Dealing with Collection Agencies - What You Need to Know About the FDCPA and FCRA
WHAT YOU ARE ABOUT TO READ PERTAINS ONLY TO PERSONS (NOT COMPANIES) LIVING INSIDE THE UNITED STATES OF AMERICA WHO ARE DEALING WITH DEBT COLLECTORS AND DEBT COLLECTION AGENCIES ATTEMPTING TO COLLECT ON PERSONAL AND HOUSEHOLD DEBTS (THIS DOES NOT APPLY TO BUSINESS RELATED DEBTS). IF YOU ARE OUTSIDE THE UNITED STATES, PLEASE DEFER TO YOUR COUNTRY'S LAWS. RESIDENTS OF (AND COMPANIES CONDUCTING BUSINESS INSIDE) THE UNITED KINGDOM OF GREAT BRITIAN SHOULD READ THIS POST INSTEAD, AS IT WILL COVER THOSE ON THE "OTHER SIDE OF THE POND" (THE ATLANTIC OCEAN). ALSO, I AM NOT A LAWYER. PLEASE SEEK THE ADVICE AND COUNSEL OF AN ATTORNEY WHO IS LICENSED TO PRACTICE LAW IN YOUR JURISDICTION. AS WITH ALL THINGS, LAWS CHANGE AND WHAT I TYPE HERE MAY BE DATED BY THE TIME YOU READ THIS. THANK YOU.
Collection agencies are required by FEDERAL LAW to follow the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA) (this link is to a PDF file) to the letter. The law is VERY clear about this.
For example, if Getty Images sends a collection agency after you, and the agency makes the initial contact with you via phone, they have five business days from the date they made the initial contact (via telephone) to send you a written collections notice via US Mail (that's the United States Postal Service, not UPS or Fed-Ex). If they try to call you again, you can sue them in federal court for harrassment (well, actually for violating the FDCPA, but I'm just typing in general terms here - I'll deal with the specifics and the semantics of the FDCPA in a bit), and seek up to $1,000 in statutory damages (which, by law, are tax-free - also note that the Court has the final say in how much statutory relief you are legally entitled to; from here on in I will assume the maximum in damages for the sake of this discussion) plus recovery of your legal fees (attorney's fees, court filing costs, etc). The collection agency would also be barred from contacting you regarding the debt (the one that they got from Getty Images) ever again. If they comply with the law and send you a written collections notice, they then have to wait 30 days by law before contacting you again. With one notable exception, if they contact you within the 30 day "grace period" you can sue them in federal court for violating the Fair Debt Collection Practices Act (again, seeking $1,000 in statutory damages, plus recovery of your legal fees).
Now, let's suppose the collection agency calls you; you tell them to send you a written collections notice, and they comply. They also do not call you back (either at home, on your cell phone, or at your place of employment). Now what? This is where the FDCPA really comes in and starts to bare its teeth (and my, what big teeth it has). The FDCPA says you can send them a "validation letter" which is essentially a cease-and-desist order. This is where things really get interesting. In a FDCPA validation letter, you are demanding that they prove their identity, their legal ability to lawfully collect debts in your state (if you were in Illinois, then they'd have to prove that they can lawfully collect the debt in Illinois - the state they are in DOES NOT MATTER ONE IOTA), the amount of the debt, how they acquired the debt (did the creditor assign the debt to them, or did they buy it; if they bought it, where did they buy it from, when was it bought, and for how much?), among other things. You also state that they are not to contact you via any means other than US Mail; failure to comply will result in a federal lawsuit on grounds of violating the FDCPA (again, the $1,000 in statutory damages comes into play). Also, the only thing they can do when they reply is to answer your questions (this is the "notable exception" I referred to earlier). If they continue their collection activities (and the words "This communication is from a debt collector. This letter is an attempt to collect a debt." counts as a collection attempt), then they are in violation of the FDCPA and can be sued in federal court (these types of cases are often open-shut, with the defendants being able to do nothing but drop their jaw and cut you a check). Note that lawyers and law firms typically handle collections activity as an additional means to generate residual income for their businesses (and let's face it, law firms are businesses). Even if a lawyer contacts you regarding a debt, if the words "This communication is from a debt collector. This letter is an attempt to collect a debt." are on the correspondance they send you, they are acting as debt collectors and are therefore subject to the FDCPA. If they're not in the letter/invoice they send you, hire an attorney, because chances are pretty darn good that they're in violation of the FDCPA.
The best way to send a validation request letter is to deliver the letter via Certified Mail with a Return Receipt (it will cost you $4.42 at the post office, IIRC). You don't have to restrict the delivery of the letter to the addressee (Mr. John Doe, Vice President of Collections for example). Anyone who works at the collection agency will do - even the janitor or (God forbid) a temp worker. This way you know they received it, and you will have proof that it was sent. Be sure to keep a copy of the sales receipt from the post office, a signed copy of your validation letter, and the delivery confirmation slip (it's a green piece of construction-type paper) with your collections notices should it prove to be necessary for you to take legal action against the bill collector. (Important Tip: Never send an FDCPA validation request letter - or any other correspondance for that matter - to the PO Box that they print on the form letter (or the envelope). By law, bill collectors are required to provide their actual business address in all correspondance. Send it there instead. Not only will this tweak their nose, but you'll also have a much stronger case should you have to sue them.)
The vast majority of collection agencies will either ignore the letter and continue their collection attempts (which will usually get you $1,000 tax free) or just stop their collections activities. I have yet to hear of a case where a debt collector actually properly followed through with an FDCPA validation letter. Also note that a validation letter is a legal document and the bill collector will usually have to pay additional damages to the Court (which usually gets passed on to you - I came close to having this done, but the defendants in my case, which was a class action, were able to just barely dodge that bullet - and yes, I was one of two class representatives in that lawsuit) if they cannot produce the letter you sent them during the lawsuit's discovery process.
[Addendum: If a debt collector tries to sue you for sending a validation letter, do not worry. The law clearly states that any litigation filed against you for exercising your rights under the FDCPA and FCRA is not only harrassment and abuse, but also a violation of the FDCPA since it falls under "attempts to collect a debt" - the Court will either dismiss their lawsuit out-right, or will enter a judgment into your favor and order the bill collector to pay you $1,000 in statutory damages, plus other compensatory relief, such as reimbursement for your attorney's fees and, in rare cases, even actual damages (the award of actual damages depends on the judge presiding over the case obviously - some are blantantly pro-consumer and will relish in the thought of exercising their judicial power to make debt collectors squeal like pigs while others will just give you statutory damages and tell you to get the hell out of their courtroom).]
The debt collector will also try to place a black mark on your credit report (it's part of their modus operandi). If you had sent them a FDCPA validation letter and they report you to the credit bureaus anyway, they will not only be in violation of the FDCPA (because you are disputing their claim to be able to legally collect the debt from you in the first place), but also the FCRA (Fair Credit Reporting Act) as well. You'll be able to take them to court and sue them for violations of the FDCPA ($1,000), violations of the FCRA ($1,250-$3,500 in statutory damages for each mark against you filed with each credit reporting bureau), as well as collections fraud (damages are up the judge).
For example, if a debt collector files the Getty Images invoice with each of the three major credit bureaus (Equifax, Experian and TransUnion), you will be able to collect up to $10,500 in statutory damages for the FCRA violations alone, plus an additional $1,000 for the FDCPA violation, recover all of your attorney's fees and court filing costs, and possibly even be entitled to punitive damages as well.
One other thing. If a debt collector knows you are being represented by an attorney, and they try to contact you directly by any means whatsoever, they will be in violation of the FDCPA and you will be able to sue them for (once again) $1,000 in statutory damages. In rare cases, you may even be able to recover ACTUAL damages (this nearly happened to me last year). The actual damages being the amount that the debt collector is trying to collect from you (either what they claim to be the "total" amount or a "settlement offer").
Now, you'll probably remember I mentioned something about FDCPA class action lawsuits. How do they work? Well, if a collection agency is repeatedly acting like it's above the law (and only an attorney will be able to determine this when investigating your complaint) they may offer to file a lawsuit against the bill collector on your behalf as a class action (in which case you would be not only the plaintiff, but also the class representative if the motion for a class action lawsuit is approved by the Court). FDCPA class actions are almost always prosecuted in the federal court system, and can recover (for the class) up to $500,000 or 5% of the total amount (which ever is less) in statutory damages, recovery of all actual damages (that's money us poor people paid to the bill collector - it's literally a refund that gets paid to us directly, rather than to the class), recovery of all attorney's fees, court filing costs and other legal expenses (this is on top of the judgment for the class, which means the bill collector has to pay all the legal fees on top of whatever the class gets), and even punitive damages as well (this part is up to the Court's discretion).
I mentioned that the Class gets the money from the judgment (or a class settlement). But what about you, the class representative? What do you get? Well, the lawyer gets his money straight from the defendant, so that won't come out of whatever the class gets. What you (as the class rep - or leader as it's also known) will typically get between 10-20% of whatever the class gets before the damages (or settlement) is disbursed (given) to the class members. Keep in mind that if there are multiple class leaders, they do not each get between 10-20% of the pie, but would have to share that percentage among each other. So if you have two class leaders, and the Court determines that the Class leaders get 20%, they would each get half of that (10% each). Actual damages and recovery of attorneys fees do not factor into this. Just statutory and punitive damages.
And that's just the federal law. I'm sure your state has laws on the books that will be able to protect you as well (also, given the wording of the FDCPA - and IIRC the FCRA - you can even use the federal courts as a preferred venue for violations of state law as long as you include the state-level violations in your federal complaint).
I'm going to include a sample FDCPA validation request letter below for you to use as a template. I'm leaving the state-specific parts out, since I don't know what state you live in (and believe that you have to do some of the work for yourself). This was mashed-up from several online templates I found a couple years ago when I was going through this myself. My lawyer, who is employed with the Law Offices of Edelman, Combs, Latturner and Goodwin (in Chicago, Illinois) said that the letter was over-kill, and that (essentially) if the bill collector even so much as sneezed I'd have an open-shut case against them.
Here's the letter, in all it's glory (minus the parts dealing with Illinois law). Just be sure to change the parts that are italicized (and in red) to regular text (meaning get rid of the italics and change the text color to black) and replace them with your pertinent information (your name, your account number with the creditor, the date your collections notice was dated, the date you received the letter, and so on - and yes, replace "Your Signature" with a blank line so you have room for your signature, since you do have to sign it). There are also three "notes" in there (in red italicized text). Remove those as well :).
EXAMPLE FDCPA VALIDATION REQUEST LETTER - THIS IS ONLY AN EXAMPLE
(123 Your Street Address)
(Your City, ST 01234)
(ABC Collections Services, LLC.)
(123 NotOnYourLife Ave)
(Chicago, IL 60654)
Re: (Name of Creditor)
Acct # (XXXX-XXXX-XXXX-XXXX)
To Whom It May Concern:
This letter is being sent to you in response to a notice dated (Date), which was received on (Date). Be advised that this is not a refusal to pay, but a notice sent pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. 1692g § 809 (b) that your claim is disputed and validation is requested.
This is NOT a request for “verification” or proof of my mailing address, but a request for VALIDATION made pursuant to the above named Title and Section. I respectfully request that your offices provide me with competent evidence that I have any legal obligation to pay you.
At this time I will also inform you that if your offices have reported invalidated information to any of the three (3) major Credit Bureaus (Equifax, Experian or TransUnion) this action might constitute fraud under both Federal and State Laws. Due to this fact, if any negative mark is found on any of my credit reports by your company or the company that you represent I will not hesitate in bringing legal action against you for the following:
1.) Violation of the Fair Credit Reporting Act
2.) Violation of the Fair Debt Collection Practices Act
3.) Defamation of Character
If your offices are able to provide the proper documentation as requested in the following Declaration, I will require at least 30 days to investigate this information and during such time all collection activity must cease and desist.
Please provide me, in writing, with the following:
1.) What the money you claim I owe is for.
2.) How you acquired this account. Was it assigned or purchased?
3.) Explain and show me how you calculated what you claim I owe.
4.) Provide me with copies of any papers that show I agreed to pay what you claim I owe.
5.) Provide me with a full copy of my payment history.
6.) Provide a verification or copy of any judgment if applicable.
7.) Identify the original creditor.
8.) Prove the Statute of Limitations has not expired on this account. (Note: this will vary with each state, and may not even apply to you)
9.) Provide me with your license numbers and Registered Agent. (Note: this will vary with each state, and may not even apply to you)
Also during this validation period, if any action is taken which could be considered detrimental to any of my credit reports, I will consult with my legal counsel for suit. This includes any listing of any information to a credit reporting bureau or agency that could be inaccurate or invalidated or verifying an account as accurate when in fact there is no provided proof that it is.
If your offices fail to respond to this validation request within thirty (30) days from the date of your receipt, all references to this account must be deleted and completely removed from my credit file and a copy of such deletion request shall be sent to me, in writing, immediately.
I am also requesting, in writing, that no telephone contact be made by your offices to my home, my cellular phone, or to my place of employment. If your offices attempt telephone communication with me, including but not limited to, computer generated calls and calls or correspondence sent to or with any third parties, it will be considered harassment and I will have no choice but to file suit. All future communications with me MUST be done in writing and sent to the address noted in this letter by the United States Postal Service (USPS).
It would be advisable that you assure that your records are in order before I am forced to take legal action. This is an attempt to correct your records; any information obtained shall be used for that purpose.
(Your Printed Name - Note: Use your type-writer or word processing program to "type" your name. Do not print it by hand.)
We all need to tell UK Watchdog about getty
I have had one of these letters, thought about making them an offer but after reading this forum I am going to tell them to take me to the UK county Court(which they cannot claim back their costs ha ha ha)It will cost them more in legal fees to get a single £1 from me.
I would advise all UK people to report them to the Watchdog tv program, the more complaints they get ,the more chance of them taking up the story.
The BBC use getty images so it will be interesting to see what happens !!!!