Does the FDCPA Apply to Creditors?

Does the FDCPA apply to creditors?

A recent court decision caught my attention last week. It was through the U.S. Court of Appeals for the 11th circuit, where the plaintiff claimed that Citigroup violated the Fair Debt Collection Practices Act (FDCPA) by harassing him while trying to collect a debt.

The lower court and the appellate court rejected the claim confirming that the FDCPA applies only to third party collectors, not creditors that collect on their own receivables. It is well known in the collection industry that the FDCPA only applies to third party collectors, however, the consumer’s perception is that anyone collecting money from them has to abide by some rules. This is true in some aspects;  however creditors are free to be more aggressive in their internal collection efforts. There is no limit to the amount of contacts or number of attempts a creditor is allowed to make with it’s customers. There are still expectations that a creditor will use reasonable tactics and techniques to collect on their receivables.

Recently the Minnesota Attorney General stepped in and told a creditor (Fairview Hospital), that they could not continue with their aggressive collection tactics when they were attempting to collect right in the emergency room from patients receiving care. The Attorney General blamed Accreditive Health for training their personnel techniques that would increase their immediate collection efforts but infringe on the consumers rights for healthcare. Because of this training, and the actions taken by Fairview Health in their collection efforts, Accreditive Health is not allowed to do business in Minnesota for several years. Accreditive Health only did the training and never did the actual customer interaction and they still got punished by the Minnesota Attorney General. http://www.ag.state.mn.us/Consumer/PressRelease/07312012AccretiveCeaseOperations.asp 

So I guess the point here is that every creditor out there is still under scrutiny for the techniques and tactics they use to collect their money.

On top of this, there is a new sheriff in town, and it’s called the Consumer Financial Protection Bureau (CFPB). The CFPB is overseeing complaints by consumers in regards to student loans, checking accounts, credit cards, mortgages,  savings accounts, credit reporting, bank services, and other consumer loans. Over the next several years we may see this expanded to include hospitals and medical practices. In 2013, they will begin overseeing complaints about collection agencies. It is my understanding that they will be working with other government agencies on handling these complaints, and tracking them to better understand the reason behind the complaints. The arm of the CFPB will become broader as time goes on. I see some more regulation and oversight on the tactics creditors use to collect their money. Now is a good time to put into place some internal policies that will be used in your collection practices along with a way to manage and track any complaints you may see.

Because of these changes in the regulatory agencies, I believe every creditor should reevaluate their internal operations and look for ways to train your staff in what to do and what NOT to do. PRP is dedicated to helping you direct your staff in the right direction and to assist in educating them to Collect the Debt & Keep the Customer. You can download “PRP’s Secrets” relating to the Psychology of Collections that will help your staff deal with the collections in a professional and curteous customer service approach. I also recommend that you review the FDCPA to get an idea of what is right and what is wrong while your staff is collecting. We train our staff to abide by the letter of the law when it comes to the FDCPA. We also train our staff to abide by the spirit of the law and to be customer service orientated. If you follow this advice, you will reduce or completely eliminate any complaints.

For a copy of the Fair Debt Collection Practices Act you can go to the link below: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf

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