Dealing with unfair debt collection practices

Helene Mueller
eCollect support team

There are different methods for dealing with debt collectors when they are forcing harassing methods and illegal practices upon a consumer. The Federal Trade Commission in the United States generated more than 164.000 complaints against debt collectors during 2011 (see ext. link 2). There are various organisations and laws, which protect consumers and are designed to prevent DCAs (Debt Collection Agencies) from resorting to harassing or illegal practices during the debt recovery process. The Office of Fair Trading (UK), the FDCPA-Fair Debt Collection Practices Act- for U.S., the Unfair Commercial Practices and the European Collectors Association (for the whole European Union), along with many other acts and government organisations forbid unfair and abusive practices on behalf of debt buyers, debt collectors, debt recovery attorneys, etc.

How to deal with bad debt collection practices

A lot of consumers are not familiar with their rights and usually become a victim of debt collection frauds. In order to know how to deal with debt collection agents, debtors have to be acquainted with consumers’ rights and different legislation acts and laws. When a debtor is subject to harassing debt recovery practices, his rights as a consumer and as an individual are violated. If he is being contacted by a debt agency and has been threatened or abused, he should report the organisation/representative in question. Furthermore, he can also request the full name of the trading agency and check if the DCA is licensed to perform legal debt collection.

A debt collection agent can cross the line not only with abusive tone but also with false threats, which is considered as a psychical torment towards the debtor. If a collector is repeatedly harassing a consumer via threatening phone calls, letters by post or emails, the indebted subject has the absolute right to address a cease-and-desist-letter (also known as an infringement document) to the debt recovery agency/creditor, etc. (ext. link 6 & 7). Such letter generally depicts debtor’s request towards the collection agent to stop contacting the consumer by all means. If the collector ignores the C&D written instruction, legal actions will be carried out, as such letters are issued only by a legal representative or court authority.

Through various acts and organisations, legal and illegal actions of DCAs have been marked and enlisted, pointing out debtors’ rights. Such acts serve as guidelines for consumers, showing them how to deal with debt collectors and their unfair practices.If, for example, a collector contacts the consumer outside the ethical and legally accepted time frames (from 8 am to 9 pm), this will be considered as breaching debtor’s rights. Even if the agent doesn’t threat or use uncourteous language, a collector has no right to disturb an indebted subject before 8 am or after 9 pm, also he does not have the right to call or visit in person during weekends or different holidays. When a collection agency uses threats of legal actions towards the debtor, when the will not be any, or when such actions are not possible to be carried out, this method will be regarded as false facts’ placement and also as a fraud.

Dealing with collection frauds

Collections frauds are composed of different practices, and all of them are considered as a severe violation of the law. If a DCA or a collection agent provides the consumer with incomplete or incorrect information, regarding the debt amount, additional charges, name of the organisation, etc.; this will be marked as a fraud or a collection scam.

The recovery agency has the right to charge the consumer a commission fee but only on the scale of the amount determined by law for the specific country, where the debtor is located. If the monetary sum requested by the DCA exceeds the legal interest, this is also considered as collection’s scam.

Sometimes it might happen that a consumer has already cleared his defaults, but after a time, he might be contacted again by a false debt collection agency, which will request immediate payment. The subject can represent a non-existent debt recovery agency, the so-called phantom collectors or phantom DCAs. The agency can also be a registered debt buyer, which means debtor’s credit file hasn’t been cleared by the creditor, but instead, the debt case has been sold to a debt purchaser. The first case is a severe fraud and if the consumer senses that the caller is not at all authorised to perform any kind of debt collection, he should immediately report this subject directly to the legislature or a police station.

Used literature & External links