Compliance Is Key
Best Practices: When emailing or texting customers, clients or debtors, compliance is key.
As a creditor or debt collector, it’s important to ensure your email communications with debtors comply with the Fair Debt Collection Practices Act (FDCPA) to avoid legal violations and ensure respectful, transparent interactions. Follow these best practices to maintain compliance:
1. Avoid Harassment and Abuse
- Limit Frequency: Avoid sending excessive or repetitive emails that could be construed as harassment. Ensure your communications are respectful, professional, and infrequent.
- Tone and Language: The tone of your emails should never be threatening, abusive, or intimidating. Always communicate respectfully to avoid any perception of coercion.
2. Provide Debt Verification
- Clear Debt Details: Within the first 5 days of contacting the debtor, ensure that you provide a written notice (in the email or an attachment) that includes the amount of the debt, the creditor’s name, and instructions on how to dispute the debt.
- Response to Disputes: If a debtor disputes the debt, cease collection efforts via email until you have provided written verification of the debt.
3. Obtain and Respect Consent
- Email Consent: You should have clear, documented consent from the debtor before communicating via email. If you haven’t obtained consent, do not initiate email communication.
- Revocation of Consent: If the debtor requests to stop receiving emails or withdraws consent, you must honor this request immediately and cease email communication.
4. Avoid Misrepresentation
- Accurate Information: All information provided in your emails should be truthful and accurate. Do not mislead the debtor about the nature of the debt, your authority, or any potential legal actions you may take.
- Clear Disclosures: If the email includes any legal threats or potential consequences, make sure these are truthful, reasonable, and consistent with the debtor’s rights under the law.
5. Respect Privacy and Timing
- Emailing During Business Hours: Avoid sending collection emails at inconvenient hours, such as late at night or early in the morning, unless the debtor has agreed to those times.
- Workplace Privacy: Do not use email addresses that belong to the debtor’s employer, unless you have confirmation that they are acceptable channels for such communication.
6. Clear Instructions for Disputing the Debt
- Dispute Rights: Include clear instructions for how the debtor can dispute the debt. This should be easily accessible in your email and include a reasonable time frame (typically 30 days) for the debtor to respond.
- Acknowledge Disputes Promptly: If a debtor disputes the debt, stop collection efforts via email until you have sent the required verification of the debt.
7. Cease Communication Requests
- Honor Cease Requests: If the debtor requests in writing (including via email) that you cease further communications, comply with this request promptly. You may only contact the debtor thereafter to confirm that you are halting communication or to notify them of legal action.
By following these best practices, creditors can ensure their debt collection communications via email, texting or electronic devices are compliant with the FDCPA (Fair Debt Collection Practices Act) as well as the operative guidelines of the CFPB (Consumer Financial Protection Bureau). All debtors have rights and protections from abusive debt collection practices. It is critical to be respectful of the debtor’s rights. Maintaining professionalism and transparency in your communications can also help preserve your reputation and minimize legal risks.
Polarization in the Debt Collection Industry
Polarization relates to the debt collection industry in several ways, reflecting the divisions in public perception, policy, and business practices. Here’s how polarization manifests in this context:
1. Public Perception
- Consumer Advocacy vs. Industry Needs: Some people view debt collectors as necessary for maintaining credit systems and enforcing accountability, while others see them as aggressive entities that exploit vulnerable populations.
- Socioeconomic Divide: Individuals with financial stability may support stricter collection practices to ensure economic order, whereas those with financial struggles may advocate for leniency or systemic reform.
2. Policy and Regulation
- Diverging Political Views: Policies governing the debt collection industry often divide along political lines, with some advocating for consumer protection laws (e.g., limiting communication methods or interest rates) and others prioritizing business freedoms to recover debts efficiently.
- State-Level Disparities: States vary widely in their regulation of debt collection practices, reflecting localized political and cultural divides.
3. Industry Practices
- Approach to Debt Recovery: Some companies adopt empathetic and consumer-friendly approaches, aiming for collaboration with debtors, while others rely on aggressive tactics, leading to public backlash.
- Technology and Transparency: Advances in technology polarize industry stakeholders. Consumers may welcome innovations that provide clarity, while traditionalists in the industry might resist changes that impose additional costs or oversight.
4. Economic and Social Impact
- Inequality and Debt: Polarization around economic inequality often intersects with debt collection. Critics argue that the industry disproportionately affects low-income individuals, while proponents claim it’s a necessary function to stabilize financial systems.
- Trust Issues: Polarized trust levels in the industry stem from its history of practices that consumers and watchdogs have criticized as unethical or unfair.
Conclusion
Polarization in the debt collection industry affects its regulation, reputation, and future evolution. Bridging these divides requires balancing consumer protection with the legitimate needs of creditors and aligning industry practices with ethical standards.
Faulty Practices
Public Humiliation Used to Collect Debts
Below is a story about trickery from a debt collection agency in Spain. These kind of tactics were used here in the United States back in the 1970’s. As a consequence of these kind of abusive debt collection practices the FDCPA / Fair Debt Collection Practices Act was enacted in 1979 by the United States Congress. The FDCPA strictly prohibits public humiliation and shaming debtors into paying a debt. These kind of collection tactics and behaviors result in sanctions, fines and orders to suspend the operations of the collection agency.
Working from Home
The changing patterns in working from home will affect how debts are collected.
- Collectors will need to respect the rules and operative guidelines of the FDCPA when it comes to recognizing a debtor as a consumer debt or commercial debt.
- Confirming the RPA, Right Party Contact, will be critical. Collectors must avoid third party disclosure to members of the household.
- Demand letters sent to a residential address will need to be in compliance with FDCPA regulations and the operative guidelines of the CFPB – Consumer Financial Protection Bureau.
- The use of telephonic devices, cell phone, Zoom, Webex, WhatsApp will create new challenges for collectors.
Get up to speed in a free 15 minute consultation and learn how to be in compliance with the rules and regulations of debt collectors. Contact us.
Are Your Collectors Up to Speed?
What qualities should you look for when interviewing candidates for the position of Collector.
People Skills
- Do they present themselves in a professional manner?
- Are they well groomed?
- Are they able to engage with people while maintaining a positive and helpful attitude?
- Can they articulate well in both verbal and written language?
- Do their writing skills incorporate correct grammar and spelling, whether formulating an email, text, or collection letter?
Is your company providing ongoing training for new hires?
- What is the candidate’s level of proficiency in the collection industry’s procedures and laws?
- Is the candidate open to ongoing training and improvement of their job skills and willing to put in the time to learn?
- Is the candidate trained in negotiating techniques and are they good listeners?
While it is unlikely that you will be able to know right away that you’ve hired the right person for the job, it is important that in the hiring process a reasonable amount of time is taken to run the candidate through a variety of scenarios to see how they respond. A process should be in place within your company to make sure that the candidate is monitored and coached throughout their trial period as well as provided with opportunities for ongoing education and training.
This article was inspired by Thomas W. Hamilton’s post in the Aug. 11, 2021 issue of the American Lawyers Quarterly Newsletter.
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