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About our presenter… Margaret Capes, B.A. (Hons.), LL.B., M.Ad.Ed, is Legal Education Coordinator of Community Law School (Sarnia-Lambton) Inc. She also acts as Review Counsel for Community Legal Services, as an adjunct professor in the clinical law program, and as faculty advisor for Pro Bono Students Canada and the Dispute Resolution Centre, all at the Faculty of Law, University of Western Ontario. She is the former Executive Director of Community Legal Assistance Sarnia.

Hot Topics in Consumer Protection Collection Agencies

2009, Community Law School (Sarnia-Lambton) Inc. 4 Regulating Collection Agencies Governed by the Collection Agencies Act. Regulated by the Ministry of Consumer Services Notorious for abusing people in debt The most common complaint received by the Ministry

2009, Community Law School (Sarnia-Lambton) Inc. 5 Why People Get into Debt General financial setback such as loss of employment Poor repayment habits Lack of money-management skills Overspending Dissatisfaction with a product or service

2009, Community Law School (Sarnia-Lambton) Inc. 6 Communication is Key Most creditors want to talk to the consumer Creditors are more likely to work out a payment plan if they can discuss the matter with the consumer Consumers who do not cooperate often find their accounts turned over to collection agencies. Once this happens, the best opportunity for a reasonable repayment schedule has already been lost.

2009, Community Law School (Sarnia-Lambton) Inc. 7 What is a Collection Agency? An independent business that attempts to collect debts on behalf of others Must register with the Ministry of Small Business and Consumer Services before starting business “What You Need to Know about Collection Agencies” brochure available on the Ministry’s website

2009, Community Law School (Sarnia-Lambton) Inc. 8 Exceptions to the Collection Agencies Act The Act only regulates third-party debt collectors Regulated/licensed professions are exempt: Lawyers Licensed Insurance Agents Registered brokers Credit unions and banks In-house collections agencies such as Ford Motor Credit or GMAC

2009, Community Law School (Sarnia-Lambton) Inc. 9 When the Collection Agency Comes Knocking If the consumer agrees that the debt is owed: Contact the collection agency and, if possible, pay the debt Deal only with the agency when making payment arrangements If immediate payment is not possible, contact the agency to explain and to discuss alternative payment arrangements Confirm payment arrangements in writing Get a receipt for all payments (cancelled cheque, written agency receipt)

2009, Community Law School (Sarnia-Lambton) Inc. 10 If the Consumer Disputes the Debt: Immediately notify the collection agency and the original creditor of the mistake, in writing Explain the error in the amount owed and why you don’t owe it Follow up to confirm that the debt has removed from your record Never make a payment if there is a genuine dispute over the amount owed A collection agency may not continue to demand payment once it knows the consumer disputes the debt

2009, Community Law School (Sarnia-Lambton) Inc. 11 Consumer Rights and Prohibited Collection Practices The Collection Agencies Act identifies prohibited practices for collection agencies, including: A consumer must be notified in writing at his or her when a creditor assigns their account to an agency for collection A collection agency may not start legal action to collect a debt without first notifying the debtor of the intention to do so Before a collector demands payment, the debtor must be given enough information to ensure him or her that the account information relied upon by the collector is correct Neither the collection agency’s charges, nor the creditor’s charges to retain the agency, may be added to the consumer’s debt, and neither the agency nor the creditor may collect or attempt to collect them from the consumer.

2009, Community Law School (Sarnia-Lambton) Inc. 12 Prohibited Collection Practices, Cont. A collection agency may not communicate with a debtor using any means by which the cost of that communication may become payable by the debtor. A collection agency may not attempt to collect any amounts in addition to the amount owed by the debtor to the creditor. A collection agency may not make telephone calls of a nature or frequency that constitutes harassment. This includes repeated calls to a consumer’s workplace. A collection agency may not imply or give false information in an attempt to collect a debt, and may not use threatening, profane, intimidating, or coercive language with a consumer. A collection agency may not contact a debtor more than three times in any seven-day period.

2009, Community Law School (Sarnia-Lambton) Inc. 13 Prohibited Collection Practices, Cont. Collection calls may only be made between the hours of 7:00 a.m. and 9:00 p.m., Monday to Saturday, and between the hours of 1:00 p.m. and 5:00 p.m. on a Sunday. Collection calls may not be made on statutory holidays. A collection agency may not contact a consumer if it is notified by registered mail that it is to communicate only with the consumer’s lawyer. A collection agency may contact someone other than the debtor only if the person being contacted has individually guaranteed to pay the debt and the contact is in respect to that guarantee, or if the contact is for the sole purpose of obtaining the debtor’s home address or telephone number.

2009, Community Law School (Sarnia-Lambton) Inc. 14 Prohibited Collection Practices, Cont. A collection agency may contact a debtor’s employer only if: The employer has guaranteed to pay the debt; The contact occur only once and for the sole purpose of confirming the debtor’s employment; or The contact is regarding payments pursuant to a wage assignment given to a credit union or an order or judgment made by a court in favour of the collection agency. Consumers should note that there is no regulation specifying the length of time for which an account must be overdue before it can be turned over to an agency for collection

2009, Community Law School (Sarnia-Lambton) Inc. 15 Collection Agency Harassment There are a number of avenues open to a consumer who believes that he or she has been harassed by a collection agency, including: Investigation by the Ministry of Small Business and Consumer Services: If a consumer believes that a collection agency has violated the Collection Agencies Act, they should contact the head of the agency. If the agency does not resolve the matter to the consumer’s satisfaction, the consumer should contact the Ministry of Small Business and Consumer Services to file a complaint. Criminal Code Charges: If a collection agency is harassing a consumer with telephone calls that are particularly abusive and threatening, an individual may contact the police for potential violations of the Canadian Criminal Code Private Lawsuits: There have been a number of recent decisions where collection agencies have been successfully sued for engaging in abusive practices in violation of the Act.

2009, Community Law School (Sarnia-Lambton) Inc. 16 Credit Counselling Consumers experiencing serious financial problems should consider contacting a credit counselling service for help. Credit counselling services can help consumers create repayment plans that will proactively address debts and cover living expenses. Consumers can contact the Ontario Association of Credit Counselling Services for information about nonprofit credit counselling services in their area.

2009, Community Law School (Sarnia-Lambton) Inc. 17 Helpful Resources Ontario Ministry of Small Business and Consumer Services website at: Ontario Association of Credit Counselling Services (OACCS) website at: Community Legal Clinics – Ontario website at: Members of Provincial Parliament website at (click on “MPPs” under “Contacts”) Community Law School (Sarnia-Lambton) Inc. website at: (click on Bulletin Board) Lawyer Referral Service (Ontario). In Ontario, the Law Society of Upper Canada provides a service for people looking for a lawyer. It is called the Lawyer Referral Service and can be reached at

2009, Community Law School (Sarnia-Lambton) Inc. 18 Sample Complaint Letter (Collection Agency) to the Ministry of Small Business and Consumer Services November 30, 2009 Ministry of Small Business and Consumer Services Consumer Protection Branch 5775 Yonge St. Suite 1500 Toronto, ON M7A 2E5 Dear Sir/Madam: Re: ABC Collection Agency, Ltd.—Consumer Complaint Please be advised, I was contacted by ABC Collection Agency, Ltd. by telephone on June 10, 12, 13, and July 10, 11, 12, Each time, they asked to speak to Mr. James Smith. I explained that I was the only person living at this address and that my name is Mr. Jerry Smith. I also asked them to stop calling as they clearly had the wrong person. They have continued to call at all hours of the day and night, including 6:00 a.m., 11:00 p.m., 12 Noon, and 6:00 p.m. I have stopped answering the telephone because they have used threatening language suggesting that my employer would be advised of the $15,000 owing on my credit card bill. Please note, I do not have an outstanding balance on my credit card. Kindly consider my request for an investigation of the actions of ABC Collection Agency, Ltd. and for assistance in having the harassing telephone calls stopped. I can be reached at: 1234 Johnston St., Summerville, Ontario, N0P2X0, phone: Yours truly, Jerry Smith

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