Consumer Group Pushes for Canadian Debt Collection Law Reform

A Canadian consumer advocacy group Monday published a report that calls on lawmakers, primarily at the provincial and territorial level, to amend laws governing debt collection practices including a blanket requirement that all collection calls be recorded.

The Public Interest Advocacy Centre (PIAC) said in its comprehensive report, “All Along the Watch Tower: A Review of the Canadian Consumer Debt Collection Industry,” that consumers should be more diligent in their search for guidance, collection agencies should alter their approach to consumers, credit grantors need to find a better way of incentivizing collection agencies, and lawmakers should consider changes that make rules more explicit.

“An enhanced effort is required from all stakeholders to improve Canada’s debt collection industry, and changes to consumer protection provisions can act as a catalyst,” noted Jonathan Bishop, PIAC’s Research Analyst and author of the report. “New rules are required to level the playing field between consumers with debt and the debt collection industry in Canada.”

Many of the recommendations pertain to disclosures made to consumers and practices in the legal collection channel. PIAC did call for a national requirement that all collection calls be recorded and also recommended that lawmakers and regulators allow communication by email.

Among the recommendations made by PIAC in the report:

Provincial governments should consider amending debt collection laws and regulations to ensure a collection agency includes a 1-2 page memo explaining to consumers their rights. The memo would be drafted and supplied by the relevant provincial/territorial consumer affairs agency in the jurisdiction where the consumer resides.

Amending provincial debt collection laws and regulations so collection a gencies must provide written notice before collection calls commence in every Canadian jurisdiction.

Amending provincial debt collection laws and regulations so once it is known a consumer contacted is not the debtor, attempts at collection must end in every Canadian jurisdiction.

Every call between debt collector and consumer should be recorded, for the protection of all parties and to ensure industry best practices.

The relevant provincial/territorial consumer affairs agency should implement random “spot checks” on collection agency telephone conversations by obtaining recordings from agencies. Any tampering would result in large administrative monetary penalties up to an immediate licence suspension.

Provincial governments should consider amending debt collection laws and regulations to amend or remove the exemption now enjoyed by lawyers.

Provincial governments should consider amending debt collection laws and regulations to introduce annual transparency reports related to debt collection complaints.

Provincial governments should consider exploring the opportunity for debt collection agencies to contact clients by email , once the debtor’s identity and the validity of the overdue account have been verified.