The Fair Debt Collection Practices Section 808 prohibits the exercise of bill collection practices deemed as “unfair”. Below are some of the practices that are considered unfair and illegal.
Physical force or criminal means. When the bill collector uses physical force or criminal means to cause harm or inflict fear to the person, reputation or property of anyone then such act is considered illegal.
Amount or changes lawfully owing. Debt collectors and debt collection agencies cannot collect any amount (including interest, fee, charge, or expense incidental in addition to the principal amount of the debt). Exceptions to the case are when they are: expressly authorized by the signed agreement made by the creditor and debtor; permitted by the stature of each state. It is considered violations of the law to collect interest, service charges, collection charges, attorney’s fees, legal notice fees and other fees unless such charge is carefully stated and authorized by a stature or is based from a valid agreement between the parties concerned.
Prejudgment interest is also subject to collection rules. If for example the prejudgment interest rate is not specified in the contract, the debt that is owed through a loan must possess only an interest rate of 10 percent yearly after the breach and nothing more.
The general rule is that private parties are not allowed to impose penalties. Only certain statues allow private parties (credit card issuer) to impose on penalties. Nonetheless, unless expressly stated in the statutes, imposition of penalties is unlawful. Collection or asking of attorney’s fees is also considered unlawful unless authorized by the stature or agreed upon by the parties involved. Collection expenses, collector’s fee or charge is entirely prohibited by the law. The only exception is when the contract term that obligates the debtor to pay meet extensive, rigorous and insurmountable rules regarding “liquidated damages” and “unfair business practices”.
Identity Theft. Stealing of identity is considered a major unfair debt collection practice. Using of another person’s name to transact a debt without the knowledge or authorization of the other is definitely illegal. Bill collection agencies or collectors that are indignant is pursuing a consumer to pay that he/she did not incur may constitute unlawful misrepresentation.
Application of payment. The debt collector agencies may not alter the payment process which was stated in the agreement between the creditor and debtor. The collector must follow the debtor’s instructions of what resources should be allocated where.
Postdated checks. It is considered illegal for a collector to accept or deposit a postdated check by more than five days, unless that person provided due notice to the person giving the check. The notice should be given not more than ten business days before deposit.
Defective service process. These include the filing of lawsuits that are not legally served. The summons and the complaints are just there to threaten the debtor.
