Let’s Talk Money: A Creditor’s Guide to Effective and Lawful Communciations

Talking about money is complicated. Individual values, expectations and social norms often drive conversations about money. Talking about owing money is even more taboo. It’s one thing to ask your friend to pay you back for the movie ticket you purchased online.  It’s another thing to ask your neighbor to pay back the homeowners’ association for the snow plowing he received all winter.  Why is that?

Communications about Debt is Highly Regulated

The Federal Debt Collection Practices Act, known as the “FDCPA”, at 15 U.S.C. § 1692, is the federal law that governs the actions of collection agencies and law firms in the collection of debts.

These laws were enacted to protect consumers from unfair practices utilized in the collection of debts. The laws prohibit bad acts, like lying, swearing and threatening debtors.  They also strictly govern who creditors can contact, the time of day debtors can be contacted, how many times debtors can be contacted and the content of some communications.  Regulation F, the latest update to the federal law, is so proscriptive in its content and format that creditors are given safe harbor from alleged violations if creditors adopt the exact language and format set forth by the Consumer Financial Protection Bureau.

Communications about Debt is Highly Litigated

According to the American Bankruptcy Institute, more than 40 % of all reported FDCPA violations involve phone calls. Why is that? One reason is that creditors must make certain disclosures at the beginning of a phone call with a debtor.  If the right disclosures are not given when a communication is commenced, the FDCPA has likely been violated.  To address this issue, attorneys have developed a “mini-miranda” warning statement they make at the beginning of each contact to comply with the disclosure requirements under the FDCPA.

Another reason phone calls may result in such a high volume of violations is that verbal communications can be subject to different interpretations based on tone, inflection and use of language. To make a demand for payment, the communication must be definite and authoritative, but not threatening. Creditors must tailor their words and tone during phone calls, so there is gravity to their demand without harassment or intimidation. What someone considers a threat or harassment is a question of fact to be litigated, and there is an entire legal industry suing creditors for alleged FDCPA violations.   A quick review of some local websites reveal how debtors are encouraged to save calls, record calls and take screen shots of incoming call so that the phone communications can be saved for litigation. FDCPA litigation is usually heard in federal court, where cases are lengthy and expensive to litigate, even if no violation is found. If violations are found, debtors may recover actual damages, statutory damages, attorney fees, and costs.

How Attorneys Can Help

At Smith Jadin Johnson, our attorneys know the rules and have developed written communications to obtain results for their clients without exposing them to allegations of FDCPA violations.  We know what to say and when to say it. We do not make unsolicited or “cold calls” to debtors, and we’ve found this shields our communications from being deemed harassing or threatening. We do not make unsolicited email contact with debtors for the same reason. Instead, we effectively utilize written demand letters, mailed to a debtor’s property address, to initiate contact about a debt and start a conversation of repayment. Mailed letters may seem old fashioned in the modern era communications via emails and text messages, but the service rules in both state and federal court still rely on delivery by U.S. Mail. Our mailed communications are tailored to comply with the safe harbor provisions under Regulation F of the FDCPA, that both protect our clients from allegations of unfair collection practices and yield monetary results that bring accounts current. When debtors receive our demand letter and want to talk through repayment options, we have both a designated phone line and email address to start an effective and lawful communication about payment of a debt.

If you want help navigating the complex communications about debt, please contact our office at 1-888-495-9140 to discuss how we can assist you the in effective and lawful debt communications that protect your business from FDCPA claims and gets you paid.