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What are some laws governing collection agencies?

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Quick Answer

The Fair Debt Collection Practices Act, or FDCPA, and Dodd-Frank Act are the laws that govern collection agencies, according to the American Bar Association. Still, there are state laws that preside over collection activities. For instance, collectors based in New York have to observe the provisions of the New York State Debt Collection Procedures Law.

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Full Answer

The FDCPA provides debt collectors with the necessary guidelines when they seek to collect legitimate debts but also offers protection to the debtor. The passage of the Act was informed by the abusive nature of collection activities, notes the American Bar Association. The Dodd-Frank Act led to the formation of the Consumer Financial Protection Bureau, or CFPB, which is mandated with enforcing laws against deceptive, unfair and abusive practices by collection agencies.

Apart from federal regulations, states have laws that govern collection agencies, explains the American Bar Association. In the state of New York, the New York State Debt Collection Procedures Law defines the rules for collecting debts. Some of the limitations outlined in the law include prohibiting collectors from informing the debtor's employer of the nature of a debt without his consent and suggesting they can collect more fees than those owed to them by the debtor.

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