News & Resources

Collectors need to word letters carefully

May 26, 2012 Philip Burgess

Usually, debt collection agencies rely on phone calls to secure communications with an individual who owes money due to missed payments. However, some groups decide to send letters, particularly when the debtor is hard to contact on the phone or the agent was not given a contact number. Because of ongoing litigation, however, debt collectors may want to take care when wording their written communications. Agents in Illinois, particularly, need to refer to recent case law before drafting such messages. Legal obligations from the FDCPA The Fair Debt Collection Practices Act was passed in 2006 to regulate all types of communications a collector could have with a consumer, their family members, bosses and other acquaintances. Though most communications between a collector and debtor are done over the phone, the regulations outlined in the FDCPA can also be applied to other mediums. For example, Section 807 regarding false or misleading representations, outlines the various steps agents must take to properly represent themselves as members of the recovery industry. Part 11 of Section 807 holds that whether communication is oral or written, the collection company must be accurately represented and note that whatever information obtained can be used for recovery purposes. Additionally, Part 2 of Section 809 dealing with the validation of debts indicates the name of the creditor must be clearly expressed. Walls v. United Collection Bureau, Inc. Part 2 of Section 809 came under fire in the recent Walls v. United Collection Bureau case on the docket of the district court of Illinois. UCB was requesting the case be dismissed before it went to trial. Joshua Walls had received a letter indicating he owed a debt, however, he claimed the name of the collection agency was not indicated on the communication. According to the court's written opinion, Walls could not identify to which company he owed money - Resurgent Capital Services was called the "client," LVNV was referred to as the "current owner," and Credit One Bank was identified as the "original merchant" and "original creditor." Despite claims by UCB that the letter is clear, Judge John Grady found in favor of the individual because of the ambiguous language, and the case was not dismissed. The next status hearing regarding Walls' claims is set to take place May 30. Implications Though no final decisions have been made, in order to avoid lawsuits, collection agencies may want to take this ongoing trial as an example of what not to do in the future. InsideARM reported agents need to be explicit in their definitions, but also concise, so as not to confuse any individual. Businesses in the industry should make sure to properly identify each party specified in any communication to a person who owes a debt.