How to Avoid Being Sued For Improper Debt Collection Practices
Debt collection in California is tricky. It is never worthwhile to try to harass or embarrass a debtor into paying a debt. There are a myriad of laws protecting debtors and even though your debt is legitimate it is best to consult with a business lawyer to make sure your debt collection practices will not expose you to liability so that you wind up owing your debtors money. The laws that apply to debt collection in the business world apply equally to debt collection in the horse industry. While each case may vary, it is best to avoid these types of debt collection practices:
Discussing a Debt with Third Parties. Generally speaking, it is best to discuss a debt only with the debtor or the debtor’s lawyer. Under the Federal Fair Debt Collection Practices Act, and the Rosenthal Fair Debt Collection Practices Act, communications with anyone but a debtor or a debtor’s attorney is prohibited. The publication or posting of “deadbeat lists” not only can violate the California and Federal laws listed above but they can also give rise to an action called known as “Public Disclosure of Private Facts.” (See California Civil Jury Instruction 1801). Similarly, comparing notes with other vendors, “black-listing” a client, or other public humiliation tactics expose you to the risk of suit if they result in damage to the debtor. Even mentioning the debt can be risky. Further, if the information you convey is not completely accurate you also face the possibility of being sued for defamation. You may not communicate with the debtor’s employer or trainer or any horse show or horse association regarding the debt unless you are specifically authorized to do so by law or by a written waiver from the debtor. While you are not obligated to continue providing services, you do not owe anyone an explanation and a statement such as “they owed me money” can be enough to get you sued if you then caused the debtor damage. The best answer is “it is a private business matter” and leave it at that.