If a customer owes your local business money, it's hard not to feel angry, like you want to do anything possible to get your money back. But the days of going all out to collect on a debt over.
The Fair Debt Collection Practices Act, designed to protect consumers from harassment or intimidation, sets firm limits on what you can do to collect a debt from a consumer. The federal debt collections law even prohibits practices that were once standard, and that you might not consider harassment at all.
Besides, as a local business, you have an even more powerful reason to be especially careful about legal debt collection issues. You have something much more valuable at stake than a lawsuit: your business's reputation in the community.
Legal Debt Collection Best Practices:
There are plenty of articles on the web that lay out in plain English what the Fair Debt Collections Practices Act says you can and cannot do. Just to give you some idea of the law's requirements, here are some of the biggest:
- No telling any third party about the debt (except collection bureaus, collection agencies, or the debtor's attorney).
- No calling on the telephone 9 pm - 8 am, or calling repeatedly in a way that is annoying.
- No postcards or envelopes that mention the debt.
- No threats to take actions you cannot or will not really take, such as seizing property, in the case of an unsecured debt.
- No misrepresenting yourself (e.g., "Hi! This is the Publisher's Clearinghouse Sweepstakes. May I speak to John?").
- No paying down the debt with payments the customer has directed be applied to other debts
Tips and Tricks for Legal Debt Collections:
With all these limits on what you can do to collect a debt, what can you do legally?
- Speak with the debtor personally on the telephone