If you're new to the debt-collection process in California, going about it can be tricky. When someone owes you money for goods or services performed, there are both federal and state laws that protect the debtor from improper collection practices. Before attempting to guess what's allowed and what's not, you should consult with a business lawyer to ensure you don't make any mistakes and put your company at risk. In the meantime, here are four ways you can avoid a lawsuit.
Understand the FDCPA
According to Federal laws and the Fair Debt Collection Practices Act, debt collectors are not allowed to use unfair, abusive, or deceptive tactics in order to collect a debt that's owed.
It's important to understand that the term "debt collectors" applies to third-party collectors. In other words, they don't refer to the original creditor, but rather to an agency that's been hired on that company's behalf to collect the debt.
The agency is restricted from calling debtors at certain times of the day, and they also have to adhere to certain requests from the debtor. For example, if the debtor says not to call them at work or to only communicate with them through mail, the debt-collection agency must honor those requests.
In California, creditors must additionally adhere to CFDCPA laws (California Fair Debt Collection Practices Act). Under these rules, the term "debt collectors" does not just apply to an agency hired by the creditor. It covers the original creditor as well. In fact, any of the following types of debt collectors must follow the laws outlined in the CFDCPA:
Do Not Discuss the Debt with Third Parties
As a debt collector, you are not allowed to discuss the debt with anyone but the debtor or their attorney. This includes not only phone conversations but other practices that some creditors may not be aware of. For instance, publishing a deadbeat list online or in a newspaper is illegal. If you do this, you could face both federal and state repercussions that include paying fines and having to pay for damages to the debtor.
You also can't discuss the debt with other businesses. Suppose you are curious about whether the debtor owes money to anyone else, so you start asking questions. Even if it's not construed as an "unfair" debt collection, it still violates the party's right to privacy.
If you do discuss the debt with another party and you give out false information, you could additionally be sued for defamation on top of violating their privacy. In fact, you're not even allowed to convey that the debtor owes you money. Just that simple statement alone is enough to get you in trouble.
Do Not Use Obscene Language
More than likely, you and your staff know to be professional and courteous at all times. But there's no doubt that there will be occasions when debtors resort to rude and harsh language. It can be difficult to avoid getting sucked into the negativity, but it's important to remember that using foul, obscene, or insulting language violates both U.S. and California law. This includes racial slurs or anything that could be construed as threatening or harassing.
Do Not Pretend to Be Someone Else
If someone other than the debtor answers the phone, you should never reveal personal information regarding the purpose of the call, as that could violate privacy laws. But once you confirm that you are speaking with the correct person, you must clearly represent yourself accurately, stating who you are and that the purpose of the call is to collect a debt. Never say you're representing the government or working for a credit reporting agency, or even claim to be an attorney, if those things are not true.
Share22 February 2017
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