Anyone who has experience in the field of bill collection probably knows about the Fair Debt Collection Practices Act. This legislation was crafted in 1978 and provided a very decent amount of protections for consumers. There are a variety of guidelines that a debt collector must follow, and if any of these rules are violated, you should call up your attorney general’s office and complain. Examples of rules that third party debt collectors must follow include: a debt collector can only call between 8:30 AM – 9 PM, they cannot call a debtor repeatedly, and they must positively identify that they are speaking directly to the debtor before they proceed with their attempt to collect debt.
These are just some of the rules of the FDCPA, which you can look up on Wikipedia if you would like to know more, and also, third party collection agents have to abide by certain state rules and regulations as well. But different kinds of people owe different types of debt. What about that friend of yours who owes you five bucks? Do you have to grant them thirty days to refute the claim? Of course not! You can call up that friend at eleven at night if you know they are up and ask for your money back!
This is where things get tricky. Notice how I specifically said “third party” debt collectors when I wrote about the guidelines of the FDCPA. These are just one kind of collection agent. The other kind is called “in house collectors.” Third party debt collectors work for an independent debt collection company that is hired by a creditor to collect delinquent accounts. In house collectors work directly for the creditor. Usually in house collectors work for financially based institutions that have huge accounts receivable departments like credit and mortgage companies, or health care companies. In house collectors are not considered “debt collectors” under the FDCPA and therefore do not have to follow many of the legal rules.
Three examples: The Department of Education works with seventeen private debt collection agencies to collect on federal student loans. Any officer or employee of the Department of Ed is not bound by the FDCPA. However, the private debt collection agencies are. Second example: Morency v. Evanston Northwestern Healthcare Corp, a district court case in Illinois from 1999. While trying to retrieve medical debt, a hospital issued and mailed out pre-collection notices. Big no-no for third party collection agencies. This could have potentially meant that everybody who received that notice would have been absolved of their debt, but the court ruled that the hospital was a creditor, not a collection agency, so the FDCPA did not apply.
Third example: I am notorious for taking out ten books at the library at one time, reading about five, getting distracted and reading other books in between, and reading multiple books at the same time. I am surprised I have not gotten my library card revoked. Last summer I had books out for so long that they had a debt collector call me! The debt collector called my third party telephone, clearly a shared number, and left intimate information on a message about my delinquent account. I might have been annoyed, but I knew I had to give the books back, and the debt collector told me to pay the library directly, which meant that she was an in house collector, so the FDCPA does not apply. Third party collection agencies will almost always ask you to pay them directly, not the creditor, and they certainly cannot leave messages on third party phones with specific account information. Luckily I returned my books and because it was a public library I ended up owing like five dollars. To find out what makes third party collection agencies and in house collectors different see part two…
Mallory Megan works for Rapid Recovery Solution and writes articles on nationwide collection agencies.
