This week, let’s look at the Consumer Protection Act and how it applies to collection agents and companies in the Province of Manitoba. All collection agencies operating in Manitoba must be registered under this Act.
Like the previous article we wrote for Ontario, we want to take a look at the legislation from the agency’s viewpoint, and make suggestions how a consumer can most effectively communicate with an agency about an alleged debt.
For further reading, the Consumer Protection Act can be found here
General Licensing Requirements
To register in the Province of Manitoba, an application needs to be send into the Consumer Protection Office, with the applicable fees and a Collection Agent Bond of not less then $5,000. The agency must operate from a commercial location, and must maintain a trust account within the province of Manitoba.
Only One Agent At A Time
Large creditors often will use more than one collection agency, either in competition or in sequence, first giving an agency six to twelve months to collect an account, and then transferring the file to a second, or even a third agency. However, as part of the Consumer Protection Act, it is a legal requirement that a creditor may not list an account with more than one agency at a time – this means the same account for the same amount and same debt incurred can only be handled by a single collection agency.
Agencies have several rules they must follow – the first is that they must use their licensed name, and cannot pretend to be calling from somewhere else (such as a law firm).
The agency may not call by telephone collect, or call a cell phone if the consumer incurs a charge for time used – obviously the agency will not necessarily know a number is a cell phone, or that the person pays-as-they-go, so it is up to the consumer to inform the agency that they are communicating improperly with themselves.
Allowed call times are Monday to Saturday 7am to 9pm, with no calls on Sundays or Statutory Holidays. Calls may not be so frequent as to constitute harassment, but unlike Ontario’s Collection Agencies Act, that frequency is not actually determined.
When the agency is communicating by telephone or in writing, they must disclose the collector’s name and agency name, the name of the creditor, as well as the amount owing.
The agency also cannot threaten any action it does not have lawful authority to do – this could be reporting to the credit bureau if the creditor does not allow it, legal action if it is not feasible, or even more egregious violations like threatening to seize personal property, arrest a consumer, or other unlawful acts. They also cannot provide false information that might be detrimental to the consumer, such as leaving an answering message that would violate the act.
The agency cannot use letters or forms that are unacceptable to the Manitoba licensing administrator – they may not use court related documents, such as a draft statement of claim
Finally, the agency must attempt to collect the lawful amount owing, without additional administrative fees, or courier costs – even if the creditor’s contract states otherwise. There may be an exception for NSF fees or banking fees caused by the consumer having a cheque returned, but the act is unclear on this matter.
If a consumer is attempting to negotiate a debt, they should understand that payment is the ultimate goal of the agent, but these arrangements should be mutually satisfactory. If negotiations break down, or promises are not kept, there is little a consumer can do to keep the matter from being reported to the credit bureau or if the balance warrants it, stop legal action from occurring. Many consumers don't understand the consequences for non-payment -- here is a link to a government website that discusses consumer rights and the effect of the credit bureau:
Paying Your Account
If a consumer decides to pay their account, collection agencies in Manitoba must deposit their funds into a trust account, where they will distribute the funds back to the creditors. Understand that the monies collected are reported to the creditor, usually within 30 days. As the agency is the company that can affect a consumer's credit rating, it is best to try to deal with them directly, rather than contact the creditor.
The agency cannot add any charges on top of the balance owed, aside from lawful interest allowed by the creditor (and previously reflected on their invoices and/or contract), courier expenses, credit card fees, or other additional amounts. There may be an exception for NSF fees or banking fees caused by the consumer having a cheque returned, but the act is unclear on this matter.
If a consumer negotiates a settlement on an account, make sure you receive a letter in advance releasing you from the debt prior to the settlement, and keep that letter in your records for the next seven years to protect yourself.
If there is a payment made, the consumer should make sure you pay in a way that gives you proof of payment, or a receipt -- they should never pay with cash in the mail, but use a money order or cheque without personal information or file number written on the memo line, and if the consumer is paying by post-dated cheques or pre-authorized payments, everyone should be on the same page as far as dates and amounts that have been agreed to.
Consequences For Not Paying
If a consumer does not want to pay their debt, they should be upfront and honest with the collection agent to save everyone time and energy. If they do not cooperate with the collection agent, they can't threaten you, or use misleading language, and can only state consequences they are lawfully allowed to use. If an agent states consequences for non-payment, they should do so in a professional, non-emotional manner.
If a consumer is disputing their debt, it is best to send the agency a detailed dispute of why the debt should not be enforced in writing, and send a copy of your letter to the creditor, the collection agency, and potentially the credit bureau.
When the creditor allows (and in most cases, this is likely), the collection agency can affect an individual's personal credit rating -- collection agencies have the ability to report in the registered item section, showing the agency name, the creditor's name, the original amount of the debt, and the current amount reflecting interest and payments to date. In this day and age, the power of credit reporting is becoming more and more important. If a consumer plans on applying for a loan, credit card, car lease, bank account, or even certain types of employment, a poor credit report may be an obstacle.
For larger balances, if the creditor authorizes it, legal action can be taken by the collection agency -- I address the subject of whether an account can go to legal action here: http://receivableaccounts.blogspot.ca/2011/02/collection-agency-legal-department-fact.html
For more information about consumer rights, and your options for dealing with a collection agency, there are numerous sites discussing your options. I would recommend government sites for the most accurate and fair information. Here are some helpful links:
As I have said before, most consumers that end up in collections are not bad people, but have been affected by a lack of financial education, economic hardship, living beyond their means, or simply being unaware a debt has been incurred. It's possible for the collection agency to work within the rules set down by the provincial governments and deal with consumers in a professional manner so everyone can be satisfied at the end of the day -- the creditor can be paid, the collection agency can collect on the account, and the consumer can be dealt with fairly.
If you have questions about the right way for collection agencies to represent creditors, you may certainly contact myself at Kingston Data and Credit.
Kingston Data and Credit