Collecting Debts Online

Published: Wednesday, November 15, 2006

In today's increasingly electronic marketplace, online debt collecting is an issue for many debt collectors. According to the CheckFree Corporation, in 2005 more than half of U.S. online households were paying at least one bill online. In light of this information, the ability for collection agencies to offer an additional payment method may be important to the continued success of the collection industry.

A Web site has the ability to act as an additional debt collector for an agency. In addition to accepting payments, a Web site can offer consumers another avenue for submitting a dispute, checking the balance of their account, and requesting payments or pay-off amounts.

When determining whether to utilize the convenience of online collections, there are a number of regulations a debt collector needs to consider, such as the Electronic Fund Transfer Act (EFTA), Regulation E, and federal and state collection laws. Additionally, in order to accept online debit transactions, a debt collector needs to comply with the Operating Rules of the National Automated Clearing House Association (NACHA).

The Fair Debt Collection Practices Act (FDCPA) defines communication as the "conveying of information regarding a debt directly or indirectly to any person through any medium." Some courts have established that a debt collector's Web site may be subject to the FDCPA. A Web site maintained for consumers can allow them to submit payments or disputes, check the balance of their account or communicate with the debt collector. If a collection notice references a debt collector's Web site, the Web site then is used in connection with the collection of a debt and the content of the site is incorporated into the collection letter. Therefore, the debt collector must be sure the information provided on the Web site complies with the requirements of the FDCPA.

Utilizing the power of the Internet in the debt collection process can be a powerful tool. Whether the collector wants to accept online payments, provide consumers with another venue to submit a dispute, request payment or pay-off amounts or access balance information on their account, the collector is obligated to shoulder the burden of regulatory compliance and data protection along with the benefits of increased efficiency and convenience. In the process of going online, a debt collector should consult legal counsel in order to reduce the risk of potential violations.

For further information regarding online debt collection, please contact the ACA International Internet & Check Services Program at icsp@acainternational.org.

This article is provided as a service of ACA International's Internet & Check Services Program.