Your life may seem like a nightmare once you've been read the riot act by your credit card company and its guard dog. But when they step out of line, do you know how to protect yourself?
It may seem like a bad movie, but when you start getting calls threatening your life and security, it seems unfeasible that a credit card could bring you so much grief. With banks getting tougher on credit card defaulters, it is a surprise that consumers have not yet woken up to the fact that they can take action against banks that cross the line between getting their dues back and plain harassment.
According to Maneshinde, in case of harassment by a recovery agent, hired by a lender, a person may approach the courts. But this rarely happens. "It is very difficult for individuals to come to the courts and take the issue. In a large number of these recovery companies, there are retired police officers of the rank of Inspector-General on the board or their relatives are employees of these companies. So there is a direct nexus. If a person claims there have been threats against him, beyond the law, he must be able to prove it. Individuals must record the calls and get evidence. But there is the infrastructure lacking. There is the greater visibility a consumer action group has," he says.
Currently, a public interest litigation case filed by Mumbai-based Consumer Action Network, CAN, is pending in the Bombay High Court, which wants it declared illegal and criminal for lenders to employ "outside agents" to recover dues using strong-arm methods. On February 9, the court directed the banks against which the PIL is aimed at to submit a list of their collection agents. Coming into the petitions' net are several majors, like Citibank, Standard Chartered Bank, American Express Bank, ICICI Bank and even the RBI.
Other than to approach the courts, a harassed consumer has little recourse, in the absence of a comprenhesive law or a strong regulator, and only 'guidelines' by individual banks to deal with recoveries. Collection is governed in part by laws like the Banking Regulation Act, the Negotiable Instruments Act and the Contract Act, but there is no specific law at play. While the IBA has had a 'guideline' in place for the proper collection of debts for the last two years now, which forbids the use of threats, this has not held much sway.
In the US, the Fair Debt Collection Practices Act, FDCPA, clearly lays down the ground rules for collection agencies and attorneys, though it says nothing about the lender. An agent is prohibited from inundating you with phone calls at your workplace or at home, publicising the debt situation, threatening you, or spreading falsehoods about you.
by Rahul Mitra
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