Debt collection companies walk a fine line between business efficiency in their primary function (accounts receivable management), while at the same time needing to respect the fact that the debtor is a valuable client to the business for whom they are running collections. Aggressive tactics are punishable by regulation, but perhaps more commonly, they run the risk of misrepresenting the business to its clients and having a negative impact on the business’s reputation. That is why it is so important for organizations to choose a collection agency that falls on the right side of the fence in what is otherwise a huge grey area. With that in mind, here are the top 4th, 5th, and 6th most prevalent complaints against debt collection agencies in 2014:
#6: Taking or threatening to take an illegal action. The Consumer Financial Protection Bureau reported 2,207 instances of debt collection agencies threatening to do something which they are not legally permitted to do. An example would be telling the debtor that the debt collection agency is going to send the sheriff to collect on the debt if the debtor doesn’t pay, or threatening someone’s property. Click this link to read some real-world debt collection horror stories.
Section 806 of the FDCPA prohibits debt collection agencies from making violent threats, using profanity, or taking part in non-transparent communication practices intended to harass or annoy. For a full review of the FDCPA read here.
#5: Improper contact or sharing of information. 2,333 complaints were filed with the CFPB in 2014 regarding improper contact or sharing of information. Of these, 239 involved medical collections and another 240 involved student loans.
Debt collection companies who deal in healthcare collections are governed by the Health Insurance Portability and Accountability Act and its “privacy rule” for Protected Health Information (PHI). Part 164 Subparts C, D, and E talk about security requirements for debt collection agencies, notification requirements in the case of a breach, and disclosure requirements to affected individuals. For a good summary, read here.
Permissible contact with debtors is governed by Section 805 of the FDCPA. Debt collectors are not legally permitted to call your residence outside the hours of 8AM and 9PM local.
#4: False statements or representation. 2,906 complaints were filed against debt collection companies in 2014 regarding false or misleading statements that a collection agent had made. Of these, credit card collectors received the most complaints (820) followed by medical debt collectors (409). An example of dishonest medical collection tactics is the placement of a debt collection agent in the hospital emergency room without making it known that they are a collector.
Section 807 of the FDCPA governs false or misleading representation of the collections agent or the process. Did you know that...
Debt collectors cannot legally represent themselves as affiliated with the U.S. Government.
Debt collectors cannot threaten to seize, garnish, or sell your property if such action is not planned or legally permissible.
So, that was a look at some of the most common complaints against debt collection companies - but check back in a few days to see the top three! Please feel free to contact us with any questions you may have about NSB's processes and how we maintain compliance.