Debt hunters in Parliament’s crosshairs

– Parliament attacks debt hunters again

Pressure, undue costs… Collection companies are in the crosshairs of the National Council. Jean Tschopp (PS/VD) proposes a mediation body.

What do you propose?

Many companies use collection companies to recover their debts. In just a few weeks, a bill can double or quadruple. Very often, the basis of the claim is not even verified, undue additional damages are claimed. Most consumers, unaware of their rights, refrain from taking legal action due to high costs and pay the full costs.

My proposal consists of setting up an ombudsman, a neutral and independent mediation body to protect and inform consumers of their rights.

This ombudsman could operate in the same way as the Ombudscom of Ofcom (Federal Office of Communications), which intervenes when invoices are disputed with telecommunications operators. The Confederation could similarly appoint a mediator on the issue of collection companies.

Are businesses wrong to use these collection companies?

A company obviously has the right to ensure that it gets paid. The Prosecution Act provides state assistance in suing debtors and obtaining payment of bills. But perhaps it would be worth it for some businesses to consider what contracts with these collection companies cost them and, in terms of image, the damage that the methods used by these agents can cause.

Why has the Federal Council not yet wanted to better regulate these companies?

The Federal Council has always considered that justice could be taken. But this position does not take into account the procedural complications and the inherent cost advances. And that justice is simply not easy to access.

These collection companies also violate data protection rules by, for example, having access to the creditworthiness of debtors.

This is another reason to set up a neutral Ombudsman. The one that currently exists, Collection Switzerland, is internal to the sector and essentially defends the interests of collection companies and not those of consumers. The motion by my colleague Benjamin Roduit, from the Center, also relies on data protection to request the introduction of an independent mediation body. Which shows that the lines are moving: elected officials from all sides are taking up the issue.

In the meantime, what advice should we advise consumers?

We must react quickly. Starting by checking whether the basic debt is still due, if it has not been paid in the meantime. It is then necessary to distinguish between the different costs indicated. The basic amount as well as default interest are due. You must also carefully reread the contract and its general conditions, which may provide for other costs, such as reminder costs due only if they are provided for and determined in the contract. But you should not hesitate to challenge excessive representation fees (or application fees) as well as additional processing fees. Article 27 paragraph 2 of the Debt Enforcement Act clearly states that these costs cannot be borne by the debtor..

Collection companies often claim additional damage by misquoting article 106 of the Code of Obligations. There is no additional damage simply because an invoice has not been paid.

You must contest in writing and quickly, with a copy of the creditor company, to show them what methods are used by the mandated collection company. I think a number of companies don’t know how it happens and wouldn’t condone it. Finally, if we are overwhelmed by all this, we can contact the FRC, which is also there to inform consumers about their rights.