Don’t Get Sued For These Common Debt Collection Mistakes
In the course of running your business, it often happens that someone owes you money. A client or customer doesn’t pay, or you extend a product or service to someone on the promise that you will be paid later. When you aren’t paid, it’s time to collect.
The Law Applies to You
You know that there are federal laws that say how a debt can and cannot be collected. That’s the Fair Debt Collection Practices Act (FDCPA). But in reading, you see that the FDCPA only applies to collection agencies, or third party companies that are collecting on behalf of another company.
Since you’re collecting for yourself, and not suing any other company to collect your debt, you don’t have to follow the FDCPA, or worry about being sued for violating any debt collection laws, right? Yes and no.
The Florida Debt Collection Practices Act
You would be correct that if you are collecting your own debt, for yourself, you do not have to comply with the FDCPA. However, Florida has its own collection law, the Florida Consumer Collection Practices Act (FCCPA). Unlike the federal FDCPA, the FCCPA does apply to anybody, even those that are collecting their own debts.
Some of the restrictions are ones you probably would never violate anyway (hopefully). For example, you can’t impersonate a law enforcement officer, impersonate a lawyer or judge, use profane language, or use paperwork that looks like official legal paperwork (like a lawsuit) when it isn’t.
Lesser Known Violations
But there are other, less obvious and lesser known prohibitions, that can get your business in trouble as well. For example:
- You can’t communicate with a debtor’s employer or the debtor’s friends or family, any information about the debt. This includes mailings—if an envelope discloses something about the debt on the outside, you could get sued.
Disrespecting debtors’ privacy is a surefire way to get your company in legal trouble when collecting debt
- You can’t collect a debt that is not legitimate, or which can’t legally be collected, or assert a right that doesn’t exist. This includes threats of what will happen if the debt isn’t paid—if you threaten to do something you can’t legally do, you can be sued.
You should always investigate debtors’ claims that the debt is invalid. You don’t have to stop collecting just because a debt is disputed, but make sure you aren’t collecting incorrectly (for example, mixing up debtor names, collecting on a paid account, or even on an account so old it can’t legally be collected)
- If a debtor asks, you or your employees must identify who you are and what company the caller is calling from
- You cannot call a debtor to collect after 9pm or before 8am, unless you have the debtors’ permission.
Stay profitable, while staying out of legal trouble. Call the West Palm Beach business litigation lawyers at Pike & Lustig for help today.
Resource:
ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text
