What the Fair Debt Collection Practices Act means for lenders
Certain basic principles of the rule still apply, even as technology changes.
The Fair Debt Collection Practices Act was passed in 1977 to restrict abusive activity by debt collectors. It covers the activity of anyone who collects debts owed to another party. That means it doesn’t apply directly to the original creditor, but only the third parties working to collect debts on the creditors’ behalf.
However, it’s important to note that many states have adopted additional versions of the FDCPA that enforce similar rules and regulations to the original creditor as well. So whether your credit union outsources its collection efforts, manages them in-house, or does a combination of both, the biggest priority is to make sure collectors are properly trained, credited and operating under the rules for every borrower interaction. Proper training covers the guidelines under which debt collectors may conduct business, define the rights of consumers, and prescribe penalties and violations of the Act.
Such valuable resources as the American Collectors Association can serve as a training resource and knowledge center for your operations. ACA works to provide collection operations with best practices and guidance on how to operate under FDCPA and other relevant regulations and acts.
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