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Common debt collection law violations

Nov 06, 2014 Philip Burgess

Common debt collection law violations

Everyone makes mistakes - we're all only human. This is true no matter what industry is concerned, and the debt recovery sector is no different. This may be part of the reason why agents in the field get a bad rap - when they make even the simplest of errors, consumers can complain to oversight committees and news is made.

That being said, that's not necessarily a bad thing - individuals expect high-quality services and interactions, and debt collectors strive to provide these standards.

As such, those in the industry might want to pay attention to the latest report from the reigning regulatory group, the Consumer Financial Protection Bureau. The organization recently released the newest iteration of its Supervisory Highlights report, which takes note of some of the most common violations to the sector's laws. Only by recognizing the usual errors can professionals in this realm work to combat them.

Making threats

According to Part 5 of Section 807 regarding false or misleading representations, it's against the law for debt collection agents to threaten to take legal action if they cannot do so or if they have no intention to follow through. The CFPB found that this was a common error made by recovery workers. As the report explained, in at least one review by the group, it was noted that one particular debt firm made legal threats to debtors regularly, although it had no grounds to do so.

Sub-par training materials
While this isn't a debtor-facing error, which make up the majority of complaints levied at the CFPB, the group found that a number of recovery firms aren't using worthy training materials during the onboarding process. When professionals aren't trained on the correct laws to follow - from the FDCPA to local requirements - this paves the way for violations. Company leaders need to take special care to constantly review and update training resources regularly.

Not checking state laws
While recovery agents definitely need to abide by national, state and local laws that apply to them and the corporation they represent, they also have to verify laws that they must follow when dealing with debtors from particular states. The CFPB report found, for instance, that a number of firms unlawfully required fees from a number of overdue account holders when they paid their late fees with debit or credit cards. The issue here is that some of these individuals lived in states that prohibit convenience charges on these types of accounts, meaning the collection agency was at fault.