Collections Practices by Collection Agencies

The Fair-Trading Act sets out collection practices that are not permitted.  A collection agency or collector may not use any of the following practices:

• Contact you before 7:00 a.m. or after 10:00 p.m. for the purpose of demanding payment of a debt on any day

• Threaten you directly or indirectly with an action that the collection agency or collector does not have lawful authority to do so.  For example, collectors cannot tell you that if you do not pay the debt you will be sued or your wages will be garnisheed.  They cannot give you specific Court dates or tell you that you be required to pay all costs of going to Court.  These are decisions made only by the Courts.

• Collections Agencies cannot threaten to send one of their agents to seize your property. Only an authorized civil enforcement agency can seize property and can only act when certain requirements are met. A bailiff who works for a civil enforcement agency is the only person who can seize property. For example, the civil enforcement agency may act if a judgment has been granted against you by a Court and instructions are received from the creditor who obtained the judgment. There will be more documentation than a phone call from a collection agency.

• It is a criminal offence to threaten to physically harm you, your family or your property if you do not pay. The police do not get involved in collecting debts unless there is a criminal offence committed, such as writing an N.S.F. cheque.  Although failure to pay alimony or child support can lead to jail, collection agencies cannot institute such a penalty. If any collector does this, charges may be laid under the Criminal Code of Canada. If this happens, call the police and inform Service Alberta.

• The collection agency cannot use, profane, intimidating or coercive language.

• The collection agency cannot discuss your debt or the existence of your debt with any person except you (unless you have given your express consent to do so), a guarantor of the debt, the creditor or someone you have identified in writing as your representative. If you want the collector to contact your representative to discuss your debt, you must provide that person’s current address and telephone number.

• The collection agency cannot discuss your debt with a minor child.

• The collection agency cannot call you with such frequency as to constitute harassment of you, your spouse, or any member of your family. This includes more than three unsolicited contacts in any period of seven consecutive days not including contacts with a third party to locate you or mistaken contacts with a third party or contacts by traditional mail.

• Give you false or misleading information.  For example, tell you that they are part of a law firm or the legal department of a particular business.

• Contact you employer unless it is to verify your employment.  They cannot jeopardize your job.   If your employer threatens to fire you because of the calls, consider complaining to the Consumer Investigations Unit at 1-877-427-4088.

• Contact you at work if you ask them not to contact you there and have made reasonable arrangements to discuss the debt with them and have done so.

• Contact your spouse, relative, neighbor or friend unless it is only to get information on you such as your address or telephone number.  If you co-signed a loan, you are also considered a creditor and responsible for the debt. If you agreed to relieve a spouse from debt in a separation agreement, the collection agency can still collect from either spouse or both.

Sometimes, the collection agency or collector may demand the entire amount of the debt owed even if you are late in only 1 or 2 payments to the creditor.  The collection agency must be authorized to make such a demand by the creditor and there must be an acceleration term in the contract.  Check the wording of your contract to see if they can make this demand.

The collection agency owes duties to the creditor. They cannot, on their own, negotiate or accept lower payment than the full debt.

If you think that the action of a collection agency or a collector are illegal or heavy-handed, you may contact the Alberta Government Services, Consumer Investigations Unit toll-free from anywhere in Alberta at 1-877-427-4088.