Avoid FDCPA Violations

The only fish that gets caught is the one who goes for the bait.

By Michelle Dunn  

There has been a lot of talk lately by collectors and by debtors on ways to “set up” a collector for a FDCPA violation in order to avoid paying a debt.  It is my opinion that a collector won’t be set up for a violation if they follow the FDCPA.  The only way to have a debtor complain about a FDCPA violation is if you are not familiar with the laws and what you can or cannot do.  If you are not familiar with the FDCPA you have no business calling a debtor and trying to collect in the first place. A debtor cannot “set you up” for any violation, you set yourself up by not educating yourself on the laws you must follow.  If the debtor knows the law better than you do, you need to hang up and learn the laws before trying to collect.  

Education is a huge factor in the debt and credit industry, there is so much to know and you have to be educated in order to be prepared or ready for every situation.  If you don’t feel confident that you can have an answer ready for anything a debtor may say to you when you make a collection call, you need to educate yourself more until you do feel confident.  This is not only to protect yourself and the debtor but the company you work for.  

There are not any warning signs that you are being set up by a debtor, if a debtor is asking you questions about the debt then that means the debtor knows his or her rights under the FDCPA and if you violate those rights you are setting yourself or your business up for suit.  

For example some things a debtor may say to try and throw you off guard are:  

“It is illegal to call me at work, haven’t you heard of the FDCPA?”

“That was a medical bill so it can’t be reported to the credit bureaus.”

“Are you going to sue me?”

“Are you an attorney?”

“What’s going to happen if I don’t pay this?”

“I have no idea what this bill is.”

“I will pay in full only if you show me a signature on a bill.”

“That is my husbands’ bill and he isn’t working, so I guess you don’t get paid.”

“That is my wife’s bill and this isn’t a community property state, so I am not paying.”  

As a collector you know that these are stall tactics a debtor might use to try to get out of paying a debt that they legally owe.  You also know how to respond to each of these statements if you are familiar with the FDCPA and if you have some experience making collection calls and/or dealing with debtors. In some cases if you give a debtor any chance or reason they will take that opportunity to sue you and try not to pay their legal obligation. Some debtors just flat out refuse to pay their debts and do not care what the consequences are.  If you know the laws in your state and the FDCPA you will be able to respond to these statements and continue to try and collect. The debtor says these things hoping it will be enough to make you go away and allow them to get out of paying a bill they legally owe.  

You can avoid this by knowing the FDCPA inside and out and being prepared for anything a debtor says to you.  If you know the FDCPA as well as the debtor you will be able to respond while following the law and therefore not giving the debtor anything to sue you for. I have run across many debtors who think they know the FDCPA and will try to sue you for things that are not violations, which sometimes results in no payment.  This is just a long and expensive stall tactic.  Don’t be misled by someone who doesn’t have a clue or is ignorant of the law.   

Some collectors will cease trying to collect on an account if the debtor cites a FDCPA violation even if there is no basis.  They feel that this is not worth the time and effort to continue to try and collect from this debtor.  Some agencies will pass the account over to a lawyer or paralegal when a debtor starts claiming a violation. It is your job to be prepared and educated not the debtors.  

All collectors need to continuously stay updated on the laws and training available to them.  There is much more training available now than when I started my agency.  Collectors should join associations and network with other collectors, attend conferences, read trade journals and books and if you are not sure about something, ask someone.   

The most frequent and common complaints presented to the FTC against collectors according to the May issue of Collections & Credit risk in 2006 were:  

• Demanding a larger payment than allowed by law, 40.3% compared with 42.7 in 2005

• Harassing a debtor, 21.2% of all 2006 complaints.

• Threatening dire consequences for a failure to pay, 8.4% compared to 9.6% in 2005

• Calling a place of employment, 5.85%, down from 6.3% in 2005

• Revealing a debt to a third party, 4.3% down from 4.5% in 2005

• Failing to send the required notice of a debt, 3.9%, up from 4.7% in 2005

• Failing to verify a disputed debt, 2.5% unchanged from 2005

The FTC received 69,204 complaints last year that were related to the FDCPA, 3.8% more than the 66,672 received in 2005, according to the commission’s annual report to Congress on the act. There were 58,587 complaints in 2004 and 34,543 in 2003 according to ACA International.  

Make it your agencies goal to educate your collectors and lower that number for 2007.  If we all work together we can help to educate debtors, creditors and collectors all while lowering the number of complaints and violations in this industry. There are so many more tools available now to educate yourself or your collectors that there shouldn’t be any reason why we can’t lower this number.  I was a bill collector for 18 years and one of my favorite parts of the job was making collection calls.  The more you make the calls the better you will become at it.  Advising debtors of what you will or won’t do, within your legal capacity becomes second nature; you are ready for any excuse.  When you pick up the phone to make a collection call, you know that you are calling because you need to get paid.  You know what you have to do to get paid, then the debtor gives you a reason why the debt hasn’t been paid or why they can’t pay it.  REMEMER, you called to get paid, so no matter what the debtor says, you have to have a plan to get some money. As long as you stay focused, cool, calm and collected, you CAN accomplish this and hang up feeling like you have accomplished your goal. Remember that your best debt collection tool is follow up, so even if you get a payment promise on the phone – you must follow up or you will not get paid and be calling that debtor again.  

Michelle Dunn, author of an award winning book has spent the last 19 years stepping into dangerous debt collection potholes.  She shares her hard-won expertise on debt collection with the titles in her “Collecting Money Series.” She is the founder and president of Never Dunn Publishing, LLC and her 10 year old Credit & Collections Association with thousands of members. Michelle started and ran her own collection agency for 8 years.  

Michelle was named one of the Top 5 Women in Collections as well as one of Collection Advisor’s Top 50 Collection Professionals for 2007. Michelle has also been nominated for a New Hampshire Business Review 2007 Business Excellence Award. Michelle is a regular contributor to the Wall Street Journal and has been featured in Forbes.com,  Smart Money Magazine, Entrepreneur magazine, Professional Collector, Credit & Collections Risk, the NH Business Review, and in many books and newspapers worldwide. Michelle has been a featured guest on (NPR) National Public Radio, she has been a repeat guest on television shows such as the CBS Early Show, The Book Authority and Process for Profit.  She has many published articles and 7 published books to add to her list of accomplishments.  Entrepreneur Press has released “The Ultimate Credit & Collections Handbook, the check IS in the mail” penned by Dunn in 2006.  

In addition to writing and marketing her books, Michelle was a member of The American Collectors Association for 9 years and shares valuable credit & debt information with business owners on her blog at www.BizCreditPolicy.com.  Visit www.michelledunn.com and www.credit-and-collections.com for more information.