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What is the Difference Between a Creditor and a Debt Collector Under the FDCPA?

debtorMost creditors in Columbia, South Carolina know about the Fair Debt Collection Practices Act (FDCPA) and know that debt collectors are required to abide by the terms of debt collection outlined in this federal law. But can creditors also be subject to the terms of the FDCPA? In some cases, creditors may be considered “debt collectors” for the purposes of the Act. We will explain what the FDCPA is designed to do, and then we will discuss ways in which creditors may be considered to be debt collectors under the Act and thus bound by its terms.

What is the Fair Debt Collection Practices Act?

The Fair Debt Collection Practices Act “broadly prohibits a debt collector from using ‘any false, deceptive, or misleading representation or means in connection with the collection of any debt,’” according to the language of the statute. The South Carolina Department of Consumer Affairs clarifies that the FDCPA requires that debt collectors treat debtors “fairly by prohibiting certain methods of debt collection.” More specifically, the FDCPA prohibits debtors from engaging in any of the following:

  • Contacting debtors before 8:00am and after 9:00pm;
  • Contacting debtors at times the collector knows to be “inconvenient”;
  • Continuing to contact debtors after receiving a written demand from the debtor to terminate further contact;
  • Contacting a debtor directly when the debtor has a lawyer;
  • Failing to notify debtors about their rights to challenge the validity of the debt;
  • Failing to provide basic information to the debtor; and
  • Lying to the debtor about the collector’s identity.

The Act outlines other specific deceptive or fraudulent actions that are also prohibited under the law. But how can a creditor know whether it is considered a “debt collector” under the FDCPA?

When is a Creditor a Debt Collector for FDCPA Purposes?

As an article from the U.S. Federal Trade Commission (FTC) explains, by the terms of the Act, debt collectors are covered by the FDCPA while creditors are not. However, “certain courses of conduct” by creditors can mean that they are “squarely within the jurisdiction of the FDCPA.”

What makes a creditor a “debt collector” under the FDCPA in certain circumstances? First, the FDCPA itself defines a debt collector as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”

As the FTC article underscores, many creditors assume that, since they collect their own debts, they are not subject to the FDCPA. However, in many instances where a creditor was also collecting debt under a different business name, courts have held that the creditor was also a debt collector under the FDCPA definition. It is also important to note that, even if you are a creditor who is not covered by the FDCPA, you are still required to avoid deceptive or unfair collection practices under Section 5 of the FTC Act.

Contact a Columbia, SC Creditors’ Rights Attorney

If you are a creditor and have questions about whether you have obligations under the FDCPA, it is important to speak with a creditors’ rights attorney in Columbia, South Carolina as soon as you can. Whether or not specific creditors have obligations under the FDCPA, it is important to understand lawful remedies available for collecting on debts that are owed. Contact Crawford & Von Keller Law Firm to discuss options for enforcing contracts with debtors.

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