Avoid Being Sued For Improper Debt Collection Practices
There are a multitude of laws surrounding the ways in which you can go about collecting a debt. It is best to apply good practices and avoid harassing the debtor. You can consult with a lawyer to make sure you avoid any liability in the debt collection process that could result in fines or lawsuits.
Discussing debts with third parties
The Federal Fair Debt Collection Practices Act, and the Rosenthal Fair Debt Collection Practices Act, prohibit the discussion of a debt with anyone but the debtor and their lawyer. These acts exist to protect debtors from their names being listed on public lists, which would be considered “Public Disclosure of Private Facts” (See California Civil Jury Instruction 1801). The black listing or public humiliation of a debtor can result in a lawsuit against the vendor or whoever is responsible for the list. It is best to avoid mentioning the debt altogether. This can be especially harmful if the information is not accurate, which can be considered defamation.
If someone does not pay you for your services, you are not required to continue providing services. However, you can still be sued for disclosing that they owe you money. It is best to remain discreet about any debt you are owed.
Inappropriate language and phone practices
When discussing a debt, it’s crucial to remain professional. The California and federal debt collection practices rules prohibit any form of abusive language. During collection attempts, it is illegal to call someone names or use racial or sexual slurs, according to the Federal Trade Commission. Telephone calls are acceptable unless they become harassment, at which point they are illegal. Keep your calls within business hours to remain professional.
Service and late fees are regulated in California and, in general, cannot be imposed unless they are disclosed and in advance. The amount that can be collected is regulated, as is the means of collection.
When conducting business with another party, it is best to sign proper agreements in order to avoid issues with debts and the collection of debts. Have your lawyer help you draw up and review contracts to make sure you are protected in business relationships.