The fine line of privacy law and difficult borrowers

Yesterday I had to undergo "recertification" of compliance with the Federal Fair Debt Collections Practices Act. This law is in place to protect borrowers from unscrupulous third-party collectors who will lie, threaten, intimidate and confuse people in order to get what they feel they are owed. The guidelines are very strict, though enforcement often falls to State Attorneys General offices. Some are more strict and aggressive than others.

Our AG, Andrew Cuomo, is "not" running for Governor. Which means he's loudly and publicly going after non-compliant debt collection agencies with the enthusiasm of a ten year old playing Whack-a-Mole. Granted, most of these agencies were pretty sleazy and should have been shut down ages ago. Personally, and as someone working for a non-sleazy agency, I'm glad he is on the warpath. But still - everyone's a little nervous.

Our computerized dialer system monitors most features of FDCPA that can be automated. For example, you can only call a borrower between 8am and 9pm their time. So if I try to call someone in Oregon at 9am here in NY, the dialer will not let the call go through. All paperwork must be documented through the dialler so it will only be sent by the departments specializing in those forms. It makes dialing a number a cumbersome process (everyone hates the dialer program), but it takes the guesswork out of a lot of the laws.

The real compliance issues are with direct borrower interactions, and there are two big ones. First, you must be respectful and professional at all times. No foul language, no threatening anything you can't do, no calling with intent to harass and annoy. Fairly straight forward, and mostly only an issue with older collectors who fondly remember the "good old days" prior to strict enforcement under then-AG Eliot Spitzer.

The second is about disclosure, and it's the much finer line. On the face of it, it's simple. You may not reveal information about someone's debt (including the existence of it) to anyone other than the individual, their spouse (except for a couple of states), a co-signer on the debt, or a third party who has been specifically authorized to know about the debt by the borrower. If you reveal that information to anyone else, it is the basis for a lawsuit.

(Added fun bonus: collectors are PERSONALLY liable for violations of FDCPA law and can be individually named in lawsuits. Somehow I don't see being named in a lawsuit for violation of Federal Privacy Laws being a help in passing the Bar Ethics Review in a couple of years. So I'm a little more nervous about it than the average collector.)

This means once you've found a possibility of someone's contact information, you then have to absolutely verify that you are talking to the borrower. This means identification by last four digits of social security number or date of birth. Which can lead to some fun conversations.

"Hi, is this John Smith?"

"Yes."

"Mr. Smith, I'm calling because I have a personal business matter of yours in our office. Are the last four digits of your social security number 0000?" or "is your birthday February 31, 1897?"

"I'm not giving out that information until you tell me what this is about, sonnyboy."

And so we have a standoff. You can either go for a third question that's kinda fuzzy toward disclosure ("Did you attend the Timbuktu Institute for Advanced Basketweaving?"), or attempt to explain that you need to verify this information for their protection as well under Federal Law. However, it is pretty well understood that in this standoff, more often than not you are going to lose.

Another variation of this is dealing with a younger borrower who is living with their parents. Parents often want to shield their children from the nasty debt collectors, and they tend to get very irate when you tell them you can't reveal the purpose of the call without the child's expressed permission. Best case scenario is convincing the parent to just let you talk with the borrower for a moment to get permission to continue the conversation (I've pulled this off once and only once). Worst case (and far more likely) is the parent gets annoyed enough to tell you to never call them again, which means that number becomes a Do Not Call number in the office.

The truly fun situation I had was calling for a borrower and the fiancee answered the phone. He took down my information for a message, and then asked what company I was from. As required, I gave him the company name.

"Oh, I know you guys! I had a loan in your office last year! How much does she owe, and can we get her into a program like I had?"

Ummmm...awkward. Especially since now I had the full rapt attention of one of my colleagues who had been written up the month before for third party disclosure issues, and was just itching to unload the burden of being watched by management for this.

In the end, I navigated it pretty well. I told him I couldn't talk to him about her business matter, but we were willing to try to work with her on it. He also had some questions about his own loan which had fallen into default again and was now with a different collection agency. I answered them as best I could, skating over disclosure issues about whether his loans were in collections again. And the account was reviewed by my manager (due to concerns raised by colleague), and I passed. (Colleague also praised for recognizing potential issues and heat taken off - so it worked out well for everyone.)

I passed the recertification with flying colors. As I said, it's easy on paper. We'll see what other curveballs come up later on.

In the meantime, I'm taking a week off. Christmas, then a week back in Maine with friends and family. Happy Holidays, Merry Christmas, and a Happy New Year.