When someone owes your small business money, you certainly feel
like a victim. But did you know that if you aren’t careful, you
could break the law by trying to get the money back?
How to Break a Federal Debt Collection Law
You have a small business, and your bills are coming due soon.
You could easily pay those bills if a few thousands dollars of
overdue invoices were paid. It’s time to give your clients a
few friendly reminders
1. You call up the biggest debtor at his home number. The
debtor’s girlfriend answers and you leave the message that you
were just calling to remind her husband about the invoice you
had sent last month.
2. You get into an argument over the phone with the next
debtor. In the heat of the moment, you say you’re referring the
debt to you attorney-when in reality, you know you can’t afford
to do that.
3. It’s getting late-in fact, it’s already after 9pm. But you
know that debtor number 3 tends to stay up quite late, so it’s
practically midday for him. So, you cheerfully give him a call
and remind him about the invoice of a couple of months ago.
Congratulations, you may have just broken a federal law three
separate times. Plus, you could be sued for it.
Collections Laws Finer Points
Have you figured out what collections law you broke yet? It’s
the Fair Debt Collections Practice Act (FDCPA), the federal law
for collections. Meant to protect consumers from harassment, it
has a clear list of things you can’t do. Let’s look at what you
did wrong in the last example:
1. Never tell someone other than the debtor that you are
calling about a bill. You can, of course, leave a message that
you called. You can even call someone simply to find out if
they know if a hard-to-reach debtor has moved house. But you
cannot under any circumstances let on that they owe money.
Simply leave your name and phone number as with any other “call
me back” telephone message.
2. Never claim to be involving an attorney when you are not. Of
course, this might seem like a soft area of the law, since
intentions are fuzzy. But, for instance, if it’s clear that
suing to recover the debt would cost as much as the debt
itself, your bluff will be obvious in retrospect. To be on the
safe side, don’t ever claim to have involved your lawyer.
3. Never call before 8 am or after 9 pm, unless you have the
explicit permission of the debtor. But unless that permission
is in writing, you’re safer not calling during those hours,
Unfortunately, not every aspect of the law is as
straightforward as this case. For instance, the law is only
supposed to apply to consumer collections, not business
collections. But with home business and telecommuting blurring
the line between work and home, you’re better off following the
law’s dictates in every case.
Plus, the law has numerous other protections for debtors-or
traps for collectors, depending on your point of view.
Feeling daunted? Before you give up on ever seeing your money
again, consider outsourcing your over-aged accounts receivables
to a professional collections service. After all, there’s no law
saying you should let customers rob you.
Please note this article is not intended to give legal advice
and may not be complete or up to date with the most current
collection laws changes.