ACA Adopts New Code of Ethics for Collection Industry

Verification: Under the Fair Debt Collection Practices Act (FDCPA), a consumer has 30 days to request, in writing, debt verification from a third-party collector. Upon receipt of such a request, all collection activity must cease until the collector provides the consumer with documentation the debt is owed. The new code extends indefinitely the consumer’s right to request verification in writing.
 
Additionally, the law does not require the collector to take any further action if it closes an account it cannot verify. Many consumers are left ill at ease when they hear nothing back regarding their verification request. With the new code, ACA seeks to add a step to the debt verification process requiring collectors to provide consumers notice that collection activity has ceased. This provision was added to the code in the interests of consumers, but lest such notice be interpreted as a violation of the FDCPA’s “cease communication” rule, the provision will only become effective upon ACA’s receipt of a formal advisory opinion from the Federal Trade Commission addressing a collector’s ability to provide this notice.

The new code also requires collectors to indicate, when the account is closed and returned to the creditor, that the reason for closure was the collector’s inability to verify the debt. This should allow the creditor or debt buyer to prevent the account from being sold or reassigned.

Time-Barred Debt: The statutes of limitation on consumer debts vary widely from state to state but are  generally, four to ten years. ACA members consider the filing of a lawsuit on a time-barred debt to be an abusive practice and commit to use legal collection remedies only when appropriate to satisfy a debt.

Chain of Title: Creditors increasingly opt to sell non-performing debts to buyers to improve cash flow and recovery. Selling debt is an important tool for managing receivables. To curtail the reassignment or resale of disputed debts and to prevent wrong-party contacts, ACA encourages debt buyers to obtain supporting documents and establish the chain of title for any accounts they purchase.

Identity Theft: ACA members seek to communicate with only those consumers who are legally obligated to pay their past-due debts. Wrong-party contacts and victims of identity theft need protection from unwarranted collection activity. To that end, the enhanced code requires members of ACA to conduct a reasonable investigation to determine the validity of the debt and the identity of the obligor when claims of identity theft are communicated by the consumer.  

While the FDCPA’s consumer protections apply only within the United States, ACA extends the Act and its more stringent code of ethics to all 5,500 members worldwide.

A task force of ACA members appointed by the association’s executive officers drafted the new code. ACA published the draft for a month-long comment period following which the association incorporated public feedback on the proposed changes.

By adopting the new standards, ACA members have publicly embraced self regulation, taken meaningful steps to preserve and foster the vitality of the industry and, most important, have set themselves apart as professionals committed to treating all consumers with dignity and respect.

The complete ACA Code of Ethics document can be accessed online at http://www.acainternational.org/images/10758/acacodeofethics.pdf.