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New technology, old rules for debt collectors

Oct 12, 2013 Philip Burgess

The debt collection industry has been a tempestuous environment in recent years, especially as activity has spiked in light of the recession and subsequent recovery, as well as the rapid proliferation of new technology. However, agencies are still blind to the best practices and statutes, as well as established regulations in place such as the Fair Debt Collection Practices Act.

One of the more advanced challenges facing professionals in this sector has been the proper use of technology that was not even dreamed of when long-standing laws were put into action. Text messaging, social media and the Internet at large have had profound effects on the consumer and business landscapes, and debt collectors need to ensure that they understand when to use, or not use, the platforms to communicate with debtors.

FTC's latest decision
Klein Moynihan Turco LLP recently published a statement on the Federal Trade Commission's first decision regarding the use of text messages by a debt collector, which started during a litigation proceeding against the agency. One of the most important considerations to remember when approaching new litigation proceedings regarding technology is that the old rules still apply.

For example, the majority of issues collectors have faced directly relate back to the types of communications that are allowed to be sent, and what constitutes unlawful interactions. According to the organization, the FTC filed the lawsuit because the debt collection firm had sent text messages without indicating that it was in fact an actual agency.

What's more, the source noted that the company did not disclose information to verify the original account, which is also grounds for complaints and subsequent fines. The FDCPA clearly outlines which procedures a debt collector must take when beginning the initial discussion with debtors, including statements that identify the agents and verify the debt.

The source added that the collection agency was forced to settle because it could not defend its actions, and that this led to a loss of $1 million.

Respect the rights
Your Raleigh Frayser recently listed several rights consumers have when it comes to debt collection activity, asserting that agencies must respect these guidelines or run the risk of fines, sanctions, hurt reputations and other issues. According to the source, agencies must not try to contact debtors at work if the individual in question demands to not be reached in that location.

Additionally, debtors can and often will request a formal written statement regarding their outstanding loans or other payments, and can even demand to be taken off of the calling list. If this should happen, the agency will need to cease all telephone communications and only contact the debtor through email.

Finally, harassment and contacting friends, family members or colleagues regarding the debt are strictly prohibited by the FDCPA, the source added, and agencies should ensure that all employees understand this type of behavior and activity will not be tolerated.

By training all employees to become experts in the FDCPA, agencies can minimize the risk of fines, sanctions and other issues.