Ignoring debt collection laws isn’t just risky—it can cost your business thousands in fines and damage your reputation. The Fair Debt Collection Practices Act (FDCPA) sets strict limits on when and how debt collectors can engage with debtors, making non-compliance a costly mistake. Here are three critical times when you legally can’t contact a debtor—and why working with an expert like NSB ensures you stay compliant.
The FDCPA defines a debt collector as any third party attempting to collect debts owed to another entity, including collection agencies, subrogation firms, and law firms engaged in collections. Creditors collecting their own debts are generally not subject to FDCPA restrictions, though state laws may impose additional regulations.
The FDCPA is designed to protect consumers from unfair, deceptive, or abusive debt collection practices. Violating FDCPA regulations can result in legal penalties, lawsuits, and damage to an organization’s reputation—risks that no business can afford.
Why Timing Matters: Contacting a debtor at the wrong time can quickly escalate into a legal issue. Understanding when communication is prohibited is crucial for maintaining compliance.
What the FDCPA Says: Debt collectors cannot contact a debtor before 8:00 AM or after 9:00 PM in the debtor’s local time zone. Additionally, collectors must respect any requests from the debtor not to be contacted during specific times they find inconvenient.
Why This Rule Exists: This regulation protects debtors from harassment and ensures their right to personal time is respected.
Why It’s Crucial to Respect Debtor Requests: Failing to stop communication after a written request can result in legal penalties and irreparable damage to your company’s reputation.
What the FDCPA Says: If a debtor submits a written request instructing a debt collector to stop all communication, the collector must comply immediately. Exceptions include:
Why This Rule Exists: This rule protects debtors from unnecessary harassment and allows them to seek legal advice or dispute the debt if necessary.
Protecting Debtor Privacy: Discussing a debtor’s financial obligations with third parties can lead to legal repercussions and reputational damage.
What the FDCPA Says: Debt collectors cannot discuss a debtor’s financial obligations with third parties, such as friends, family, or employers, except:
Why This Rule Exists: This regulation safeguards the debtor’s privacy and prevents potential reputational harm.
Choosing the right partner can be the difference between compliance success and costly mistakes. Here’s why NSB is the partner you need:
In Carrasquillo v. CICA Collection Agency, Inc., a debtor filed for bankruptcy in September 2019, including a debt owed to Claro Puerto Rico. Despite the bankruptcy filing, CICA Collection Agency sent a collection letter in October 2020, stating the debt was "due and payable" and that legal action could be initiated. This led the debtor to sue, claiming the communication violated the FDCPA by misrepresenting the legal status of the debt during bankruptcy. The Consumer Financial Protection Bureau (CFPB) supported the debtor's claim, asserting that any false representation—intentional or not—violates the FDCPA.
This case underscores the importance of maintaining up-to-date information and exercising caution, particularly when a debtor is undergoing bankruptcy.
Understanding when not to contact a debtor is just as important as knowing when you can. Working with an FDCPA-compliant subrogation partner like NSB ensures your debt collection practices are both ethical and effective.
Learn More About Our Subrogation Services today! Build a collection strategy that’s both compliant and results-driven.