Collection notices communicate important information to your customers about their debt. It's a basic and standard tool in the credit and collection industry, but comes with a few challenges. It's critical that collection agencies make sure they are communicating properly with consumers, and watch out for letters that may not be compliant with the Fair Debt Collection Practices Act.
A few issues to keep in mind when writing your collection notices:
- Vague letters
- Language that doesn't apply to a consumer's situation
- Language that may confuse a consumer
- Language on your first notice that may overshadow the validation notice
- Contradicting language to the FDCPA about the consumer's rights to dispute
You should be using safe harbor language in your collection notices. This was established in a Seventh Circuit Court of Appeals decision – Miller v. McCalla, Ramer, Padrick, Cobb, Nichols and Clark – to assist debt collectors in complying with provisions in the FDCPA. The FDCPA requires that a collector state the amount of the debt in the initial communication (or within five days) with the consumer. It's a good idea to just quote the text of the FDCPA verbatim.
Consider the physical details of your collection notice, such as if personal information is visible through a window envelope, as well as the language in it (including details about the statute of limitations of a debt).
"If the initial communication is a letter, what can sometimes cause problems for collectors is stating the exact amount of the debt under circumstances where the debt is accruing interest or other charges on a day-to-day-basis." Nicole Strickler, a partner at Messer Stilp and Strickler Ltd
You may choose to have an attorney send written communications to consumers on your behalf for added assurance about compliance with state and federal laws, but it's important for all parties to be on the same page in that instance. Be cautious – the context and placement of an attorney involvement disclaimer is very important on the letter.
Keep it simple! If a consumer asks for more details or resources, agencies can provide those in oral communications separate from initial letters or validation notices.
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