If a payday lender is harassing you with excessive calls, threats, or other aggressive collection tactics, it is important to know that you have specific rights under federal law. The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from using abusive, unfair, or deceptive practices. While the FDCPA typically applies to third-party debt collectors, some provisions and similar state laws may cover the original lender's conduct. The first step is to understand what constitutes harassment and the formal actions you can take to stop it.
Recognizing Illegal Harassment and Your Rights
Harassment by a lender or collector goes beyond frequent contact. According to the Consumer Financial Protection Bureau (CFPB), illegal practices include:
- Calling repeatedly or continuously with intent to annoy, abuse, or harass.
- Using threats of violence or harm.
- Using obscene or profane language.
- Falsely representing that you have committed a crime.
- Threatening arrest or legal action they do not intend to take or cannot legally take.
- Calling you before 8 a.m. or after 9 p.m. (your local time) without your permission.
- Contacting you at work after being told not to.
Knowing these boundaries is crucial for identifying violations and documenting them.
Steps to Take to Stop Harassment
If you are experiencing harassment, follow these steps to protect yourself and assert your rights.
1. Document Every Interaction
Keep a detailed log of all communications. Note the date, time, name of the caller, the phone number used, and a summary of the conversation, including any threats or abusive language. Save any voicemails, text messages, or written correspondence. This documentation is vital evidence if you need to file a complaint or a lawsuit.
2. Send a Formal "Cease and Desist" Letter
Under the FDCPA, you have the right to demand that a debt collector stop contacting you. Send a letter via certified mail with a return receipt requested, clearly stating that you wish all communication to cease. Once the collector receives this letter, they may only contact you to confirm they will stop contact or to notify you of specific legal actions, like a lawsuit. Keep a copy of the letter and the postal receipt for your records.
3. File a Complaint with Regulatory Agencies
You can report the lender's behavior to government agencies that oversee consumer financial protection.
- Consumer Financial Protection Bureau (CFPB): File a complaint online at consumerfinance.gov/complaint. The CFPB forwards your complaint to the company and works to get a response.
- Federal Trade Commission (FTC): Report the harassment at reportfraud.ftc.gov. The FTC enforces the FDCPA and takes action against companies that break the law.
- Your State Attorney General's Office: Many states have their own debt collection laws that may offer additional protections. Contact your state AG's consumer protection division.
4. Consult with a Legal Professional
Consider speaking with a consumer law attorney, especially if the harassment is severe or involves clear legal threats. Violations of the FDCPA can result in the debt collector being liable for damages, including statutory damages up to $1,000 plus attorney's fees. Many attorneys offer free consultations for such cases.
Addressing the Underlying Payday Loan Debt
While stopping the harassment is the immediate priority, the underlying debt remains. The Consumer Financial Protection Bureau has found that a majority of payday loan borrowers end up in cycles of debt, taking out multiple loans or rolling over existing ones. To break this cycle and resolve the debt, consider these alternatives:
- Contact a Nonprofit Credit Counselor: Agencies affiliated with the National Foundation for Credit Counseling (NFCC) can help you create a budget and may negotiate a debt management plan with creditors.
- Explore a Payday Alternative Loan (PAL): Many federal credit unions offer these small-dollar, short-term loans with significantly lower interest rates and more flexible repayment terms than typical payday loans.
- Ask for an Extended Payment Plan: Some states require payday lenders to offer a no-cost, extended repayment plan if a borrower cannot repay. Check your state's regulations to see if this option is available to you.
- Seek Emergency Assistance: Local community organizations, charities, or religious institutions may offer grants or no-interest loans to help cover urgent expenses.
Harassment from a lender is a serious issue, but you are not without recourse. By understanding your rights, formally documenting and challenging the behavior, and seeking help to manage the debt, you can address both the immediate stress and the underlying financial challenge.