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Our attorney told us that the bank cannot send letters to delinquent debtors directly and that such letters must come from a debt collector or an attorney. Is that true? – IBA Compliance Connection

IBA Compliance Connection

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Our attorney told us that the bank cannot send letters to delinquent debtors directly and that such letters must come from a debt collector or an attorney. Is that true?

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No. We are not aware of any laws or regulations that would require an attorney to perform all collection efforts on behalf of a bank, and we do not believe that a bank acting in its own name would be subject to any non-criminal laws restricting debt collection practices (though it would probably be a best practice to comply with the Fair Debt Collection Practices Act (FDCPA) in any collection efforts).

The FDCPA applies only to “debt collectors,” defined as persons collecting “debts owed or due or asserted to be owed or due to another” (15 USC 1692a(6)), and the Illinois Collection Agency Act does not apply to banks, unless the bank owns and operates a collection agency (225 ILCS 425/2.03(1)). Therefore, the FDCPA’s requirement that a debt collector inform a creditor of the thirty-day period in which the creditor can dispute a debt would not apply to a bank collecting its own debts. 15 USC 1692g(a)(3).