The government had announced a law to prevent fake collection agencies from harassing consumers for a loan amount. Validation of debt is currently governed by the FDCPA (Fair Debt Collection Practices Act).
According to FDCPA, everyone is entitled to debt validation by the following law for validation of debts; Fair Debt Collection Practices Act § 809 [15 USC 1692g]
"(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.”
It is therefore an obligation on the debt collector to provide proofs of his authenticity to the consumer, or the person who owes him the debt. There are two options when the debt collector is actually entitled to collection. It may be an assignment or purchased debt. In case of an assignment, the collector is only assigned to be paid the debt, and is not really the owner of the debt. In the other case that is in case of purchased debt the collector has actually purchased the debt and the person who owes the debt actually owes it to the collector. However, the collector is still governed by the rules of the FDCPA.
FDCPA defines the two terms debt collector and creditor, and distinguishes in them. It is done by these two statements in § 803:
"(4) The term "creditor" means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another."(Definitions [15 USC 1692a])
"(6) The term "debt collector" means 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.”(Definitions [15 USC 1692a])
It is an act to save consumers from the collectors, and therefore validation of debt is important before paying off debts.