What are Consumer Rights for Debt Collection?

M. Lupica

Most jurisdictions have laws enacted for the purpose of enumerating consumer rights for debt collection. Generally, the rights are much more strongly in the favor of the consumer with regard to dealing with third party debt collectors rather than the original creditor. Most laws protecting consumer rights for debt collection include both prohibited conduct by the debt collector as well as actions to be taken by the debt collector in order to ensure the rights of the debtor. Debt collection statutes are often strict liability laws, which mean that the consumer whose rights have been violated does not necessarily need to show actual damages to effect enforcement of penalties.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

Debt collection statutes that are designed to ensure consumer rights for debt collection usually create a distinction between third party debt collectors and original creditors. Third party debt collectors are entities that regularly collect or attempt to collect debts owed or asserted to be owed to another. These third party debt collectors are the ones to whom the limitations in their practices and methods generally apply, though some jurisdictions have enacted laws applying similar restrictions to original creditors.

There is a wide variety of conduct that has been deemed abusive and deceptive and held to violate consumer rights for debt collection. For instance, there are several restrictions on the use of the phone including the hours at which the debtor may be contacted and the place at which the debtor may be contacted. In most cases, if the debtor informs the debt collector that he or she is represented by an attorney or would like the contact to cease, then the debt collector must do so. Further, the debt collector may not inform other third parties of the debt either through publication on a list or direct contact with that party.

There is also certain protocols that the debt collector may be required to follow in dealing with a debtor that has been ordered to preserve consumer rights for debt collection. The debt collector must identify themselves as well as the original creditor on whose behalf they are acting. They must also notify the consumer of their right to dispute any debt for which they are being contacted and provide verification of the debt upon request.

Because debt collection statutes usually impose strict liability on the debt collector, debtors whose creditors violate their consumer rights for debt collection may bring an action without having to show actual harm. Generally, the statutory remedy for violation of such rights includes a modest fine plus reasonable attorney’s fees to the debtor. On the other hand, if the court finds the debtor filed the action in bad faith, then they may award reasonable attorney’s fees to the debt collector.

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