Because I’ve written a few consumer awareness articles, I
occasionally get inquiries from consumers – sometimes it’s telling the consumer
that yes the debt is legitimate, and they should make arrangements with the
agency and creditor. Sometimes, it’s
consumers who have been the victim of horrible collection practices. I received this email from a woman in Ontario yesterday, and it pretty
much sums up everything wrong with our industry.
My husband has a credit card debt from 7-8
years ago and today a collection agency called but my husband was not home.
They proceeded to tell my all about this debt and that if he goes and applies
for a loan from Citi Financial and not a bank that they would cut the debt in
half and remove it from the credit bureau history so he can get approved for
the loan to pay this debt. They also told me that if he does not get the loan
to pay it that they will take him to court and have his wages garnished to the
point of taking 3/4 of his pay cheques every 2 weeks and that he would also be
responsible for all court costs up to a sum of around $15,000.00. The credit
card debt is classified as a R9 in the credit bureau. Is this legal?
This pretty much sums up why our industry has a
bad reputation -- there are so many things wrong here I can’t begin to express
my frustration. For those of us trying
to run an ethical business, and that’s most of us in the collection industry,
this kind of behavior hurts us, not just by deceiving the consumer, but by
creating the impression to businesses that collection agents can and will say
anything to collect the money. The
collection agent (and likely collection agency) are grossly violating the
Ontario Collection Agencies Act in several ways:
=> The collection agent
should not discuss this debt with the wife unless the debt was in both their
names. If they were not a named party on
the credit card statement, the agent violated the Collection Agencies Act by
disclosing details.
=> If the debt is 7-8
years old, and no payments or written admissions of debt have been made in the
last six years, it isn’t registered on the credit bureau as an R9 or otherwise. The agent’s promise to remove it is pretty
simplistic when it wasn’t there to begin with.
In any case, even if it was on the bureau as an R9, as the collector
mentions, the agency cannot remove a trade line item put there by Citi
Financial – they can only control the data they register, such as a registered
collection item (which is different from an R9 tradeline).
=> Unless there is a
judgment already against this file (which I highly doubt), there is a 2 year
limitation in Ontario for issuing a small claims court action. The husband would have 20 days to file a
defense, and if undefended a default judgment would be awarded. Yes, pre- and post-judgment interest would be
awarded, but only the interest on the contract and the actual costs for the
court action (probably in the neighbourhood of $300-400. Odds are the agent has grossly inflated the
balance.
=> If a garnishment is filed,
they can only take 20% of a person’s salary or wages, not three-quarters. However, if a garnishment is filed against a
contractor or someone on straight commissions, they can seize 100%.
=> Ah, the old ‘go borrow
the money from friends and family’ line for payment in full or a lump sum
settlement. However, what the agent has
said here is pretty strange -- borrow money from Citi and not a bank? That’s confusing. It’s not helping the consumer – why would the
agent suggest this? Obviously the
account should be paid in full, but if arrangements can be made on the balance,
that should be on the table too.
What’s probably happened here, and I can speak
from experience, is Citi Financial has used a series of collection agencies as
the file was 1-3 years old, and afterwards has sold the debt to a debt buyer,
who in turn has hired another collection agency to attempt to collect the debt. Because these accounts are extremely aged,
they are attempting every possible tactic to recover the accounts, including
lying about the consequences and their powers.
There is actually a clause in the Collection Agencies Act that says, and
I quote “may not use threatening, profane, intimidating, or coercive language”,
or “give any person, directly or indirectly, by implication or otherwise, any
false or misleading information”. I’m
pretty sure the collector did all that, in a single call.
I’m going to throw a stone here, and suggest
the agency is probably more at fault than the agent. Again, I speak from experience having worked
with experienced agents over the years – these kind of habits are deliberately
ingrained by the agency, with a boiler-room environment where staff are fired
for not hitting ridiculous targets within 30-60 days of hiring them, or it’s
from negligent behavior because the agency management simply doesn’t care what
the agents have to say to hit their targets.
I’ve worked Citi Financial paper in the past,
and I’ve worked extremely aged paper, and I can tell you this behavior isn’t
necessary. You can responsibly represent
a creditor *and* collect their money *and* not offend, lie, or deceive
consumers *or* your staff.
Until then, here’s my advice to consumers,
collectors, and creditors – stop this crazy nonsense. These tactics were used thirty and forty
years ago when laws were hard to acquire, and consumers couldn’t go on the
internet and put reviews on creditors and collection agencies. We live in a transparent environment now, and
this behavior just hurts us all.
Blair DeMarco-Wettlaufer
KINGSTON Data and Credit
Cambridge, Ontario
226-946-1730
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