The number and diversity of referees and rules in debt collection dodgeball in Canada is simply overwhelming.
I strongly recommend that you read my article titled "Player Introductions in Debt Collection Dodgeball" before you read this article. The focus of that article was on creditors and their collection agents. It explains a number of concepts including original creditor, an in-house collection department, debt buyer, purchased debt, and collection agents.
In this article we will be providing not only an overview of the basic regulatory framework for bill collectors but also introducing those responsible for enforcing these guardrails. In many games there is only one referee. In debt collection dodgeball there are not only multiple referees but also multiple sets of rules.
1. Regulation of bill collectors in Canada
a. Regulation of bill collectors in Canada is a patchwork quilt
Government regulation of those attempting to collect unpaid accounts is a hot mess in Canada. The relevant laws are a patchwork quilt that vary from one jurisdiction to another.
Each one of Canada's ten provinces and three territories has a different code of conduct for regulating collectors. This means that a collector speaking with Canadians from across the country is responsible for complying with any one of the thirteen different sets of rules. Each workday in Canads some of the most ethical collectors employed in the collection industry routinely violate provincial law regulating collection agencies because no collector can be expected to comply with one of thirteen different sets of rules on any given phone call with a consumer.
When I am contacted by a consumer and I want to know what protections are afforded to them these are the questions I will often ask.
In what province do you reside?
Are you receiving phone calls with respect to monies owing to a federally regulated financial institution such as a bank or credit card company?
Which firm employs the collector calling you; (1) your original creditor, (2) a debt buyer, (3) a collection agency, or (4) a lawyer or law firm?
Are you receiving collection calls from a collection agency or a debt buyer in circumstances where the collection calls are originating from a location in Ontario?
b. What province do you live in?
The protections that you are entitled to from bill collectors may often depend upon which province you live in.
Collection agencies are firms that collect monies owing to others. Provincial and territorial laws regulating collection agencies attempt to accomplish two goals. Firstly, every province and territory in Canada licenses collection agencies. Like so many laws regulating collection agencies, the definition of a collection agency is not uniform across Canada. Ontario and Alberta are the only two jurisdictions in Canada where a debt buyer falls within the definition of a collection agency.
Secondly, these provincial laws provide some protections to consumers by not only imposing certain obligations and codes of prohibited conduct--a set of DO's and DONT'S for collection agencies. The extent of these protections varies from one province to another. The residents of Ontario, British Columbia, and Alberta are afforded more protections than the residents of other provinces.
British Columbia's provincial law regulating collection agencies affords protections to consumers regardless of the employer of the bill collector.
These laws regulating the conduct of collection agencies can be found in either a stand-alone law limited in scope to regulating the conduct of collection agencies and their employees, or as part of a comprehensive law that regulates a broader range of consumer transactions. Some provinces like Saskatchewan, Newfoundland, and Prince Edward Island have a stand-alone law that simply regulates collection agencies. The remaining provinces have a broader law that regulates more categories of consumer interactions that simply those involving collection agencies.
Here is a list of the ten provincial and three territorial laws where you can find specific provisions regulating the conduct of collection agencies and collectors.
On May 1, 2021, the Nova Scotia Collection Agencies Act will be replaced by the Nova Scotia Collection and Debt Management Services Act.
As a general rule, these provincial and territorial laws regulating collection agencies only apply to collection agencies communicating with the residents of that province. Later in this article we will canvass the incredibly broad scope of the Ontario law regulating the activities of collection agencies where communications with consumers originate from a physical location in Ontario.
Each province has a civil servant whose responsibility it is to enforce that province's laws regulating the conduct of collection agencies, someone whom I refer to as the provincial regulator.
c. Are you receiving collection calls in connection with monies owing to a bank or credit card company?
In Canada, the federal government regulates banks and credit card companies. Federal legislation passed about 10 years ago created a number of protections for consumers receiving collection calls with respect to monies owing to federally regulated financial institutions. More than half of all unpaid accounts in Canada are owed to Canadian banks or credit card companies so these protections are a big deal.
This federal legislation affords some protection to a consumer who owes monies to a bank or credit company regardless of the bill collector's employer. The scope of this protection is broad enough to apply to the following categories of bill collectors:
Collectors employed by original creditors
Collectors employed by collection agencies
Employees of a lawyer's office making collection calls
The reason why this federal law is so important is that it entitles consumers to protection from abusive and overreaching behavior by collectors employed by banks and credit card companies.
This federal law does not apply to debt buyers because it only applies to unpaid accounts where the creditor is a federally regulated financial institution. Once your bank or credit card company sells your unpaid account then you will lose these protections under federal law because the debt buyer is not a federally regulated financial institution. Welcome to debt collection Whac-A-Mole!
d. Is the collector calling you employed by (1) your original creditor, (2) a debt buyer, (3) a collection agency, or a (4) collection law firm?
In order to determine what protections, if any, a consumer is entitled to, it might be necessary to determine which one of the following categories of employers your bill collector falls into:
Your original creditor
A debt buyer
A collection agency
A collection law firm
i. Collection calls from your original creditor
The fewest protections afforded to Canadian consumers occur where that bill collector is calling from your original creditor. In my eight years working as a collection lawyer the most abusive bill collector I ever encountered were employed by creditors. I literally had one client call me crying after he received a phone call from a collector from Capital One. I then got on the phone and I called that collector and I told him I was contemplating naming him in a blog post as the worst collector in Canada.
ii. Collection calls from a debt buyer
You are not entitled to protections under provincial law if you are receiving collection calls from a collector employed at a debt buyer unless
You are a resident of Ontario, Alberta, British Columbia, or Newfoundland
You are receiving collection calls from a debt buyer physically situated in Ontario
iii. Collection calls from a collection agency
If you live anywhere in Canada and your are receiving collection calls from a collection agency then you are entitled to some protections. The extent of these protections will vary greatly depending upon which province or territory you live. The jurisdictions with the least protections for consumers under their laws include Manitoba, Prince Edward Island, and the three territories.
iv. A collection law firm
A significant number of lawyers do some work assisting creditors and collection agencies collect unpaid accounts. A handful of these law firms employ staff whose job descriptions are virtually identical to a collector at a collection agency. I refer to these firms as collection law firms. One of the largest collection law firms in Canada is Mississauga, Ontario-headquartered Anderson Sinclair. According to the firm's website it has offices in five provinces.
A law firm is regulated by a provincial law society. In Canada a provincial law society is the body that regulates the conduct of lawyers who practice law in that province. If a collection law firm--or a member of their staff--are acting in an aggressive or unprofessional manner a written complaint to the provincial law society might be all that is required to encourage them to be on their best behavior.
v. First party collections versus third party collections
It is very helpful to understand the distinction between first party collections and third party collections. First party collections occur where employees of your creditor call you demanding payment of your unpaid account. Third party collections occur where collectors calling you demanding payment are employed by collection agents--as opposed to your creditor.
Some more detail will help you understand this distinction. Collection calls from the inhouse collection department at your original creditor or a debt buyer are first party collections. In contrast, collection calls from collectors employed by a collection agency or a collection law firm are third party collections.
In Canada consumers are typically afforded more protections on third party collection interactions than on first party collection interactions.
e. Calls from collection agencies or debt buyers originating in Ontario
As noted earlier in this article, most provincial and territorial laws regulating collection agencies provide protections to the residents of that province or territory. Ontario is the exception.
Regardless of where you live--anywhere in the world--if you are receiving collection calls from a collection agency or a debt buyer physically situated within the borders of Ontario then you are entitled to the generous protections under the Ontario law regulating collection agencies, the Ontario Collection and Debt Settlement Services Act.
An example will help illustrate this point.
John Mykityshyn is a resident of Winnipeg, Manitoba. Virtually every weekday collectors from Ontario-based debt buyer ABC Debt Buyer, are calling reception at his workplace about a 12- year old cell phone bill and they are being rude and abusive towards the receptionist. They claim he owes more than $6,000.00 on his ex-wife's cell phone. John is worried that he is going to lose his job if these abusive collection calls continue.
Manitoba's provincial law regulating collection agencies, the Manitoba Consumer Protection Act, is absolutely no assistance to John because the definition of collection agency under the Act does not include debt buyers. ABC Debt Buyer owns John's unpaid cell phone bill and therefore, it is not subject to the Manitoba Consumer Protection Act.
There is, however, hope for John. Firstly, since the collection calls to John's workplace originate from Ontario the Ontario Collection and Debt Settlement Services Act applies. Secondly, the definition of collection agency under this Ontario law includes debt buyers. This means that John can make a formal written complaint to the Ontario Government alleging a violation of the Act. As a practical matter, John should probably hire a lawyer to write a strongly worded cease and desist letter to ABC Debt Buyer ABC threatening to sue them for failure to comply.
A cease and desist letter is a letter sent by a consumer--or the consumer's legal representative--demanding that an entity's collectors stop calling the consumer. Cease and desist letters are an important item in a consumer's toolbox to stop collection calls. I will write more about cease and desist letters in a future article.
2. Privacy laws and rights afforded to consumers
Canada has a privacy law that is relevant in certain circumstances in debt collection dodgeball. This law is called the Personal Information Protection and Electronic Documents Act (PIPEDA), commonly referred to as PIPEDA. This laws sets national standards for privacy practices in the private sector.
To make matters more confusing, three provinces--Alberta, British Columbia, and Quebec--have enacted their own provincial privacy laws that apply to privacy practices in the private sector. Alberta's Personal Information Privacy Act (PIPA), and the British Columbia Personal Information Privacy Act (PIPA), are both very similar to PIPEDA, their federal cousin.
i. The appropriate privacy regulator to complain to
If you live in Alberta, British Columbia, or Quebec, and you want to file a privacy-related complaint you should likely make it to the privacy commissioner in your province. Furthermore, you may want to inquire if there is merit in making a complaint to the Federal Privacy Commissioner under PIPEDA.
Individuals living outside Alberta, British Columbia, and Quebec seeking to make a privacy-related complaint should do so to the Federal Privacy Commissioner under the federal Personal Information and Electronic Documents Act (PIPEDA).
ii. Making a written complaint about a third party disclosure
You might want to make a written complaint to the appropriate privacy regulator where a creditor or its collection agent has disclosed the existence of your unpaid account to someone other than a person legally responsible to pay the account. This is referred to as a third party disclosure.
Furthermore, if you are a victim of a third party disclosure you should also make a formal written complaint to the provincial regulator in your province responsible for regulating that entity. Where the culprit is a collection agency your complaint would be made to the provincial regulator responsible for regulating collection agencies. If, on the other hand, the culprit is an employee of a law firm, then you would make a written complaint to the provincial law society responsible for regulating that law firm.
iii. Seeking information or documents from your original creditor or a collection agency
A consumer might want to make a written complaint to the appropriate privacy commissioner in circumstances where the consumer has written to a creditor requesting information--such as the date of last payment on an account--or copies of documents in that entity's files, and the request has not been fulfilled.
I often have my clients send a letter to the Chief Privacy Officer at the consumer's original creditor, requesting confirmation of the date of last payment on a particular account.
In a future article I will explain how this tactic can be the silver bullet when a consumer is dealing with a negative item on their credit report or defeating a creditor because the debt is too old.
3. Human Rights Commission or Human Rights Tribunal
More than 15 years ago when I was a collection agency lawyer in one case a consumer made a complaint to the Ontario Human Rights Tribunal alleging that a collector employed by my collection agency-client made an ethnic slur against the consumer.
Each province in Canada has an entity whose stated purpose is to protect human rights. If your rights under provincial human rights law have been violated then you might be able to successfully file a complaint to the appropriate provincial government body. In the majority of provinces this body is known as your province's Human Rights Commission. In some jurisdictions, including Ontario, British Columbia, and Nunavut, it is known as the Human Rights Tribunal.
4. Remedies for egregious conduct by creditors and collection agents
Sometimes creditors, their collection agents, and collectors engage in egregious conduct. In some instances, this may provide the consumer with an opportunity to successfully sue for monetary compensation. In rare instances, the conduct of a collector may cross the threshold into criminal behavior and it might be possible to have criminal charges laid against a collector. I am going to deal with these issues in future articles.
The regulation of bill collectors in Canada is a complex topic. It is unfortunate that laws regulating debt collectors are not uniform across the country.
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