Explain the purpose of the Fair Debt
Collection Practices Act.
Explain how a consumer can prevent
unfair debt collection practices
Access Federal Trade Commission online
information about fair debt collection laws.
you are behind in paying your bills, you can expect to hear from a debt
collector. A debt collector is someone, other than the creditor, who regularly
collects debts owed to someone else. Lawyers who collect debts on a regular
basis are also considered to be debt collectors.
The Fair Debt Collection Practices Act
provides consumers with specific rights when facing debt collectors. Federal law requires that debt collectors
treat debtors fairly.
This lesson uses information form the Federal Trade
Commission to help students understand their rights when dealing with debt
Grouping of Students:
Large group discussion.
1. Introduce the topic of debt collection
protection by showing the brief FTC video “Dealing with Debt Collectors.”
2. Review the primary intent of the Fair
Debt Collection Practices Act.
debt collector may contact you in person, by mail, telephone, telegram, or fax,
but may not contact you at inconvenient times or places. For example, before 8:00 am or after 9:00 pm,
unless you agree.
debt collector may not contact you at work if the collector is aware that your
employer prohibits it.
an attorney is representing you about the debt, the debt collector must contact
the attorney, rather than you. If you don’t have an attorney, a collector may
contact other people only to find out your address, your phone number, and
where you work.
debt collector may not harass, oppress, or abuse you or any third parties they
contact about you.
debt collector may not lie or mislead anyone when collecting a debt.
3. Discuss the rationale for these consumer
protections. What are the possible
consequences if debt collectors were allowed to use whatever methods they want?
following is copied from Section 802 of the Fair Debt Collection Practices Act. It
is the rationale developed by Congress for the law.
15 USC 1692 § 802. Congressional findings and declaration of
September 20, 1977
There is abundant evidence of the use of abusive, deceptive, and unfair debt
collection practices by many debt collectors. Abusive debt collection practices
contribute to the number of personal bankruptcies, to marital instability, to
the loss of jobs, and to invasions of individual privacy.
Existing laws and procedures for redressing these injuries are inadequate to
Means other than misrepresentation or other abusive debt collection practices
are available for the effective collection of debts.
Abusive debt collection practices are carried on to a substantial extent in
interstate commerce and through means and instrumentalities of such commerce.
Even where abusive debt collection practices are purely intrastate in
character, they nevertheless directly affect interstate commerce.
It is the purpose of this title to eliminate abusive debt collection practices
by debt collectors, to insure that those debt collectors who refrain from using
abusive debt collection practices are not competitively disadvantaged, and to
promote consistent State action to protect consumers against debt collection
4. Ask students to suggest what penalty or
punishment should be used when debt collectors violate the fair debt
15 USC 1692 § 813 Civil Liability (pages 13-14)
Except as otherwise provided by
this section, any debt collector who fails to comply with any provision of
this title with respect to any person is liable to such person in an amount
equal to the sum of—
(1) any actual damage sustained by such person
as a result of such failure;
(2) (A) in the case of any action by an
individual, such additional damages as the court
may allow, but not exceeding $1,000; or
(B) in the case of a class action,
(i) such amount for each
named plaintiff as could be recovered under subparagraph
(ii) such amount as the court
may allow for all other class members, without regard to a minimum individual
recovery, not to exceed the lesser of
$500,000 or 1 per centum of the net worth of the debt collector; and
In addition, the law allows for administrative (legal) enforcement and
penalties as provided by several Federal Trade Commission enforcement laws.
5. Conclude: Review the key provisions of the Fair Debt
Collection Practices Act.
Explain ways consumers are protected from unfair credit practices.
Explain ways consumers are protected from abusive credit collection practices.
Explain the obligations of consumers when using credit.
Consumers who use credit are protected by a variety of federal laws designed to protect their rights when they interact with credit card companies. He most recent major legislation, the Credit CARD Act, enacted in 2009, provides many new consumer credit protections and strengthens other existing laws. For example, your credit card company generally cannot increase the rate on your existing balance and must tell you forty-five days before increasing the rate for new transactions. The Act also places new limits on fees and rate increases and requires consistency in payment dates and times.
1. Ask: When you purchase something and something goes wrong or you are not treated fairly, what do you expect? Do you have rights? What are they?
Elicit some discussion of the ways consumers are protected by federal, state and local laws. Right to return goods, safety, advertised prices, no hidden costs, etc.
2. Explain: When you use a credit card or sign a credit agreement, you are also protected by a variety of laws.
Ask: Why do we need laws to protect the rights of people who use credit?
Discuss possible things that sales people or creditors might do that are not fair or abusive to consumers? Suggest: misleading credit costs, hidden costs, unfair rules, abusive collections practices, etc. For some ideas for this discussion, see the article at this “Consumer Union” web site: http://www.consumersunion.org/pub/core_financial_services/004040.html
3. Explain: The federal government is the primary level of government involved in protecting consumer credit. Most of this activity crosses state lines and, thus, is under federal jurisdiction. Also, federal government agencies are the primary regulators of the financial institutions involved in credit.