How Debt Collection Agencies Work: The FTC and Complaints Against Debt Collectors (2005)

A collection agency is a business that pursues payments of debts owed by individuals or businesses. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed.

There are many types of collection agencies. First-party agencies are often subsidiaries of the original company the debt is owed to. Third-party agencies are separate companies contracted by a company to collect debts on their behalf for a fee. Debt buyers purchase the debt at a percentage of its value, then attempt to collect it. Each country has its own rules and regulations regarding them.

Debt collectors who work on commission may be highly motivated to convince debtors to pay the debt. These practices are highly regulated by The Fair Debt Collection Practices act, State laws to protect consumers, and the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission,and State regulatory agencies. Several Federal and State higher courts decisions have outlined several bad practices; Heintz vs. Jenkins,In re: Vinhee, Mcollough vs. Johnson, Rodenburg, Lauinger, Komarova v. Nation Credit Acceptance Inc.
In the US, the FDCPA prohibits calls to the debtor if the call will cost the debtor toll charges (in most other countries recipients of telephone calls are not charged, so this issue does not arise). The FDCPA also establishes what time of day calls can be made at, to whom and where. If a person answers, the call center may track statistics (e.g., the times and days when someone answers) in order to place calls at times when the debtor is more likely to be home; typically this is done by an automated dialing system between the times of 8am and 9pm local standard time. The collector may not use illegal and deceptive practices (for example, threatening the debtor with arrest or impersonating law enforcement). The collector cannot use obscene language and must inform the debtor of the nature of the call (collecting a debt) and their name and the name of the collection company when requested.
International debt collection is a less common and specialised field. Not many companies specialize in this sort of collection as there may be a need to speak different languages and have a knowledge of the different legal systems and laws. International collection calls are often made in a different language than used in the collecting company.
Collection agencies are sometimes allowed to contact individuals other than the debtor, usually in an attempt to locate the debtor but without mentioning the debt. In the US under the FDCPA a collector is permitted to call a neighbor or relative for help in locating the person who owes a debt. Collectors may only ask for “address, home phone number, and place of work.” Collectors are “not permitted to discuss [the] debt with anyone other than [the debtor], [their] spouse, or [their] attorney.” [8] The debtor can give permission to the collection agency to speak to somebody else besides the above mentioned. Collectors must state their name and must give the name of their employer if the person specifically asks. They may only contact each person once, unless it is believed that the person gave the collector incorrect or incomplete information at the time, but now has complete or updated information.[7] Collectors may contact a debtor at the workplace unless the collector has been informed the employer prohibits such calls,[9] in which case the collector must cease all calls to the debtor’s workplace immediately.
At times a person with no connection to the debt or the debtor may be contacted by a collector by error. Examples include victims of identity theft and people erroneously targeted due to a similar name. Alternatively, the alleged debtor may dispute that the debt is payable. In such cases the alleged debtor can require that the collector or creditor prove that the debt is payable—in no jurisdiction does a debt exist merely because a collector says so. In the United States under the FDCPA, anyone has the right for any reason to request written validation of the debt or to demand the collector cease communication.

Relatives of deceased people do not necessarily themselves have to pay the debts of the deceased, but debts must be paid by the deceased person’s estate.

http://en.wikipedia.org/wiki/Debt_collection