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Debt Collection | Debt Collectors
Debt Collectors
When a Debt Collector is pursuing you, it can be a very scary experience. Debt Collectors are normally used by Creditors in order to get them to ask you to pay off debts owed. What a lot of people don't know and it might ease your mind to hear that Debt Collectors are NOT court officials and should not be confused with Bailiffs as they do not have the same powers. They do not have a right to enter your home or seize your goods.
The Office of Fair Trading has released a guideline for Debt Collection Agencies. Creditors and Debt Collectors must follow this guidance. You can view the OFT guidance for Debt Collection Agencies leaflet here to see how debt collectors should behave legally.
We have also outlined some relative points for a debt collector from the leaflet below.
UNFAIR BUSINESS PRACTICES
Communication
2.1 It is unfair to communicate, in whatever form, with consumers in an unclear, inaccurate
or misleading manner.
2.2 Examples of unfair practices are as follows:
a. use of official looking documents intended or likely to mislead
debtors as to their status, e.g. documents made to resemble court
claims.
b. leaving out or presenting information in such a way that it
creates a false or misleading impression or exploits debtors' lack of
knowledge
c. those contacting debtors not making clear who they are, who they work for,
what their role is, what the purpose of the contact is
d. unnecessary and unhelpful use of legal and technical language,
e.g. use of Latin phrases
e. failing to provide debtors or creditors with information on status of debts, e.g.
not providing requested balance statements when reasonably requested
f. contacting debtors at unreasonable times
g. ignoring or disregarding debtors' legitimate wishes in respect of when and
where to contact them, e.g. shift workers who ask not to be telephoned
during certain times of the day
h. asking or instructing debtors to make contact on premium rate
telephone numbers
4 Debt collection guidance July 2003
False representation of authority and/or legal position
2.3 Those contacting debtors must not be deceitful by misrepresenting their authority
and/or the correct legal position.
2.4 Examples of unfair practices are as follows:
a. falsely implying or claiming authority, e.g. claiming to work on
instructions from the courts, claiming to be bailiffs or, in
Scotland, sheriff officers or messenger-at-arms.
b. falsely implying or stating that action can or will be taken when it legally
cannot, e.g. referring to bankruptcy or sequestration proceedings when the
balance is too low to qualify for such proceedings or claiming a right of entry
when no court order to this effect has been granted.
c. misrepresenting status or backing, such as
· using a logo which falsely implies government backing
· using a business name which implies public body status, or
· falsely claiming trade body membership.
d. falsely implying or stating that action has been taken when it has not, e.g. that
civil action has been taken or that a court judgment has already been obtained.
e. falsely implying or stating that failure to pay a debt is a criminal offence or that
criminal proceedings will be brought.
f. pursuing third parties for payment when they are not liable.
g. taking or threatening to take court action in the wrong jurisdiction, e.g. taking
action against a Scottish debtor in an English court unless legally justified.
Office of Fair Trading 5
Physical/psychological harassment
2.5 Putting pressure on debtors or third parties is considered to be oppressive.
2.6 Examples of unfair practices are as follows:
a. contacting debtors at unreasonable times and at unreasonable intervals
b. pressurising debtors to sell property, to raise funds by further
borrowing or to extend their borrowing
c. using more than one debt collection business at the same time
resulting in repetitive and/or frequent contact by different parties
d. not ensuring that an adequate history of the debt is passed on as appropriate
resulting in repetitive and/or frequent contact by different parties
e. not informing the debtor when their case has been passed on to a different
debt collector
f. pressurising debtors to pay in full, in unreasonably large instalments, or to
increase payments when they are unable to do so
g. making threatening statements or gestures or taking actions which
suggest harm to debtors
h. ignoring and/or disregarding claims that debts have been settled or are
disputed and continuing to make unjustified demands for payment
i. disclosing or threatening to disclose debt details to third parties unless
legally entitled to do so
j. acting in a way likely to be publicly embarrassing to the debtor either
deliberately or through lack of care, e.g. by not putting correspondence in a
sealed envelope and putting it through a letterbox, thereby running the risk that
it could be read by third parties.
6 Debt collection guidance July 2003
Deceptive and/or unfair methods
2.7 Dealings with debtors are not to be deceitful and/or unfair.
2.8 Examples of unfair practices are as follows:
a. sending demands for payment to an individual when it is uncertain that they
are the debtor in question, e.g. threatening debt recovery action to 'the
occupier' or sending a payment demand to all people sharing the same
name/date of birth as a debtor in the hope that contact with the correct debtor
will be made.
b. disclosing debt details to an individual when it is uncertain that they are the
debtor in question, e.g. disclosing details to 'the occupier' of an address.
c. refusing to deal with appointed or authorised third parties, such
as Citizens Advice Bureaux, independent advice centres or money
advisers
d. contacting debtors directly and bypassing their appointed representatives
e. operating a policy, without reason, of refusing to negotiate with debt
management companies
f. passing on debtor details to debt management companies without the debtors'
informed prior consent
g. failing to refer on to the creditor reasonable offers to pay by instalments
h. not passing on payments received within a reasonable time resulting in delays
that adversely affect a debtor's financial position.
i. failing to investigate and/or provide details as appropriate, when a debt is
queried or disputed, possibly resulting in debtors being wrongly pursued
j. requiring an individual to supply information to prove they are not the debtor
in question, e.g. driving licences, passports, full name, date of birth, signatures
k. not ceasing collection activity whilst investigating a reasonably queried or
disputed debt.
Office of Fair Trading 7
Charging for debt collection
2.9 Charges should not be levied unfairly.
2.10 Examples of unfair practices are as follows:
a. claiming collection costs from a debtor in the absence of express contractual or
other legal provision
b. misleading debtors into believing they are legally liable to pay collection
charges when this is not the case, e.g. when there is no contractual
provision
c. not giving an indication in credit agreements of the amount of any charges
payable on default
d. applying unreasonable charges, e.g. charges not based on actual and
necessary costs
e. applying charges which are disproportionate to the main debt.
8 Debt collection guidance July 2003
Debt collection visits
2.11 Those visiting debtors must not act in an unclear or threatening manner.
2.12 Examples of unfair practices are:
a. not making the purpose of any proposed visit clear, e.g. merely
stating that collectors or field agents will call is not sufficient
b. visiting a debtor when it is known they are vulnerable, e.g. when a
doctor's certificate has been provided stating that the debtor is ill
c. continuing with a visit when it becomes apparent that the debtor is distressed
or otherwise vulnerable, e.g. it becomes apparent that the debtor has mental
health problems
d. entering a property uninvited
e. not leaving a property when asked to
f. visiting or threatening to visit debtors without prior agreement when the
debt is deadlocked or disputed
g. not giving adequate notice of the time and date of a visit
h. visiting debtors, unless requested, at inappropriate locations such as work or
hospital.