1) Naming: consumers are able to identify and understand their legal rights as debtors;2) Blaming: consumer complaints are enforced against collection agencies/debt collectors in breach of the CAA regulations; and3) Shaming: collection agencies that employ unfair, unlawful and unethical tactics are exposed as scofflaws and are subject to fines and possibly license suspension or revocation.
Getting harassed, threatened or berated by someone on the phone who probably also doesn’t pay their bills on time is nothing newAfter all, anyone who owns a computer and has internet access can find information about their legal rights from the helpful Ministry of Government Services website: Your Rights When Dealing With Collection Agencies (see backgrounder here)
Based upon the Ministry’s statistics above, some collection agencies/debt collectors are not getting the message about the new “Rules of the Road”. So, as a public service, I will endeavour to assist those in the debt collection industry who still think that the law does not apply to them, by using a case study of one particular collection agency that really, really, really needs to revise its debt collection notice letter.
Contact Resource Services Inc.,
P.O. Box 47009 2225 Erin Mills Parkway
Mississauga, Ont. L5K 2P0
PHONE: 1-800-673-2203 FAX: 905-403-1410
A National Collection Agency
“RE: ________ CREDIT CARD
AMOUNT OUTSTANDING: $xxxx.xx
COLLECTION REFERENCE: __________
THIS LETTER IS TO INFORM YOU THAT CONTACT RESOURCE SERVICES INC. RECENTLY PURCHASED YOUR ________ CREDIT CARD ACCOUNT. WE WOULD LIKE YOU AN OPPORTUNITY TO SATISFY YOUR ACCOUNT. YOU CAN DO SO BY CHOOSING ON THE FOLLOWING OPTIONS:
PAY $xxx.xx IN FULL SATISFACTION OF YOUR ACCOUNT; OR
MAKE CONSECUTIVE MONTHLY PAYMENTS OF $xx.xx, AND WE WILL DELETE THE ENTIRE INTEREST BALANCE OF $xxxx.xx; OR
CALL OUR OFFICE AT 1-800-673-2203 TO DISCUSS OTHER POSSIBLE ARRANGEMENTS.
IF YOU CHOOSE ONE OF THESE OPTIONS, YOU MUST DO SO ON OR BEFORE 2010/07/12. PLEASE CALL US WITH ANY QUESTIONS YOU MAY HAVE REGARDING YOUR ACCOUNT.
CONTACT RESOURCE SERVICES
But wait, there’s more. In slightly smaller but no less imposing capitalized font, the demand letter reads:
UNLESS YOU NOTIFY THIS OFFICE WITHIN 30 DAYS AFTER RECEIVING THIS NOTICE THAT YOU DISPUTE THE VALIDITY OF THE DEBT OR ANY PORTION THEREOF, THIS OFFICE WILL ASSUME THIS DEBT IS VALID. IF YOU NOTIFY THIS OFFICE IN WRITING WITHIN 30 DAYS FROM RECEIVING THIS NOTICE, THIS OFFICE WILL OBTAIN VERIFICATION OF THE DEBT OR OBTAIN A COPY OF A JUDGEMENT [sic] AND MAIL YOU COPY OF SUCH JUDGEMENT [sic] OR VERIFICATION. THIS IS AN ATTEMPT TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE. THIS OFFICE WILL PROVIDE THE NAME AND ADDRESS OF THE ORIGINAL CREDITOR, IF REQUESTED BY YOU WITHIN 30 DAYS FROM RECEIVING THIS NOTICE.” [emphasis added]
The debt collection letter then concludes with an easy-to-use detachment for Bank use or to return this portion with a cheque or money order payment. Responsible blogging requires due diligence and fact-checking. Background checks and a Google search yields some key information:
1. CRC is an Alberta corporation (but likely has an extra-provincial registration in Ontario), and is self-described as a “National Collection Agency”;
2. CRC is owned by one, Michael A. Cornale, Sr., of Mississauga, Ontario, Canada;
3. Mr. Cornale, Sr. is, coincidentally, a Past President, (1981-1982) of the International Association of Commercial Collectors, Inc.;
4. CRC is a popular topic of discussion on the Canadian Money Advisor forum: http://www.canadian-money-advisor.ca/company/2976.html;
5. Mr. Cornale, Sr. also operates another debt collection agency, Corporate Recovery Services Ltd. in Alberta;
6. In 1999, Mr. Cornale Sr., on behalf of his Alberta company, pleaded guilty to breaching the Alberta Fair Trading Act and provided an Undertaking to the Alberta Director of Fair Trading, which contained an agreed statement of facts that he used unlicensed collectors who also misrepresented their identities (including, in one instance, misleading a consumer that she was calling on behalf of Rogers Cantel legal department), both in writing and over the phone.
The Alberta Director of Fair Trading also issued a Cease and Desist Order against CRC on August 8, 2005 for misleading letters to debtors.
Here’s the bottom-line. This collection letter from Contact Resource Services Inc. is deceptive, misleading and likely constitutes unfair trading practice. If anyone receives such a notice they should immediately report it to the Ministry of Consumer Services.Here’s why. When an institutional creditor, such as a credit card company, writes off a credit card account debt (also known as a “charge-off”), it does so on the basis that it has determined the debt is uncollectible (i.e. a bad debt) and treats it as such for accounting and tax purposes.
If the credit card company then assigns this receivable/debt to a third party, such as a collection agency, the limitation period applicable to the original debt is not suspended or renewed. So, if the limitation period applicable to the original default has expired, then a subsequent demand by the same creditor or assignee of the debt is not lawful or legally enforceable.
Recall the wording of CRC’s collection letter above:
“UNLESS YOU NOTIFY THIS OFFICE WITHIN 30 DAYS AFTER RECEIVING THIS NOTICE THAT YOU DISPUTE THE VALIDITY OF THE DEBT OR ANY PORTION THEREOF, THIS OFFICE WILL ASSUME THIS DEBT IS VALID.”
This is simply a ruse to induce the consumer in responding to the debt collection letter, irrespective of the “validity of the debt”. In this example, the alleged debt dated back to the mid-1990’s and the original credit card supplier made its final demand in 2001 and then assigned it to CRC. (Ignore the fact that the credit card debt was originally around $300.00 and incurred by someone other than the alleged debtor).
This is the old “silence is an admission” trap. What happens then if the consumer does call CRC?
IF YOU NOTIFY THIS OFFICE IN WRITING WITHIN 30 DAYS FROM RECEIVING THIS NOTICE, THIS OFFICE WILL OBTAIN VERIFICATION OF THE DEBT OR OBTAIN A COPY OF A JUDGEMENT [sic] AND MAIL YOU COPY OF SUCH JUDGEMENT [sic] OR VERIFICATION.
The CAA and Regulation are explicit: collection agency notice letters are not to be used as fishing expeditions. Does calling the telephone number provided constitute consent to release of credit information? Not in the slightest, but, once they reel you in, good luck getting the hook out.
The subtle point is that CRC is trying to spring a trap on the unwary. Most non-lawyers are unfamiliar with limitation periods and how they work. Under the new Limitations Act, 2002, the former limitation of 6 years was repealed, subject to transitional provisions. The new Act specifies that no proceeding shall be commenced in respect of a claim, after the second anniversary of the day on which the claim was discovered. The fundamental issue is the meaning of the term ““acknowledgment” under s. 13.1 of the new Act, which reads:
S. 13(1) If a person acknowledges liability in respect of a claim for payment of a liquidated sum, … the act or omission on which the claim is based shall be deemed to have taken place on the day on which the acknowledgment was made.
(9) This section does not apply unless the acknowledgment is made to the person with the claim, the person’s agent … before the expiry of the limitation period applicable to the claim.[emphasis added]
In Hare v. Hare, 2006 CanLII 41650 (ON C.A.) , an appeal involving a claim made on a demand promissory note, the Court of Appeal for Ontario confirmed the well established rule that a demand notes matures as soon as it is delivered. The majority held (2:1) that that rule was not disturbed by the new Act. Thus, the limitation begins to run as soon as the money is advanced. However, the running of the limitation can be started afresh by an acknowledgment, such as a payment being made on account. (the Limitations Act was amended in response to the Hare decision)