FTC Guidelines to Fair Debt Collection

Also, the FTC guidelines state that if a debtor tells you in writing to stop contacting them, you are legally obligated to do so. That doesn’t mean, however, that you have to forget about the money that is owed to your business. It simply means that it may be time to visit the small claims court and file the necessary paperwork to collect the debt.

Certain types of debt collection techniques are prohibited, including:

• Any type of harassment. Some small business owners may decide to take an aggressive stance in order to collect monies that are owed to them. Be advised that you may not harass, oppress, or abuse anyone while attempting to collect a debt. (You may also not use obscene language, even though you may be tempted to do so.)
• False statements. No one, neither a small business accounting department nor a collections agency, can make false statements regarding the collection of a debt. You cannot imply that the person has committed a crime, or pretend to be an attorney or a government representative. You cannot threaten that the party will be arrested if they do not pay their debt.
• Using any “unfair” practices. This includes depositing a postdated check before the date agreed upon (and that is on the check), or using any type of deception to make the debtor accept collect calls or pay for telegrams.

If you are unsure of how you can collect on a bad debt, check with your local state’s attorney general’s office and the Federal Trade Commission. Many states have their own debt collection laws, and your attorney general’s office can help you determine your rights.

You might also solicit advice from other small business owners who belong to the local chamber of commerce, or an industry-related group.