Every business that extends credit, at one time or another, is going to run into a situation in which it needs to collect money from clients. When this happens, businesses can either try and collect the money they are owed on their own, or they can hire a debt collection agency to do it for them. Either way, it’s important to be respectful of clients and in compliance with debt collection laws at all times. While debt collection agencies, especially, have to be in compliance with these laws, businesses should also practice them to avoid ruining their reputations and client relations.
Who Makes the Rules?
The rules that govern how debt collectors may act were established by the Fair Debt Collection Practices Act, which has been in effect since 1978. The law was designed to protect consumers from abuse, deception, and other unfair acts in debt collection. These rules apply to all consumer debt collections.
The Basic Rules
While there are many federal rules in place as to how debt collectors must act and what they cannot do- rules which all debt collectors should know and follow- the basic rules are these:
l Debt collectors must validate the debt, or, in other words, provide proof to the consumer that the debt exists and is owed
l Debt collectors must not harass or abuse consumers in any way
l Debt collectors must not provide any false information
l Debt collectors must properly and accurately identify themselves and the reason for their communication with the consumer
l Debt collectors must call consumers at reasonable times
If these rules and laws are not followed, a consumer could potentially sue a debt collector, leading to trouble and a damaged reputation for the business and furthering its problem with debts. As such, it is important that your business and anyone it hires acts, at all times, in accordance with the law as it relates to debt collection.