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ACM steps up efforts against unfair debt collection practices

The Netherlands Authority for Consumers and Markets (ACM) today has launched an awareness campaign to empower consumers against unfair practices in the debt collection industry. In the campaign, called ‘Debt collection? Only pay if the facts are correct,’ ACM and the Netherlands Authority for the Financial Markets (AFM) call on consumers to take action against unjust, incorrect or aggressive debt collections.

In addition, ACM and AFM have started explaining and enforcing the rules in the debt collection industry. ACM recently conducted its first wave of dawn raids in the industry as part of its investigation into debt collection practices. Henk Don, Member of the Board of ACM, explains: “It is essential that consumers take action against unjust claims. That is how they can prevent harm to themselves. And that is also how to stop unfair debt collection practices, next to the actions taken by regulators. At the same time, I’m calling on the debt collection firms and their clients to face up to their responsibility in this matter.”

What is the problem?

ACM has investigated the debt collection industry because consumers had reported a lot of problems to consumer information portal ConsuWijzer about this industry, and because the subsequent harm to consumer confidence was substantial. ACM has identified three problems with commercial debt collection firms and with businesses that collect themselves. The following situations constitute a violation of the rules.

  • Collecting unjust claims. This is, for example, about invoices that should not have been sent because the consumer in question had not agreed to the purchase such as with unsolicited follow-up shipments (also known as subscription traps);
  • Charging too high collection fees. Debt collectors can only charge collection fees and interest based on the principal. They are not allowed to charge any other costs such as office management costs, filing costs or administrative costs. Collection fees have been statutorily capped;
  • Exerting unacceptable pressure on consumers. This is the case if firms threaten to take measures that they are in fact not authorized to take such as confiscating someone’s possessions or salary, or serving a summons on them. Or if firms exhibit aggressive behavior.

These problems are frequently observed among a large group of debt collection firms. Such cases relatively often involve low-income individuals who have high debts. These consumers are more vulnerable than others.

Consumer campaign

By educating consumers and offering practical tools on its consumer information portal, www.consuwijzer.nl, ACM helps consumers take action. On that site, consumers will find the following information:

  • Information about the rules that apply to debt collection procedures;
  • The ‘ Collection Letter Checklist’ (in Dutch)  to find out whether the collection letter is correct, and what consumers can do if the letter is not;
  • The ‘ Collection Fee Calculation Tool’ (in Dutch) to calculate the collection fees, interest, and VAT that the collection firm is allowed to charge at the most;
  • Sample letters (in Dutch) with which consumers are able to defend themselves against unfair collection practices, and links to other organizations that could help them in that effort.

ACM wishes to draw attention to this campaign that it is running in association with AFM and its civil-society partners such as the Dutch Association for Debt Counselling and Social Banking NVVK, the Dutch Organization for Social Counselors (LOSR), the Legal Service Counter (Juridisch Loket), the Dutch Consumers Association (Consumentenbond), Money Wise Platform (Wijzer in geldzaken), the National Institute for Family Finance Information (Nibud), and the Fraud Help Desk. ACM has also created a short campaign video (in Dutch). ACM calls on consumers to keep reporting unfair collection practices to its consumer information portal ConsuWijzer.nl. Employees (current and former ones) of debt collection firms can also report information to ACM. This can also be done anonymously using the online form.

ACM and AFM: educating consumers, while enforcing the rules

ACM and AFM have joined forces to deal with misleading and aggressive practices of debt collection firms more effectively. This has produced the following results thus far:

  • ACM recently conducted the first wave of dawn raids at debt collection firms;
  • AFM has reminded moneylenders of their responsibility for debt collection problems (in Dutch);
  • ACM has called on companies that hire debt collection firms to face up to their responsibility. ACM has asked them to explain how they make sure that the debt collection firms that collect on their behalf comply with the rules.