Difference between revisions of "Harassment by Debt Collectors"
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== Client problems== | == Client problems== | ||
* | *Client says a creditor is unfairly trying to collect when the client has no money to pay a claim. | ||
* Client says a creditor is persisting in contacting them even though the client disputes the debt. | *Client says a creditor is persisting in contacting them even though the client disputes the debt. | ||
== Summary of the law == | == Summary of the law == | ||
Revision as of 16:04, 13 October 2018
| This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Alison Ward in August 2018. |
The law protects debtors from harassment by creditors and other debt collectors.
Client problems
- Client says a creditor is unfairly trying to collect when the client has no money to pay a claim.
- Client says a creditor is persisting in contacting them even though the client disputes the debt.
Summary of the law
When a debtor refuses, or is unwilling, to pay a creditor’s claim, it is very likely that there will be friction between the two parties. Creditors are indignant that the debtor is not paying, while the debtor is indignant that the creditor is unfairly pressing for payment. Communication often breaks down, leading to pressure from the creditor, which the debtor feels is unreasonable.
Tort actions
There are various provisions in the common law, as well as federal and provincial legislation, limiting or providing remedies against harassment. Tort actions (brought by a private citizen) against creditors in common law are possible, but unlikely. There is no specific cause of action for “harassment” or “invasion of privacy” in Canada. A debtor might have a tort claim of nuisance against a creditor if a creditor’s collection tactics are extreme (for example, persistent, abusive phone calls). Some case law suggests that intentional mental harm may also be a tort. Naturally, if a creditor assaults a debtor during collection efforts, the debtor has a tort claim. Consult a lawyer if your client is considering bringing a common-law tort action against a creditor.
Protections under legislation
The Business Practices and Consumer Protection Act, in Division 1 of Part 7, sets out prohibited collection practices.
These prohibitions apply both to the original creditor and to any assignee, such as a collection agency. The term “collector” in this section applies to both.
Harassment is prohibited
Section 114 of the Act prohibits communication or attempted communication with the following people in a manner or with a frequency that constitutes harassment:
- a debtor
- a member of the debtor’s family or household
- a relative, neighbour, friend or acquaintance of the debtor
- the debtor’s employer
Behaviour that constitutes harassment includes:
- using threatening, profane, intimidating or coercive language
- exerting undue, excessive or unreasonable pressure
- publishing or threatening to publish a debtor’s failure to pay
Further restrictions on communication with a debtor
The Business Practices and Consumer Protection Act restricts how, where and when a collector may communicate with a debtor in attempting to collect a debt. A collector, other than a creditor attempting to collect its own debt, must give the debtor written notice of the name of the creditor, the amount of the debt, and the identity and authority of the collector at least five days before initiating verbal contact with the debtor. (There is one exception to this restriction. A collector may phone the debtor to ask for or confirm their home address or email address, in order to send them the required written notice.)
A collector may only verbally contact a debtor at work once, and only in limited circumstances. A collector may only contact a debtor’s employer for the purpose of confirming a debtor’s employment or with the authorization of the debtor.
A collector may not continue to verbally contact a debtor if the debtor has requested that the creditor contact the debtor in writing only.
A collector may not continue to communicate directly with the debtor if the debtor has directed that all communication be with the debtor’s lawyer, or if the debtor has notified the collector and the creditor that they dispute the debt and want the matter taken to court.
A collector must not communicate by phone or in person with the debtor, a member of the debtor's household, or a relative, neighbour, friend or employer of the debtor:
- on a statutory holiday
- on a Sunday except between 1:00 pm and 5:00 pm
- any other day except between 7:00 am and 9:00 pm
Further restrictions on collectors
Section 120 of the Business Practices and Consumer Protection Act expressly prohibits a collector from collecting more than the debtor owes or from someone who is not liable for the debt.
In addition to these rules specifically for debt collectors, section 124 of the Act says that collectors cannot use practices that are prohibited by any other part of the Act or its regulations.
Consumer Protection BC publishes information in the “Debt Collection” section of its website further explaining what collectors can’t do. For example, a debt collector:
- must not publish or threaten to publish details of the debt except to a credit reporting agency
- must not use threatening, profane or intimidating language
- must not threaten to sue the debtor unless they are actually taking legal action
Legal action against collectors
Section 171 of the Business Practices and Consumer Protection Act allows a person who has suffered damage to bring an action against a collector who has contravened the Act or regulations. Actions under section 171 can be brought in Small Claims Court. In Total Credit Recovery v. Roach, a debtor was awarded $2,000 compensation for harassing communications by a collection agency. Also of note is a case decided under earlier legislation, Toban v. Total Credit Recovery, in which a total of $10,000 in damages was awarded to the claimant for serious harassment, which included abusive calls to his landlord, employer and family members from whom the collector demanded immediate payment.
In extreme situations, the Criminal Code may apply. Specific threats to harm a debtor, as well as repeated visits to a debtor’s residence are prohibited under the Criminal Code.
Information gathering
When assisting a debtor with a harassment allegation, gather and confirm all information on the financial circumstances of the client, including income and expenses, assets and debts, and future prospects for changes in income. For the specific creditor involved, confirm basic details such as name and address.
Obtain sufficient detail to assess the debtor’s liability and the amount the creditor claims is owed. Consider, for example, if the debtor has a defence to the claim if they were sued for the debt (see the sections on Contract Defences and the Debtor’s Options for Getting Out of Debt).
It may be useful to have the debtor prepare a written account (with details of the number of times and content) of any contact the creditor has made. You could advise the debtor to keep a record of future unwanted contact as well, though reasonably quick action to solve the problem may ensure an end to such contact.
Solving the problem
There are several aspects to resolving a debtor’s allegation of harassment.
Stop the harassment
The immediate concern will probably be putting a stop to the harassment. Even where a debtor is clearly liable on a debt, the law does not allow any creditor to pressure a debtor unreasonably. Consumer Protection's website at contains useful template letters that can be used, for example, to request that a collector only communicate in writing, or to dispute the debtor's liability for an alleged debt.
It may be difficult for the debtor to act on their own if the debtor has been harassed. Intervention by an advocate or lawyer may be more effective. Consider hand delivering or sending a registered letter to the creditor outlining the debtor’s circumstances, along with a proposal for resolving the claim. Make it clear if the claim is being denied (in whole or in part), and make it clear, in any event, that the debtor does not want further direct contact. Consider advising any collection agent that if there is further direct contact, the debtor will consider taking legal action.
As an alternative, the debtor might contact Consumer Protection BC for help, letting the creditor know that such a complaint has been made. This contact is usually enough to stop the pressure. It may also be in the public interest to make such a complaint, as Consumer Protection BC may revoke the licence of a collection agent against whom there are a number of complaints.
Look for financial solutions
The broader concern may be the overall financial picture of the debtor. Consider, as always, if there are other creditors that ought to be dealt with at the same time. Consider the short-term and long-term financial circumstances of the debtor, and what remedies are most appropriate.
Consider legal action
If the conduct of the creditor has been particularly persistent, the debtor may wish to take legal action. There are a range of causes of action that can be brought, as described above. Such actions usually require legal advice. Regardless of the degree of persistence, consider carefully with the debtor if they wish to undertake such litigation. Often, debtors are relieved that the financial problems are resolved and have little desire to seek further redress.
In extreme circumstances, the conduct of the creditor might be brought to the attention of the local Crown Counsel for prosecution. Prosecutions under collection agent statutes are rare, but in the Saskatchewan case of R. v. Ens, a debt collector was convicted of harassment after making six aggressive phone calls to a debtor over a two-day period.
Be careful not to violate the spirit of the Law Society of BC’s Code of Professional Conduct for British Columbia, Rule 3.2-5. This rule prohibits making a threat to report criminal conduct in order to obtain a civil advantage. For example, it would be improper to demand damages (financial compensation) from the creditor in exchange for not reporting the creditor’s conduct to Crown Counsel.
Related topics and materials
See the other sections on dealing with debt:
See related topics:
See also People’s Law School’s page on dealing with debt collectors.
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