June 1, 2006

A collection agency is an organization hired by a business to collect money that is owed. Some businesses use collection agencies when customers’ accounts are overdue. Ontario regulates collection agencies through the Collection Agencies Act and its regulations. The act’s regulations forbid collection agencies from:

• Contacting a consumer until six days have passed from sending the consumer written notice of the following:
  • the name of the creditor
  • the balance owing
  • the name of the agency and its authority to demand payment
• Continuing to contact a consumer if he or she did not receive the notice unless a second copy of the written notice is sent to an address provided by the consumer, and then contact may only be made six days after sending notice
• Contacting a consumer if he or she (or his or her lawyer) sends a registered letter to the agency disputing the debt and suggesting the matter be taken to court
• Contacting a consumer if he or she notifies the agency by registered mail to communicate only with a lawyer appointed by the consumer (the lawyer’s name, address and telephone number must be provided to the agency)
• Contacting a consumer on Sunday, except between the hours of 1 p.m. and 5 p.m., and on a holiday
• Contacting a consumer, other than by ordinary mail, more than three times in a seven-day period without consent, once the agency has actually spoken with the consumer
• Using threatening, profane, intimidating or coercive language, or using undue, excessive or unreasonable pressure
• Continuing to contact a consumer if he or she has told them that he or she is not the person they are looking for unless they take reasonable precautions to ensure he or she is that person
• Giving false or misleading information to any person
• Recommending to a creditor that legal action be commenced against a consumer without first sending notice to the consumer
• Contacting a consumer’s employer except on one occasion to obtain employment information, unless the employer has guaranteed the debt, the call is in respect of a court order or wage assignment or the consumer has provided written authorization to contact the consumer’s employer
• Contacting a consumer’s spouse, a member of the consumer’s family or household, or a relative, neighbour or acquaintance except to obtain the consumer’s address and telephone number unless the person contacted has guaranteed the debt or the consumer has given permission for the person to be contacted.

A few precautions can eliminate common complaints:

• Repay debt that has gone to a collection agency as soon as possible. If you need to borrow money, make sure you borrow it as cheaply as possible.
• Compare rates on credit cards or personal loans.
• Never send cash. Always make payments in such a way that you have a receipt – either a cancelled cheque from your bank or a receipt from the agency.
• Negotiate a payment schedule you can live with and stick to it.
• Avoid payday loans, which are marketed as a quick and easy way to get cash until the next payday. They charge additional fees that can make these loans too high to repay.