Patient Account Services

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Patient Account Services

  1. 1. Fair Debt Collection Practices Act OVERVIEW Purpose & Benefits: • Eliminate abusive practices. • Not competitively disadvantaged. • Promote consistency. • Protects consumers • Benefits ethical collectors. • Sets a professional standard. • Fosters a fair and competitive environment. Problems with Non-Compliance Accountable Parties • Financial liability for both agency • Third- Party Debt Collectors. and the individual. • Debt Purchasers. • Costly and time consuming to • Attorneys. respond to complaints and lawsuits. • Creditors. • Career threatened.
  2. 2. Fair Debt Collection Practices Act COMMUNICATING WITH THE CONSUMERS The FDCPA governs communications between consumers and debt collectors in connection with the collection of debt. A consumer is: Communication is: • Any natural person. Conveying information–either directly or • Obligated to pay a debt. indirectly–to any person, through any • Does not include businesses. medium, regarding debt. Does include: •Executors. Communication is prohibited: • Administrators. • At a time that is known to be • Parents/Guardians inconvenient to the consumer. (if consumer is minor) •Before 8:00 a.m. or after 9:00 p.m. local • Spouses. time at the consumer’s location. (limited circumstances, approved by state law) •If the consumer is represented by an A debt is: attorney. •An obligation. •If it is known or reasonably understood •Arises from a transaction. that the consumer’s employer would •For personal, family or household prohibit it. purposes.
  3. 3. Fair Debt Collection Practices Act COMMUNICATING WITH THE CONSUMERS Mini- Miranda Disclosure: “This is an attempt by a debt collector to collect a debt. Any information obtained will be used for that purpose.” • Recite the Mini-Miranda in the Do not recite the Mini-Miranda first written and first verbal when: communication with a consumer. •Leaving a message with • All communications with someone. consumers must indicate that the •Leaving a message on an communication is from a debt answering machine. collector. •Obtaining location information. • Some states laws require the •On fax coversheets or postcards. Mini- Miranda in additional •On employment verification communication with consumers. requests.
  4. 4. Fair Debt Collection Practices Act COMMUNICATING WITH THE CONSUMERS Cease Communication When a consumer requests that you cease communications: •It must be written. •Once received, you may not communicate or contact any other parties.
  5. 5. Fair Debt Collection Practices Act THIRD PARTY COMMUNICATIONS Who May Be Contacted: Clarification of an Attorney • Consumer • Someone who graduated from (if not represented by an attorney) law school and passed Bar • Creditor examination of at least one state. • Attorney for Creditor, Debt • A person acting pursuant to the Collector or Consumer power of a attorney is merely an • Credit Reporting Agency agent to the consumer under a (if otherwise permitted by law) principal agent relationship • Consumer’s Spouse • Communicating with the power (if permitted by state law) of Attorney is not permitted and • Consumer’s Parents would be considered a Third Party (if consumer is a minor) Disclosure Violation If an attorney represents the consumer in regards to a debt that the debt collector is collecting on, the collector must contact only the attorney unless: •The Attorney fails to respond within a reasonable period of time.
  6. 6. Fair Debt Collection Practices Act THIRD PARTY COMMUNICATIONS Regulated Third Party Communication DO NOT: Laws to Consider: •Reveal the existence of a debt to any party. • Health Insurance Portability •Use symbols or language in written and Accountability Act communication. (HIPAA) •Use postcards •Discuss the existence of a consumer’s debt • Gramm-Leach-Bliley Act with: (GLBA) The consumer’s employer and/or coworkers. Friends Neighbors Relatives (excluding the consumer’s spouse, as otherwise permitted by law)
  7. 7. Fair Debt Collection Practices Act THIRD PARTY COMMUNICATIONS Obtaining Location Information: Employer Verification • Identify yourself by name only. YOU CAN: • State that you are trying to locate • Call the employer and request the company the consumer. to verify whether or not the consumer is currently employed by the company. • Request only home address, home phone number and YOU CANNOT: • Request the consumer’s work phone place of employment. number, supervisor’s name, dates of • Contact a third party only once. employment or any other information.
  8. 8. Fair Debt Collection Practices Act COMMUNICATING WITH THE CONSUMERS When leaving messages on What is a Pre-Recorded Message: answering machine or • Any message recorded and communicated to a consumer, no voicemail: matter how long or how short. • Make sure you are reaching • Must follow the Telephone the correct consumer. Collection Protection Act (TCPA) • Never leave a message that & Federal Communications would identify the existence of a Commission. (Found in Chapter 4 & 12) debt. Examples: • An automated message system Issues with Pre-Recorded Messages: that leaves a standard collection •Debt collectors must comply with the message. Telephone Consumer Protection Act • The recorded operator in your • Abide by disclosure requirements voicemail system is considered a •See Chapter 4.2.1 of ACA pre-recorded message. International’s Guide to the Fair Debt • An introductory message from an Collection Practices Act for guidance auto dialer stating that someone is going to pick up the phone soon.
  9. 9. Fair Debt Collection Practices Act COMMUNICATING WITH THE CONSUMERS Written Communication: Caller ID Concerns: • It is permissible to contact a third party • If an agency’s telephone number in writing if the envelope does not indicate appears on caller ID, it could that the communication is from a debt disclose that the call relates to a collector. debt and lead to a third party • Avoid communication via fax or e-mail. disclosure. • Using open face communication could Consider: result in FDCPA violations. • Blocking the agency’s name. ACA does not recommend using • Using an acronym for the agencies name if state law permits. these methods of communication to collect a debt, due to the risk of third party disclosure: • Answering Machine • Fax Machine • Pagers • E-mail • Cell Phone
  10. 10. Fair Debt Collection Practices Act VALIDATION & VERIFICATION Validation Notice: Must contain: • Required disclosure • Amount of debt • Provided to the consumer • Name of creditor to whom the debt is owed • Informs consumer of their right to • Statement that unless the consumer, within 30 days after receipt of the notice, disputes the request verification of the debt validity of the debt, or any portion thereof, the • Should be in writing debt will be assumed to be valid by the debt • Is required each time a subsequent collector • Statement that if the consumer notifies the debt collector takes over an account collector in writing within the 30-day period that • Must be sent within five days of initial the debt, or any portion thereof, is disputed, the communication debt collector will obtain verification of the debt Should Include: or a copy of a judgment will be mailed to the consumer by the debt collector “See Reverse Side for Important • Statement that, upon the consumer’s written Information” (If printed on the reverse side request within the 30-day period, the debt of the letter.) collector will provide the consumer with the Mini-Miranda Disclosure (If first time name and address of the original creditor, if you are communicating with consumer) different from the current creditor.
  11. 11. Fair Debt Collection Practices Act VALIDATION & VERIFICATION Overshadowing: Settlement Offers: • A validation notice may not be A settlement offer allows the contradicted or overshadowed by other consumer to settle the debt for an communications or notices. amount less than the total owed. • A validation notice is considered SETTLEMENT OFFERS CANNOT: overshadowed or contradicted if a • Overshadow the validation subsequent letter includes information that period. is inconsistent. • Use deceptive language to present the offer. Overshadowing the Validation Period: Collection Efforts: The Validation notice should not: While pursuing collection activity • Demand immediate payment. during the validation period: • Be inconsistent so as to cause The debt collector MUST cease confusion. collection activity if a written • Be printed in smaller font. verification request is received. • Be buried in other text
  12. 12. Fair Debt Collection Practices Act VALIDATION & VERIFICATION Legal Action: Verification Request Response: You Can: Upon receipt of a consumer’s written Debt collectors can file suit during the request for verification, the FDCPA validation period. requires all collection efforts cease. You Cannot: •A collector cannot send a fax to Debt collectors cannot contradict the verify a debt. right to request verification. • Verification cannon be mailed by the creditor. Verification Request: Verification Request •A consumer has the right to request verification during the 30-day validation Obligations: • Debt Collectors are NOT obligated by period. the FDCPA to send verification of debts • Verification includes any materials that AFTER the 30-day validation period. substantiates the consumer incurred the •However, if you do not meet the debt. consumer’s request, your odds of • A request for verification must be collecting may be diminished submitted in writing
  13. 13. Fair Debt Collection Practices Act CREDIT REPORTING Credit reporting is a collection activity when it is: • A communication in connection with the collection of a debt. • Done after a written dispute is received, but before responding to the dispute with verification. Credit reporting IS allowed during 30-day validation period unless a written dispute is received. Brady Decision • Has major implications for the collection industry. In February 1999, ACA issued an action alert stating: The plain language of section 1692e(8) required debt collectors to communicate the disputed status of a debt if the debt collector “knows or should know” that the debt is disputed. This standard requires no notification by the consumer, written or oral. • Consumers who wish to dispute a debt do not have to do so in writing. • Collection agencies are obligated to report a dispute, whether it is oral or written, when reporting a debt to a credit reporting agency. Bankruptcy Issues: After consumer files for bankruptcy there must be: •Automatic Stay (injunction that stops all collection activity right after bankruptcy is filed) goes into effect.
  14. 14. Fair Debt Collection Practices Act HANDLING PAYMENTS Application of Payments: •If the debt is undisputed and interest is being collected on it, the debt collector is permitted to apply payment first to the interest then to the principal. • Payment allocation is governed by state law and/or specified by the contract with the creditor Multiple Accounts: •Debt collectors collecting multiple debts from a consumer may NOT apply a payment to any debt that is DISPUTED by the consumer. • If the debt collectors are collecting multiple accounts from the same consumer, the consumer must specify to which debt the payment should be applied Overpayments/Refunds: Resolve/Refund the overpayment • Contact the consumer for payment instruction. • Comply with state law. • Follow internal policies and procedures.
  15. 15. Fair Debt Collection Practices Act UNFAIR PRACTICES Examples of Unfair Practices: • Adding Interest, Fees, Charges or Expenses. • Accepting , soliciting or depositing postdated checks or other postdated payment instruments. • Causing a consumer to incur charges. • Possession and Disablement of Property. • Postcards and Envelope restrictions.
  16. 16. Fair Debt Collection Practices Act HARASSMENT AND ABUSE Examples of Harassment and Abuse: • Threats of Violence. • Use of Obscene or Profane Language. • Publishing a list of consumers who allegedly refuse to pay debts. • Causing the phone to ring repeatedly to annoy, abuse or harass any person. • Placing phone calls without meaningful disclosure of the caller’s identity • Advertising for sale any debt in order to coerce payment of the debt. • Harassment and abuse can occur through oral and written communications. YOU AND YOUR AGENCY ARE LIABLE FOR YOUR ACTIONS.
  17. 17. Fair Debt Collection Practices Act FALSE AND MISLEADING REPRESENTIONS The FDCPA prohibits a collector from making false and misleading representations: • An example of this is claiming to be an attorney when in fact he/ she is not. Other False and Misleading Representations: • Government Affiliation. • Misrepresenting Amount owned or Legal Status. • Unintended or Unlawful Action. • Threatening Arrest or seizure of Property. • False Accusations. • False Legal Documents. • Reporting a Disputed Debt. • Misrepresentation of Identity. • Misrepresentation of CRA. • False and Deceptive Means.
  18. 18. Fair Debt Collection Practices Act LIABILITY Personal Responsibility: Common Violations: • Ensure compliance with the FDCPA. • Harassment • Know the federal and state laws. • Failure to send notice. • Be aware of changes. • Failure to verify disputed debts. • Ask for help. • Calling a consumer’s place of employment. Enforcement: • Revealing alleged debt to third • The enforcement of the FDCPA is parties. assigned primarily to the Federal • Failure to cease communication. Trade Commission (FTC). • Threatening the consumer • The government reserves the right • Demanding larger payment. to bring administrative enforcement • Violations affect the image of the against debt collectors when the collection industry and can cause bother agency and person liability. action affects the general public.
  19. 19. Fair Debt Collection Practices Act LIABILITY Actual Damages: Some courts have ruled that actual • Consumers have a “right of action”. damages could include “out-of- • Civil liability may be assessed in the pocket expenses” and damages for: form of: • Actual Damages • Personal Humiliation. •Statutory Damages • Embarrassment. •Court Costs • Mental Anguish. • Reasonable Attorney Fees. • Emotional Distress. Actual Damages could include: • Money illegally collected. The consumer bears the • Unlawful collection charges or burden of proof: interest. • Must prove a reasonable • Lost Wages. connection between debt • Cost of treating mental or collector’s conduct and physical injury. emotional or physical damage alleged by the consumer
  20. 20. Fair Debt Collection Practices Act LIABILITY Emotional Distress: Are You Personally Liable? The consumer must show that the debt collector’s behavior: • Liability is not limited to the • Was extreme and outrageous collection agency • Was intentional or reckless • Individual debt collectors may be • Resulted in emotional distress held liable for violations to the same • Resulted in distress that was extent as the agency severe Consequences for Non-Compliance: Bona Fide Error: Collectors can be held liable for: Collectors must show by a • Actual damages preponderance of the evidence •Statutory damages up to $1,000 • The error was unintentional • Attorney’s fees • Resulted from a bona fide error • Up to $500,000 or 1% of the • Occurred despite procedures agency’s net worth for class reasonably adapted to avoid action suits. such errors

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