Robert Fite
Under the Fair Debt Collection Practices Act (FDCPA), debt collectors are permitted to contact a debtor's friends, relatives or neighbors to obtain location and/or contact information. This is an important piece of the skip tracing puzzle in finding hard-to-reach consumers.
However, there are many very specific rules associated with this privilege. First, if a debt collection agency has correct contact information for a debtor, it will not be able to contact third parties at all. Other than for disclosure to third parties, why would a collector contact a relative if, for example, a correct phone number already exists?
Another important caveat is that debt collectors are only allowed to contact a third party to obtain location information once (unless that third party specifically gives the debt collector permission to call back, which almost never happens). This means that debt collectors and delinquency hunters must have the best possible information before making a single call to a reliable third party to help them locate a debtor (e.g., a parent).
With the robust information processing technology available today, a single phone number can be determined to be connected or disconnected, a cell phone number, from a time zone that would result in calling violations, or is associated with a relative of a debtor. In addition, many solutions can provide debt collectors with the exact relationship of a relative to the debtor.
This is very important in an environment where more children are living in their parents' home after college age. Even if there are only three people living in the house, at least four phone numbers can be linked to a “boomeranger” living at home. In practice, a landline at home would be the correct party contact number for the child. However, parents' individual cell phone numbers would not be affected and would fall under the one-contact rule.
Things get complicated if the child has given their own cell phone number as their main contact when applying for a loan. Then the landline at home could be blocked (or this could be argued in court) because it is technically in the parents' name.
To reduce the risk of calls in the current debt collection environment, where legal disputes continue to arise, it is essential to have as much information as possible for your single call to relatives. Third parties will always be a valuable resource for collectors and skip trackers, but it's not worth filing lawsuits against.
Rob Fite is Vice President of Collection Solutions at LexisNexis® Risk Solutions and brings nearly 20 years of experience in collections, credit and risk management. At LexisNexis, Rob is responsible for leading the market strategies, product development, business direction and sales growth of the LexisNexis collections.
This article originally appeared in the latest issue of Know Your Debtor, a free quarterly newsletter focused on the U.S. consumer environment. Make sure you are registered to receive insideARM newsletters on your user profile page.
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