Collection Agencies by their very definition exist to collect monies owed by slow or nonpaying debtors. But what happens when a collection agency is calling for a debt you never incurred, a debt you have paid off, or a debt that was included in a Bankruptcy or Consumer Proposal? Even worse, they have placed the collection item on your credit report and you were denied financing of some sort as a result.
Often agencies are flippant, non-responsive, and antagonistic. They often take an offensive and rude tone. It’s how they get results. However, they have rules to follow and a duty to ensure that when they report information it's correct.
Rules a Collection Agency Must Follow (note this list does not include all prohibit practices):
- They may only start calling you 6 days after sending you a notice of collection; however, the Notice must be private and set out, the name of the creditor who is owed the money, the type of debt with sufficient detail to distringuish it from other debts, The amount of the debt currently owing, the name of the collection agency and the collector assigned to the file. It must also include the following mandatory statement:
“Should you have any questions or would like further information regarding the current amount of your debt or the amount of your debt when it was first due and payable and, if applicable, would like a breakdown of the difference between those amounts, please contact our office at the number below as this information is available upon request.”
- If the debtor sends a letter by verifiable means (fax, registered letter) a notice that they dispute a debt, the agency can no longer call or attempt to contact the debtor unless the debtor requests they do so.
- If a debtor retains a lawyer or licensed paralegal, they may send a letter to the collection agency requesting that the collection agency communicate only with the debtor’s lawyer or licensed paralegal. The collection agency can no longer contact or attempt to contact the debtor other than through the debtor’s lawyer or licensed paralegal unless the debtor consents to, or requests the contact
- No collection agency or collector shall contact or attempt to contact the debtor’s spouse, a member of the debtor’s family or household, or a relative, neighbour, friend or acquaintance of the debtor unless,the person being contacted has guaranteed to pay the debt and the contact is in respect of that guarantee, the debtor has requested the collection agency or collector to discuss the debt with the person being contacted; or the collection agency or collector does not have the debtor’s home address, personal telephone number or other contact information and the contact is for the sole purpose of obtaining the debtor’s home address, personal telephone number or other contact information.
- No collection agency or collector shall contact or attempt to contact the debtor’s employer unless, the employer has guaranteed to pay the debt and the contact is in respect of that guarantee, the debtor has given the collection agency or collector written authorization to contact the debtor’s employer. They may attempt the contact the employer only once and it is for the sole purpose of confirming one or more of the debtor’s employment, the debtor’s business title and the debtor’s business address.
- No collection agency or collector shall collect or attempt to collect a debt from a person who the collection agency or collector knows or reasonably ought to know is not liable for the debt or contact or attempt to contact a person for the purpose of collecting a debt if the person has informed the collection agency that the person is not who the collection agency or collector intends to contact, unless the collection agency or collector first takes all reasonable precautions to ensure that the person is, in fact, who the collection agency or collector intends to contact.
As you can see, the list of prohibited practices is quite extensive, and this isn't the whole list.
The courts have also weighed in on Collection Agencies that exceed their mandate or falsely report information.
In Haskett v. Equifax Canada Inc., 2003 CanLII 32896 (ON CA), it was stated in the judges decision:
In this case, the motion judge reached the correct conclusion on the first stage of the test. The relationship of the parties was one of proximity, and damage was reasonably foreseeable from the defendants' conduct. The plaintiff was the subject of one or more credit reports prepared and published by the defendants. It was reasonably foreseeable that, if the defendants were negligent in the way they gathered and reported information, and if they reported inaccurate information, their actions could cause credit grantors to deny credit or to charge more than they otherwise would. To the extent that a person such as the plaintiff authorizes the gathering and reporting of credit information, it is fair to say that any such authorization would normally be limited to accurate and non- negligent reporting.
As seen here, the relationship between a collection agency and a debtor or possible debtor has many moving parts. If you are currently dealing with a collection agency and you feel that you are being unfairly treated, reach out to our firm and schedule a free 15 minute phone consultation.