THE “FDCPA” & DISPUTING A CREDIT CARD DEBT
As previously discussed, the most powerful consumer Credit Card defenses are detailed in a federal law known as the Fair Debt Collection Practices Act or (“FDCPA”).
The FDCPA governs debt collectors from utilizing unfair, abusive or deceptive practices in order to collect a debt from you. The FDCPA will kick in if the creditor misrepresents the type of debt involved, including the amount owed. To summarize; Federal law makes it illegal for debt collectors or debt collection attorneys to use unfair, deceptive statements in order to collect a Credit Card debt.
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One can learn more about the FDCPA on the official government website of the Consumer Financial Protection Bureau or (“CFPB”). Examples of misrepresentation could be a collector claiming to be an attorney, or threatening to have you arrested, misrepresenting the type of debt or the balance owed, or threats about certain actions the collector may take that are considered illegal.
Another common violation is asking for fees on top of the debt, or posting communications about the debt on any social media website or platform that is viewable by the general public.
Moreover, a Credit Card debt collector may not send emails or documents that it knows will be viewed by your employer or boss, these are common examples of FDCPA violations.
Another factor governed by the FDCPA is the sending of written correspondence by snail mail. The envelope on the outside must not indicate in any way that the letter is from a debt collector. If the collector’s business name doesn’t indicate it’s a debt collector, the collector may use its address on the envelope it sends you.
QUICK FDCPA CHECKLIST:
Credit Card debt collectors are not permitted to claim falsely that:
- They are attorneys or government representatives.
- They work for a credit reporting agency.
- You committed a crime by not paying your Credit Card debt.
- You will be arrested and imprisoned if you don’t pay off the Credit Card.
- They will garnish wages, freeze a bank account or put liens on real property.
DISPUTING CREDIT CARD DEBT:
Under the FDCPA a debtor may dispute the alleged debt. It is a very powerful mechanism, since once you dispute the debt, the debt collector must stop all debt collection activities until it provides you with proof that you actually owe the debt.
If the debt collector cannot provide you with the necessary proof, they are not permitted to reach out to you again. In the event the debt collector provides the necessary proof of the debt, you can make a better-informed decision about how to tackle the debt. It is a good idea to engage a Credit Card debt settlement attorney especially if your wages are being garnished
DISPUTING CREDIT CARD DEBT PROVIDES THREE RIGHTS
The FDCPA provides a debtor with three separate rights:
- A right to receive official notice of the debt.
- A right to contest and dispute the credit card debt.
- A right to verify the debt.
*Please Note: Within five (5) days of contacting you about a credit card debt, the collector must furnish you with an official letter that tells you the amount owed on the credit card, the name of the creditor and information about what you can do if you believe there is a mistake or you don’t owe the money to the creditor.
*Please Note: You have thirty (30) days to dispute the debt after receiving the letter.
HOW TO DISPUTE AN ALLEGED CREDIT CARD DEBT
Within thirty (30) days of receiving a written notice of Credit Card debt, you may send a written dispute to the debt collection agency.
*Please Note: The FDCPA does not apply to an Original Creditor.
What is an original creditor?
It is the company, bank or Credit Card issuer that first provided you with a credit card. For example, if you hold a Capital One or Wells Fargo credit card and neither has been sold to a debt buyer or collection agency, the law holds that Wells Fargo and Capital One are original creditors.
What is the difference between an original creditor and a debt buyer or collection agency?
When your Credit Card debt is sold to a third-party collection agency or debt buyer the FDCPA will kick in immediately. On the other hand, the law holds that the FDCPA does not apply to an original creditor.
*Please Note: When you receive an official debt demand letter, be sure to check if it is coming from a debt buyer / third-party collection agency or from the original creditor. This will let you know whether the FDCPA applies or not.
If your original creditor is unknown, order your credit report from the three main Credit Agencies; Experian, Equifax and Transunion. Your credit report will have the name of the original creditor.
*Be aware: Some original creditors will use a different name for their collections. In such a case where the original creditor keeps the debt in house but uses a different name for its entity when collecting on delinquent credit cards, the FDCPA will apply.
After you have sent the third-party collection agency your dispute letter (within 30 days of receiving their letter), the collection agency and collector MUST stop all of their collection efforts, until it sends you a binding verification of the Credit Card debt. Be sure to keep a copy of your letter and always send your dispute certified mail with a tracking number.
Since debt buyers and third-party collection agencies purchase millions of dollars of bad Credit Card debt, it is very plausible they don’t have the necessary paperwork or assignment documents to prove that the debt is yours. Your debt settlement attorney can explain more. Also be sure to ask the debt buyer in your dispute letter who the original creditor is. The ball is now in the collection agencies court. They MUST verify the debt, per your dispute letter request.
A debt buyer / third-party collector will VERIFY the debt if they provide you with adequate information about the debt to prove if you actually owe it.
*Please Note: In most cases, verification includes but is not limited to; (1) the amount of the debt, (2) the date it became a debt as well as (3) the name and contact information of the original creditor.
When a debtor disputes the debt as a result of identity theft or a mistaken identity, verification of the debt MUST include a copy of the original signed agreement for credit.
*Please Note: Disputing a debt cannot be done by phone. Rather, it must be by letter if you wish to stop the collection enforcement efforts of the collection agency and debt buyer.
Once you challenge and dispute a Credit Card debt, the collection agency must cease all collection efforts. This means that until the debt is VERIFIED, the collection agency cannot report the debt to any of the credit reporting agencies. If the debt buyer has already reported the delinquent debt to the credit reporting agencies, and then you send a dispute letter seeking verification of the debt, the debt buyer / collection agency MUST contact the credit reporting agencies to let them know the Credit Card debt at issue, has been formally disputed.
Even if the thirty (30) days have passed, it is still a good idea to send a dispute letter. While the debt buyer does not need to stop its collection efforts, it is still required to verify the debt.
Anytime a debt buyer or collection agency report a debt to one or all of the credit reporting agencies and where it knows the debt is not accurate or is false, they will be liable for breaching both the Fair Credit Reporting Act and the FDCPA. If the debt is verified after you send your dispute letter, the debt buyer / collection agency may report it to the Credit Reporting Agencies, BUT IT MUST BE REPORTED AS “DISPUTED.”
If an alleged debtor fails to dispute a Credit Card debt, you will lose the right to have the creditor verify the debt. However, you are still able to stop the debt buyer from contacting you by sending a letter called a CEASE LETTER. Also, a failure to dispute the Credit Card debt CANNOT be used against you in a lawsuit / in Court.
SAMPLE CEASE LETTER
Date:
To whom this may concern:
Re: Capital One Credit Card
Account ending in ****1234
Kindly verify the above-referenced debt as required by the Fair Debt Collection Practices Act.
Also, you are hereby on notice not to contact me about this debt. Pursuant to the FDCPA, specifically 15 USC Section 1692(c) requires you pay heed to my request and cease contacting me.
Sincerely,
cc: Consumer Financial Protection Bureau
New York City Department of Consumer Protection
