Debt Collection in Healthcare: How to Collect Debts Efficiently and Legally
PART III: The Fair Debt Collections Practices Act (FDCPA)
What is the FDCPA?
The FDCPA was established to protect consumers from unfair treatment at the hands of debt collectors. Failure to comply with any part of the act’s strict guidelines and requirements can result in sizeable fines, penalties and judgments. Therefore it is critical that you become familiar with the FDCPA’s regulations to avoid legal action being taken against you and your organization. Not only do you need to understand and abide by collections law, but you need to know the strategies and techniques that will help you easily and effectively contact and deal with debtors.
Who is a debt collector under the FDCPA?
· The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of debts, or who regularly collects or attempts to to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. The term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.
· Although the statute does not expressly distinguish between a “debt collector” and a creditor collecting its own debts, the statute does specifically exclude from the definition of “debt collector” a person collecting or attempting to collect a “debt which was originated by such person.”
Am I subject to the FDCPA?
· Simple question, complicated answer.
· The general answer is NO. If you are collecting a debt that your facility originated, you are considered a creditor and NOT subject to the FDCPA.
· However, you must be using your facility’s name in all collection attempts. If a facility itself attempts to collect the debts as a parent company, then the facility may become a “debt collector” and subject to the strict requirements of the FDCPA.
What is prohibited by the FDCPA?
The act prohibits certain types of “abusive and deceptive: conduct when attempting to collect debts, including the following:
· Hours for contact: contacting consumers by telephone outside the hours of 8:00 a.m. to 9:00 p.m. local time
· Failure to cease communication upon request: communicating with consumers in any way (other than litigation) after receiving written notice that said consumer wishes no further communication or refuses to pay the alleged debt, with certain exceptions, including advising that collection efforts are being terminated or that
· Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously: with intent to annoy, abuse, or harass any person at the called number.
· Communicating with consumers at their place of employment after having been advised that this is unacceptable or prohibited by the employer.
· Contacting a consumer know to be represented by an attorney.
· Seeking unjustified amounts, wich would include demanding any amounts not permitted under an applicable contract or as provided under applicable law.
· Threatening arrest or legal action that is either not permitted or not actually contemplated..
· Abusive or profane language used in the course of communication related to debt.
· Communication with third parties: revealing or discussing the nature or debts with third parties (other than the consumer’s spouse or attorney)
o Collection agencies are allowed to contact neighbors of co-workers but only to obtain location information;
o Contact by embarrassing media, such as communicating with a consumer regarding a debt by post card, or suing any envelope when communicating with a consumer any use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.
· Reporting false information on a consumer’s credit report or threatening to do so in the process of collection
· Communicating with consumer after request for validation has been made: communicating with the consumer or the pursuing collection efforts by the debt collector after receipt of a consumer’s written request for verification of a debt made within the 30 day validation period
FDCPA requires debt collectors to:
· Identify themselves and notify the consumer in every communication that the communication is from a debt collector, and in the initial communication that ny information obtained will be used to effect collection of the debt.
· Give the name and address of the original creditor (company to which the debt was originally payable) upon the consumer’s written request made within 30 days of the receipt of the §1692g notice
· Notify the consumer of their right to dispute the debt, in part or in full, with the debt collector.
o The 30-day §1692g notice is required to be sent by debt collectors within five days of the initial communication with the consumer, if a consumer needs a written dispute or request for verification within 30 days of receiving the §1692g notice, then the debt collector must either mail the consumer the requested verification information or cease collection efforts altogether.
o Such asserted disputes must also be reported by the creditor to any credit bureau that reports the debt. Consumers may still dispute a debt verbally or after the thirty-day period has elapsed, but doing so waives the right to compel the debt collector to produce verification of the debt. Verification should include at a minimum the amount owed and the name and address of the original creditor.
In a nutshell…
· All mail or collection attempts must be made in the name of each individual care center, or you may be subject to the stringent requirements of the FDCPA
· Always identify yourself as a representative from the care facility to which the debt is owed.
· If your facility originated the debt you are a creditor collecting your own debt and not subject to the FDCPA.
It is more beneficial to be categorized as a creditor:
· Less liability
· More techniques available for effective collection
· Did we mention LESS LIABILITY? Oh, okay. Well, LESS LIABILITY