Debt Collection Law Ranks High in Safety and Security

Debt collection law gets a bad rep. Just Google “debt collection,” and you’ll stumble across a thousand stories about crooked collectors, deceptive ruses and stringent regulations to maintain the climate of lending, borrowing and repayment.

If you’ve been following our blog, you likely already know that debt collectors must follow specific federal guidelines to avoid violating consumer rights and maintain their own responsibilities. Well-known laws that we’ve discussed include the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA) and the Gramm-Leach-Bliley Act (GLBA).

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However, what you might not know is that in the entire field of law, the legal debt collection industry is in the top 10 percent for IT security, data security, physical security and third party vendor management.

Because of the nature of the practice, collections tops all other areas of law in disaster preparedness, disaster recovery plans and employee training and conduct.

The industry as a whole is more likely to have superior call recording capabilities that record 100 percent of incoming and outgoing calls, email encryption and email programs that recognize and restrict the sending of a 16-digit sequential number (ie—credit card numbers).

The licensed and recognized creditors bar is the least likely to be hacked among all law firms nationwide, and although there have been attempted website hacks, there are no known data breaches in the entire industry of legal collections.

While the stringent standards placed on collectors are to protect the consumers, they make the practice of debt collection very expensive. Collectors rank high in the areas of safety and security, and that is a positive thing, but they pay handsomely to do so.

The bottom line after paying out for security systems and other third party vendors depends entirely on a collectors’ ability to connect with debtors and work toward a payment plan that benefits both parties.

Despite the horror stories, these statistics shine a positive light on the field of legal debt collection. Collectors are doing their best to ensure a safe and secure relationship with debtors, protect important and private information and collect money in order to regain economic balance in the area of lending.

Collecting Corporate Debts, Part II

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As we discussed last week, collecting the debt of a corporation is significantly different than collecting the debt of an individual. Over the course of this blog, we’ve discussed at length the authority and regulations of the Fair Debt Collection Practices Act (FDCPA), and this might be the most considerable difference between consumer and corporate debt collection.

A lower degree of compliance is required when dealing with corporate debt. The regulations put in place by the FDCPA do not apply to commercial debts, and even the West Virginia Consumer Protection Act excludes commercial transactions.

As a result, collectors are able to pursue commercial clients more persistently, without fear of violating FDCPA standards or even fear of the nuisance lawsuits that are rampant throughout the industry today. Collectors should still use good business sense when pursuing these interests; however, they are allowed more leeway and flexibility in engaging corporations.

Commercial debtors are also typically held to higher standards in court. Contracts are more strictly interpreted and enforced in terms of interest rates, payment due dates, attorney fees, equipment levees, creditor bills, receiverships, liabilities and other clauses. Any of these may be enforceable and valid but are much less likely to be imposed against an individual consumer.

Lawyers often cite the hypothetical least sophisticated consumer standard when representing individual debtors. This standard was created to protect all consumers (no matter their education level or understanding of their debt or contract) by suggesting that even the least sophisticated consumer would have been deceived or misled by the terminology and true meaning of a given contract. However, it is assumed that corporations would be much savvier in understanding the agreement into which they were entering.

What do you think? Should corporations be held to a higher standard of contractual obligation than individual consumers? Tell us your thoughts in our comment section, and check in next week for the final installation of our series on collecting corporate debt.

In the News 03/03/2015

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In Tuesday’s post on Collecting Corporate Debts, we discussed the least sophisticated consumer standard. This week in the news, Attorney John Rossman expands on that concept on insideARM.com. This standard is an established tenet in FDCPA law, as it suggests that all debt collection communication must be approached this way.

However, many practitioners also recognize that the exception to this rule is collection communication with a consumer’s attorney. This has been debated in the past, but recently the 11th Circuit Court of Appeals stated that “statements in a proof of claim filed in a Chapter 13 Bankruptcy are subjected to the least-sophisticated consumer standard” in the Crawford decision.

While the Crawford decision is most widely known for its interpretation of the crossroads between bankruptcy law and the FDCPA, the implications regarding communications between consumers and attorneys are also notable. For more information, visit: http://tinyurl.com/mm6y2r6.

In the News 02/24/2015

DriveTime Automotive Group, Inc. has recently been accused of debt collector harassment and agreed to an $8 million settlement to reconcile charges of violating the Fair Debt Collection Practices Act (FDCPA). The charges brought against the company after an investigation by the Consumer Financial Protection Bureau (CFPB) alleged that they lacked an adequate written policy for their bill collectors, which led to collector harassment, as well as inaccurate reporting of current balance information on accounts, timings of repossessions and dates of first delinquency.

The report issued stated that DriveTime, which has dealerships across the country, had only two employees assigned to handle up to 22,000 disputes each year. Accusations of calling consumers at work and after receiving cease contact requests were also included in the charges.

Read more here: http://www.lawyersandsettlements.com/articles/Bill-Collector-Harassment/debt-collector-lawsuit-bill-19-20461.html#.VOykQvnF__F

8 Ways to Recognize a Debt Collection Scam

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As we’ve discussed in previous posts, government agencies have been created and charged with overseeing and policing debt collection agencies and law firms due to illegal and unethical collection practices.

However, their responsibilities also extend to notorious debt collection scams, which have affected thousands of people and garnered millions of stolen dollars. When someone calls you imitating a collector, they may have already accessed your personal information through identity theft or by obtaining your credit report, but there will still be signs if the caller is a fraud.

Here we’ve listed a few ways to recognize a debt collection scam. Do not provide personal information if any of the following tactics are used:

  1. The caller uses fear or harassment to urge you to pay the debt. Licensed and trained debt collectors know that the use of abusive tactics is illegal and punishable under the Fair Debt Collection Practices Act (FDCPA). If the caller-in-question threatens you with an immediate lawsuit, a call to the police or possible arrest, they are most likely not a legitimate collector.
  1. The caller demands that you pay today or in the very near future, with no offer of a payment plan. Compassionate collection practices suggest that consumers be offered monthly payment plans if they are unable to pay their debt in a lump sum. A caller suggesting that you are required to pay your debt all at once is suspicious.
  1. The same person calls you multiple times or answers the phone every time you call. Most collections agencies have a variety of employees working on each case and a receptionist that transfers incoming calls to the appropriate extension. If you have been interacting with the same person during every phone call (both received and placed by you), ask to speak to someone else. If the caller refuses, you may be speaking with a debt collection scammer.
  1. They offer only one form of payment. Every collections firm and agency is interested primarily in collecting money; thus, they will typically accept a variety of payment options including personal checks, online payment with a debit or credit card, money orders or bank ACH. Scammers often encourage you to pay with a credit or debit card over the phone.
  1. They cannot provide an address. If you are suspicious of the caller, ask them to provide their mailing address for you to send a personal check. If they cannot provide you with basic information like an address or return phone number, hang up.
  1. The caller cannot answer basic questions or refers you to the original creditor with questions. Collections agencies and law firms are equipped with all of the necessary information in order to collect on your debt and are in regular contact with the original creditor. If the caller cannot provide you with basic information about the debt, such as the date of default, principle amount or interest rate or suggests you contact the original creditor with questions, he or she is likely being dishonest.
  1. You’ve never received written communication stating an attempt to collect on the debt. If this phone call is the first time you’ve ever been contacted about your debt, request a validation letter before speaking with the caller.
  1. The caller contacts you at inappropriate times or after you’ve requested collection attempts to stop. FDCPA regulations state specific times that collectors can contact you. If the calls come before 8:00 a.m., after 9:00 p.m. or while you are at work, do not answer. If you have submitted a written notice requesting no further contact about the alleged debt, communication efforts must be terminated immediately. Continued contact is considered abusive and deceptive under the FDCPA.

If you believe you are the victim of an attempted debt collection scam, contact the original creditor or report suspicious or fraudulent activity to the Federal Trade Commission.

Have you ever been the victim of a debt collection scam? Visit our Contact Us page to share your story.

It’s All About that Pace: Efficient Debt Collection Strategy

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In debt collection, as with most things in life, timing is everything.

The longer it takes for your team to act on a case or the longer you give a consumer to pay, the less likely it becomes that you will collect on that debt.

It’s important for you to collect as much on each case as possible for several reasons. Obviously you need to collect to satisfy your clients and show them that your team is skilled and competent, but many clients will send small batches of collections cases in order to assess a firm’s success before sending them more (and often bigger) cases. Your collection fees also pay your employees and keep your business up and running.

Here are a few ways to ensure that your cases are being processed, acted upon and collected on in a timely manner:

  1. Upload and process new cases ASAP. When you receive a new case from a client, upload the necessary information into your database and begin processing the case as soon as possible. Once the information is accessible, other members of your team will be able to do their part, such as making contact with the consumer via a demand letter or filing documents with the court.
  1. Consistently follow up with clients and debtors. This may require hiring additional personnel, but making legal, consistent contact with consumers is the best way to secure payment. Going long periods without making contact with a consumer will reduce the likelihood of receiving payment. Also, keeping your clients updated on their cases is a great way to build relationships and secure more work from them.
  1. Determine if there is intent to pay. If a consumer tells you up front they have no intention of paying their debt or you sense it during your conversations, take advantage of that knowledge and move to legal action in the most expeditious manner allowed.

If you are dealing with a bad debt, or a debt that cannot be recovered, don’t waste time or resources. Focusing on active, collectible cases will provide the most benefit to you and your client.

Top 5 Mistakes Debt Collectors Make

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A successful collections call takes a lot of training and practice.

There are several rules and guidelines collectors are required to follow. Following those guidelines will still not help them predict the circumstances they’ll encounter while making their collections calls. During the course of their calls they will speak to a variety of individuals, ranging from polite to the disgruntled, and hear an assortment of personal stories of challenging financial situations.

Debt collectors sometimes have a bad reputation with the general public, due in large part to unprofessional, unethical practices. The illegal tactics of debt collectors are one of the many reasons why the Fair Debt Collection Practices Act (FDCPA) is so important. Consumers filed 45,050 complaints in the first six months of 2009 to the Federal Trade Commission (up 19 percent from that same period in 2008), making it even more important that collections professionals use ethical and compassionate practices. Here we’ve listed five of the top mistakes collectors make when contacting debtors.

  1. Not disclosing identity. Collectors are required under the FDCPA to identify themselves, notify the consumer that the communication is from a debt collector, give the name and address of the original creditor, notify the consumer of their right to dispute the debt and provide a verification of the debt.
  1. Failure to cease communication upon request. If a consumer submits a written notice that they wish to receive no further contact about the alleged debt, communication efforts must be terminated immediately. Continuing to contact a consumer is considered “abusive and deceptive” under the FDCPA. Collectors should also cease contact with a consumer who is represented by an attorney.
  1. Failing to Mirandize. The FDCPA requires that debt collection calls include a mini Miranda statement, which lets the debtor know that any communication (written or verbal) is at attempt to collect a debt and any information obtained during the communication will be used for that purpose.
  1. Misrepresentation, deceit or harassment. Pretending to be law enforcement or an attorney, bullying or threatening and using profanities are all prohibited under the FDCPA. While it is not necessarily considered harassment, compassionate collections practices teach collectors to avoid a bad attitude. Losing your temper (even if the debtor yells, curses or threatens the collector), being impatient and getting caught up in a consumer’s personal stories are all ways to derail a collections call.
  1. Revealing information to a third party. Part of a collections call script should be confirmation that you are speaking to the correct person. Identify the consumer by asking for their social security number, address and phone number. Discussing a debt with someone other than a debtor’s attorney or spouse is prohibited.

At Atkins & Ogle Law Offices, LC, we thoroughly train our collectors in collection law, compassionate collection and professionalism. Experience and hard work are a hallmark to our success and make our firm the most time-tested and progressive debt collection law firm in the state of West Virginia. We are guided by our values of service, honesty, integrity and proficiency. While we work to serve our clients with compassion, we also extend those sentiments to debtors.