Fair Debt Collection: 7.4.13 Unlicensed Debt Collection
Thirty-two states require at least some debt collectors to be licensed, registered, or bonded.1281 Because section 1692e(5) of the FDCPA prohibits threats “to take any action that cannot legally be taken or that is not intended to be taken,” a threat of a collection lawsuit by a debt collector that is not licensed according to state law may violate that provision. The FDCPA § 1692e(5) violation is not that the collector is unlicensed, but rather that the lack of a proper license according to state law makes the threatened action unlawful.