Debt collection is a high-pressure business, and employees are often trying to come up with new ways to get debtors to pay up. One of the more commonly tried tactics is to call the debtor or send them a letter saying that they will be subject to arrest and criminal prosecution if they don’t make payments. Except in rare cases, this tactic is illegal.
Why Threatening Criminal Prosecution is Barred
The Fair Debt Collection Practices Act prohibits debt collectors from making false, deceptive, or misleading representations about the status of the debt or who they are. There are no debtors’ prisons in the United States. Failing to pay money owed under a contract is entirely a civil matter. Because it isn’t a crime to owe a debt, a statement that a debtor will be prosecuted is inherently false and thus barred under the FDCPA.
Some debt collectors take things a step further and directly state or indirectly insinuate over the phone that they are law enforcement. Because the FDCPA requires debt collectors to truthfully identify themselves, this tactic is illegal in itself whether or not a threat of prosecution is made.
The only real exception to the general bar against threatening prosecution is when some sort of fraud has been committed. This could be materially false representations by the debtor about their income or other means to repay the debt. It may also be possible to prove that the debtor received the goods or services without ever having any intention to make payments as promised. While fraud prosecutions are possible under these circumstances, the situation should be carefully analyzed by an attorney to ensure that an actual fraud occurred. To avoid a lawsuit for an FDCPA violation, front-line debt collection employees should not be tasked with making determinations about fraud or informing the debtor about the possibility of criminal prosecution.
What About When the DA Wants to Get Involved?
In a time of tight budgets, some local prosecutors’ offices have rented out their letterhead to debt collection companies. The letterhead gives an aura of credibility to demands for payment as they appear to have been sent from an official government agency. When the letter also threatens criminal prosecution, the debtor has no way of knowing that the threat wasn’t made by an actual prosecutor and that they won’t imminently be arrested.
Even if a local prosecutor’s office may approve of these letters, they are still an illegal means of collecting a debt. Any false representations still violate the FDCPA, and the American Bar Association has called this use of letterhead unethical both because no prosecutor reviews the letter and because “they misuse the criminal justice system by deploying the apparent authority of a prosecutor to intimidate an individual.”
In short, debt collectors should be reminded that their jobs are civil in nature and that little good can come of trying to connect the debt to a criminal issue.