The debt collection industry has had an indifferent past with many cases of debt recovery leading to verbal or physical abuse and prolonged court cases. With the passing of Fair Debt Collection Practices Act in U.S., debt recovery agents have to follow ethical procedures while reclaiming debts and treat the debtors in a fair manner. Using intimidation or bullying tactics or subjecting the debtor to any form of harassment is illegal. It forbids certain types of misconduct by debt recovery agents as described below.
The recovery agent may make false statements and deceive the debtors that are likely to force them to pay up or disclose information which they are not required to by law. With long experience behind them, the recovery agents may try to verbally scare innocent debtors into submission. Some possible deceiving actions by debt recovery agents are:
- Manipulate the contract or written document
- Intimidate the debtor that he or she would be detained by the police
- Modify the amount of debt
- Accusing the debtor wrongly of having indulged in criminal activity
- Behave as if they are from the legal fraternity or are from government prosecuting agencies
- Indicate falsely that legal notices have been sent or are on the way
Charging extra amount in addition to the actual debt is a common unfair practice followed by the collectors. They may demand payment for telephone and other communication charges that are not legally permitted. There have been instances of other illegal coercive methods employed by debt recovery agents.
Subjecting the debtors to psychological pressure through harassment is the most terrible form of ill-treatment they can undergo as it can affect the emotion or mental make up of the persons in a grave manner. Some of the ways the debtor can be subjected to mental agony are:
- Verbal abuse through use of foul language
- Embarrassing the debtors in public by issuing statements through newspapers or other media
- Use of bullying tactics that may lead to physical injury
The company employing a debt recovery agency should take care that the latter does not resort to any of the above mentioned means which are prohibited by law in order to avoid landing themselves in legal trouble as accomplices. There has been cases where a company who hired a collection agency that went to far, and also was included in the litigation that resulted from the collection agency's abuses.
