Is rent a consumer debt?
Two acts designed to protect consumers are usually not considered relevant by landlords or property managers: (1) The Fair Debt Collection Practices Act (or FDCPA) and (2) The Fair Credit Reporting Act (FCRA). Until recently, the relationship between tenants and landlords was not viewed as a consumer debt relationship. However a recent case may suggest that anyone who helps landlords collect past due rents can be subject to the FDCPA, including property managers and attorneys.
The goal of the Fair Debt Collection Practices Act (or FDCPA) is to stop unfair, unethical and illegal bill collection tactics by debt collectors. Personal, family, and household debts are covered under the FDCPA. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.
The act defines a debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis. But does it include property managers or landlords trying to collect past due rent?
The answer seems clear: if you are the property owner, you need to follow landlord tenant law but not specifically meet the requirements of the FDCPA. If you are not the property owner and contact tenants about past due rent, it is recommended that communications with tenants meet the requirements of the FDCPA.
Within five days after first contacting the debtor, the collector must send a written notice stating the amount of money owed; the name of the creditor to whom the money is owed; and what action to take if the debtor believes they do not owe the money you may want to talk to your attorney first.
A second act, the Fair Credit Reporting Act (FCRA) regulates the providers and users of credit reports. The National Multi-Housing Council recently requested an opinion from the Federal Trade Commission regarding the use of credit reports when screening tenants.
The FTC reported back that landlords have obligations under the FCRA when they take adverse actions based on credit reports or other types of consumer reports. (A consumer report contains information about an individual's personal and credit characteristics, character, general reputation, and lifestyle). The FCRA covers a report if a consumer reporting agency, i.e. a business that assembles such reports for other businesses, prepares the report.
Most property managers and landlords rely on these credit reports as part of the tenant screening process. 1996 amendments to the FCRA added a broad "catch-all" to cover all actions or determinations "adverse to the interests of the consumer" made in connection with an application made by, or a transaction initiated by, the consu