You cannot attend a gathering of consumer finance lenders these days without hearing about the trials and tribulations of “in-person debt collection by first-party debt collectors.” This method of collection refers to the visiting at the customer's home or place of work by an employee of the creditor, in an attempt to collect the creditor's debt. This practice, which is probably as old as debt collection itself, has come under strict scrutiny by the CFPB, the FTC and consumer advocates everywhere.
Recall that limitations on dunning and acquiring location information are set forth in the Fair Debt Collection Practices Act (FDCPA) and in some state laws and regulations. Of course, the FDCPA doesn't apply to first-parties collecting their own indebtedness. So, what's all the fuss about?
The answer is that the CFPB is using its broad powers to prohibit unfair, deceptive or abusive acts or practices (UDAAP), to attack the actions of first-party creditors who conduct their debt collection activities in a manner that would be a violation of the FDCPA if such first-parties were third-party debt collectors. In other words, the standards applicable to third-party debt collectors' in-person debt collection practices under the FDCPA, are being applied to first-parties under the CFPB's UDAAP authority.
While many FDCPA limitations have now become a problem for first-party creditors, it is the in-person limitations of the FDCPA that have drawn the most attention from the government agencies, including the Compliance Bulletin released by the CFPB last December. So, here are some specific “do not do's” in connection with in-person debt collection:
Do not identify yourself to the debtor's family member, employer, friend or neighbor in seeking location information about the debtor unless specifically asked, and then only respond with your name and that of your employer.
Do not discuss your debtor's indebtedness with anyone other than the debtor or someone the debtor has specifically authorized you, in writing, to talk to.
Do not go to the debtor's home or place of employment if you have been told by the debtor not to, or you otherwise know that the debtor does not want you to do so.
Do not threaten such an in-person visit if the debtor does not return your call, or perform as promised.
And, of course, do not ever bully, verbally abuse or physically threaten or abuse your debtor.
Our position remains that even though original creditors are almost always exempt from the FDCPA, such creditors should nevertheless voluntarily observe the standards with respect to acquiring location information of FDCPA Section 804, and communications with the debtor and others of Section 805. Further, creditors are well advised to follow the FDCPA prohibitions against harassment or abuse of Section 806, the making of false or misleading representations of Section 807, and the furnishing deceptive forms of Section 812.