Identifying Some Trouble Spots in the Fair Debt Collection Practices Act: A Framework for Improvement

The Fair Debt Collection Practices Act (FDCPA) defines a debt collector as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” One issue that has bothered courts over the years is the definition of “debt.” Most courts have taken the position that a debt need not result from an extension of credit, but they see the necessity of having a consensual transaction between the parties. This article examines the judicial approach to the term “debt.” Along the same lines, this article examines the specific language in the definition of “debt collector” that exempts a person from coverage because the debt is obtained before it is in default.” This article will demonstrate that just because a debt is delinquent does not mean that it is in default, although debt collectors frequently confuse the two situations. Finally, this article considers the intricacies of the validation notice and the problem that a collector faces in trying to give equal billing to its collection message, while informing the debtor about his rights to seek verification of the debt. One may conclude that the statute puts the debt collector in an impossible position. This is especially so in light of the judicial disagreement over the application of the bona fide error defense to mistakes of law