Debt Collection, Finance

What are Debt Collectors allowed to do?

Robert Tarantola / March 1, 2018

A collection agency offers business owners the opportunity to collect debt that previously may have been written off as company losses, damaging a business’s bottom line. In Australia, debt collection services are licensed and regulated by the government. They have established a series of guidelines by which a collection agency is expected to comply, as well as a list of unfair business practices. If a collection agency is found to be utilising any of these unfair practices it could stand to lose its credit license.

Because the debt collection services provider you hire will be representing your company as it seeks to recover your debt, it is of utmost importance that you be sure to familiarise yourself with the examples of unfair practices provided by the OFT. You will want to avoid agreeing to do business with a company whose collection services are questionable.

Provide Clear Communication

It is considered an unfair practice by a collection agency to communicate with a debtor in such a manner as to be unclear, inaccurate or misleading. This would include using documents that may resemble court documents, but which in fact are not. Another example is not providing enough information to the debtor about whom the collection agency is representing, why they are representing this company, or what the agency’s role is in collecting the debt.

Be sure when you are interviewing a potential collection agency to represent you, that you are clear in what manner the debtor will be contacted and what information will be provided your debtor about his or her situation.

Do Not Use False Representation of Authority

The collection agency you choose cannot misrepresent its authority or legal position when contacting your client to collect your debt. Debt collectors may not infer that they have the authority to bring legal action against your client if they in fact do not have that ability. Debt collectors cannot pretend to be a bailiff, sheriff, or messenger-in-arms, and they also cannot state that they have a right to entry of a debtor’s home.

Unfortunately, debt collection is not a pleasant affair for any of the parties concerned. A high quality collection agency will always do its best to present itself – and ultimately you – in the most professional and responsible manner possible. When interviewing prospective agencies, be direct in asking what their policy is on false representation of authority.

Do Not Use Deceptive Methods or Harassment

At no time is it ever acceptable for a debt collection agency to act in an oppressive or threatening manner towards a debtor. Neither is it ever acceptable for an agency to try to deceive a debtor into believing the agency is some kind of business entity it is not. At all times, an agency should be forthright in its representation of being a third party debt collection services provider for your business.

The decision to hire a professional debt collector is not always an easy one. When you do decide that it is time to ask a professional debt collection services provider to handle your debt recovery, be sure that you are hiring a top quality, professional agency that adheres to the guidelines set forth by the Office of Fair Trading. Debt collection involves understanding the comprehensive and different legal legislation across each state and territory, this includes statute of limitations as this varies depending on your location in Australia.