Lesson 1, Topic 1
In Progress

1.1. Explain the concept of ethics in relation to debt recovery.

ryanrori January 20, 2021

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What is debt collection?

The National Debt Collection Act 114 of 1998 regulates the process of collecting debts in South Africa. Debt Collection is when an attorney; a person who is an agent of an attorney; or a registered debt collector collects, on behalf of the client, the capital amount plus lawful interest and the debt collectors fee.

Who is allowed to collect debts?

Section 8 of the Act says an attorney, or his or her agent, or a registered debt collector may act as a debt collector. A registered debt collector is a person registered with the Council for Debt Collectors.

Do debt collectors have to follow a code of conduct?

YES! Section 15 of the Act tells us what conduct would be considered “improper” or unethical. A debt collector is NOT allowed to …

  • Use force or threats against a debtor or any other person who has ties with the debtor;
  • Use intimidation against a debtor or any other person who has ties with the debtor;
  • Make fraudulent or misleading representations including:
  • Making or using fraudulent legal or official documents;
  • Represent themselves as a police official, sheriff, officer of the court or any person other than a debt collector.
  • Practice as a debt collector if he or she is convicted of an offence that has an element of violence, dishonesty, extortion or intimidation;
  • Spread or threaten to spread false information concerning the creditworthiness of a debtor;
  • Violate the provisions of the code of conduct.

Debt collectors’ ethics codes

How do you know when a debt collector has gone too far? What can you do about it?

The Fair Debt Collection Practices Act spells out consumers’ rights when dealing with debt collectors. In addition, members of the credit and debt collection industry have taken steps to police themselves when interacting with consumers.

ACA International, the largest trade group of credit and debt collection industry professionals, adopted a set of ethical guidelines member agencies must follow when collecting debts. The code of ethics requires debt collectors to:

  • Treat consumers with consideration and respect.
  • Communicate with consumers with honesty and integrity.
  • Suspend collection activities upon receipt of a written request from the consumer for verification of the debt.
  • Conduct a reasonable investigation to verify the debt, identify the person obligated to pay the debt and the accuracy of the information provided to the debt collector.
  • Not threaten to initiate legal action on debts that are beyond the statute of limitations.
  • Not engage in dishonest, fraudulent or deceitful conduct or misrepresent themselves.
  • Not harass, threaten or coerce people.
  • Not engage in dishonorable, unethical or unprofessional conduct that may deceive, harm or defraud consumers or the public.
  • Use reasonable efforts to safeguard the confidentiality, integrity and availability of consumer information.