Common Mistakes in Online Collections

Collections Training Resource
October 9, 2012 — 1,200 views  
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Common Mistakes in Online Collections

When it comes to debt services, online collections are both a blessing and a curse. For those who know how to take advantage of online collections, they make things far more convenient and reduce overhead. Collectors and credit professionals who don't adhere to the rules, however, soon find themselves in hot water. Here are some of the top mistakes you need to avoid when you're using online collection services or conducting your own recovery efforts using the Internet.

Legal Background

The Fair Debt Collections Act, also known as the Fair Debt Collection Practices Act or FDCPA, was a 1978 statue added as part of the Consumer Credit Protection Act. Although it's fairly broad in scope, it essentially promotes fair collection practices designed to get rid of abusive methods and threats. It also gives consumers multiple means of disputing their debt, or failing that, of getting their hands on debt validity information.

The FDCPA prohibits things like misrepresentation and harassment. It also prohibits collectors from discussing information with third parties, directly contacting people known to have attorney representation or threatening legal actions that don't actually fall under their legal rights.

Online Collection

People who collect online often use tools like email to get in touch with their consumers. They also use social networks and credit reports to trace skips and accept payments over the Internet.

The big issue here is that the FDCPA was written well before many of these technologies had even been conceptualized. That means that debt collectors who use social networks, for instance, to find people's home addresses may be committing illegal actions. Although most publicly posted information is usually fair game, creditors have to be careful not to cross the line over to harassment or stalking.

The same goes for sending instant messages and emails. Countless collectors have wound up fined or in jail because they sent excessive numbers of emails. For some reason, they think that the lack of a paper trail gives them some kind of legal indemnity, but they couldn't be more wrong. Email records are as good as any other evidence in a court of law and most communication companies save phone texts and instant messages.

When trying to complete a collection action online, collectors need to respect the same laws they would with printed communication. If they receive a digital request for dispute mediation, they have to honor it. Creditors must respect the 30 day grace period for proof of payment during which they cannot email or call consumers. Just because there are legal gray areas doesn't mean collectors shouldn't play things safe.


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