Anyone who owes debts or obligations must pay them or face collection action. Collections agencies do not have free reign to do anything they wish. Minnesota law as well as federal statutes regulate their behavior.
Unethical collection agency behaviors
Once an account falls into arrears, a lender might contact a collection agency to handle the situation. While missing one car loan or monthly credit card minimum payment won’t likely lead to repossessions or harsh past-due notices, repeatedly falling behind on payments would likely lead to action. Collections agencies must follow the law, and they cannot harass anyone. Regrettably, some collection agencies willfully violate federal and state statutes.
A collection agency that lies to someone and claims to represent a government agency engages in highly egregious behavior. A collection representative could go one step further beyond misrepresentation and claim to have the authority to arrest a debtor.
Harassment might take milder forms, but that won’t make the behavior legal. Collections agencies might find themselves in legal trouble for such conduct, but some victims might be unaware that these practices are not legal. So they may not report them.
Further troubling collection behaviors
Threats of physical violence may occur. Threats that involve other behaviors, such as attempts to shame a debtor publicly, are also banned. Actions like these may intend to frighten some into compliance.
The representative might engage in wrongful repossession. Yet, violating a contract’s terms and attempting to repossess property prematurely might be invalid under the law. Still, a nervous debtor might not take the actions necessary to assert their legal rights.
A collector might even attempt to collect a debt someone doesn’t owe. The representative may do so even when shown proof that the debt is someone else’s. Deliberately trying to collect from an innocent party may lead the collection agency into legal trouble.