Consumers complain about debt collection efforts, even when you’ve done everything right.
A report from the U.S. Consumer Financial Protection Bureau claims 200,000 consumer complaints were filed with the agency since the middle of last year. But the Association of Credit and Collection Professionals says complaints are so subjective, they don’t necessarily indicate wrongdoing by debt collectors.
In a phone conversation with Small Business Trends, Mark Schiffman, a spokesman for the trade organization, explains:
“If you’re talking about a small business that’s trying to collect a debt,you could easily get a complaint without having done anything wrong.”
Schiffman says the Fair Debt Collection Practices Act, which the CFPB enforces, does not apply to small businesses. The law currently applies only to “third person” debt collectors. Those are agencies that collect debt for others, including, potentially, small business clients.
But that’s no reason to celebrate, Schiffman says. Small businesses are governed by a bewildering assortment of state and local laws on debt collection.
He says these laws vary greatly in everything from the permissible ways to collect a debt to the amount of time a creditor has to collect.
“What we would like to see is some kind of federal standard. Consumers would know what the rules are. Debt collectors would know what the rules are. Small businesses would know what the rules are.”
In a response to the CFPB report, the Association of Credit and Collection Professionals spells out some of the issues with these complaints.
Complaints from Consumers
In an official statement, the trade association explains:
“While a consumer may not like something (such as being contacted about a debt or receiving multiple calls) it does not mean that the collector actually did anything wrong. Neither the CFPB nor the FTC investigates these complaints as to whether a complaint actually violates the law. Painting the collection of consumer debts with a broad brush and then alluding it ties to bad behavior paints an inaccurate picture of an extremely necessary, yet sometimes uncomfortable, activity.”
Another issue raised is complaints over consumers being contacted about debts not owed. The association points out a contributing factor is the fact that consumers often will not speak to debt collectors. So they won’t have a conversation long enough to straighten out misunderstandings.
Finally, the association says debt collectors face a catch-22 when consumers complain they call too often. Debt collection companies must adhere to federal rules. Those rules require them not to disclose a debt to anyone but the person from whom they are trying to collect. This makes leaving voice mail tricky and requires more calling.
Tips for Small Businesses
So, what can small businesses do to make sure they steer clear of trouble when trying to collect a payment from a customer?
First, Schiffman recommends you learn everything you can about the rules in your state or city. Then, if you do business with someone in another city or state, you may also want to study up on debt collection practices there, too. This will prevent you from unknowingly violating the rules of another community.
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