What collection tactics are considered unethical?

This question came from a consumer whom I can only presume had the unfortunate experienced of being “harassed” by a collector or collection agency. His letter reads, “I read your article on Code of Credit Ethics last Wednesday, and I see that there is such a thing. Likewise, you made mention that you are going to write on the collection side. Now, let me ask you this question: what collection tactics that are considered unethical?….”

Last week, I have already written pertaining to “Code of Credit Ethics”. Well today, let me enumerate some collection practices or what you call “tactics” that are considered unethical. The following are considered unethical collection practices/ tactics: (a) making threats of violence, (b) using obscene language, (c) harassing telephone calls or calls at times known to be inconvenient, (d) impersonating government officials or attorneys, (e) misrepresenting a consumer’s legal right, (f) and collecting more than what is legally due. Moreover, third party collectors also are prohibited from discussing your debt with third parties such as a neighbor, friend or associates.  However, Collection Agencies can report the status of their accounts being handled unless prohibited by contract to credit bureaus. Credit bureaus, such as CIBI Information and other credit reporting agencies around the world are recognized to gather and collate credit information, which includes information on debts placed for collection.   

Couple of years ago, there were several news reports of numerous complaints filed by consumers on the “unethical” tactics and “unfair” collection practices of some independent/ third party collection companies which utilizes vans with loud speakers to do “shame campaign”, while some employs several “telecollectors”, on commission basis, to “harass” consumer debtor’s until it pays. These unfair and unethical collection practices prompted the Bangko Sentral ng Pilipinas last September 2004 to issue CIRCULAR 454 SECTION 7 …. Subsecs. X320.14 and 4301N.14 to read, as follows (excerpts): …Without limiting the general application of the foregoing, the following conduct is a violation of this Subsection:  a) the use or threat of violence or other criminal means to harm the physical person, reputation, or property of any person; b) the use of obscenities, insults, or profane language which amount to a criminal act or offense under applicable laws; c) disclosure of the names of credit cardholders who allegedly refuse to pay debts, except as allowed under Subsec. X320.9 and 4301N.9; d) threat to take any action that cannot legally be taken; e) communicating or threat to communicate to any person credit information which is known to be false, including failure to communicate that a debt is being disputed; f) any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a cardholder; and g) making contact at unreasonable/inconvenient times or hours which shall be defined as contact before 6:00 am. or after 10:00 pm., unless the account is past due for more than sixty (60) days or the cardholder has given express permission or said times are the only reasonable or convenient opportunities for contact.

(Mr. Ed F. Limtingco can be reached at 0917-7220521 or at [email protected])