Should You Be Recording Collection Calls?

Recording collection calls is a common practice for many large collection agencies. Having an audio recording of every call placed to a debtor is a great way to prove that there were no compliance violations during the collection process. However, recording collection calls can also come back to haunt even collection agencies with the best intentions.

Some debtors looking to get off the hook have been known to claim that the recording of collection calls, despite the intent of demonstrating compliance, is a violation of their privacy. In past years, there has even been some legal precedent to back up these claims. This leaves debt collectors in a no-win situation where they have to choose between possible privacy issues or giving up the ability to prove that they followed compliance regulations.

Why Collectors Record Calls 

Debt collectors are saddled with the responsibility of obeying dozens of strict laws regulating what they can and cannot say to a debtor over the phone. They are required to identify themselves as debt collectors, they are restricted from making any types of threats, and they cannot discuss a debt with anyone other than the debtor on the account.

If a non-paying collection ends up in court, the collector might use recordings of collection phone calls to prove that all rules and regulations were followed. Without these recordings, debtors would be free to tell any story they like about what was said on the call. Recordings of collection calls also provide a great way for commercial debt collection agencies to perform internal audits to make sure that their collectors are following company policies.

Invasion of Privacy 

In the state of California, privacy laws require that in order for a phone call to legally be recorded, all parties to the call must be notified of the recording at the beginning of the call. If there is no notification, any confidential information recorded from the call can be considered an invasion of privacy.

There is also a section of the same law that opens the door for anything discussed to be considered an invasion of privacy. This has created a backdoor loophole that many debtors have used in attempts to get out of paying their obligations.

The Hilton Case 

In a recent court case in California, it was originally ruled that the plaintiff failed to prove that a collection agent from Hilton Worldwide, Inc. discussed confidential information on a recorded phone call. However, another court overruled that decision on the grounds that anything discussed on the call could be considered an invasion of privacy. The court eventually ruled in favor of the collectors, setting a strong legal precedent in favor of the collection industry.

What Does This Mean for Collectors? 

This significant court decision establishes that it is going to be very difficult for debtors to prove their invasion of privacy claims. Because the fines for these claims can be as high as $5,000 per phone call in California, this will go along way towards putting many debt collectors at ease.

However, it is still a worthwhile idea to get into the habit of informing the person you are calling that you are recording the call for compliance purposes. While it is understandable that many collectors don’t want to waste any time with details like this when they finally get a debtor on the phone, this might prove to be more than worth the effort if you find yourself in court.

With a long line of court rulings that have gone against the collection industry, the Hilton decision will go a long way to discourage debtors from attempting to get out of their obligations by pursuing the backend invasion of privacy loophole.

By |2017-09-16T12:27:38+00:00September 8th, 2014|Blog|0 Comments

About the Author:

Graduated from University of Utah - business degree 1990. Served in US Army as an interrogator / linguist, then as a tactical intelligence officer - Military Intelligence 1986-1990. Managed Western US sales operations for NY based collection agency 1990-1992. Founded Direct Recovery Associates, Inc. 1992-present