Arkansas Debt Collection Laws: An Overview
Laws governing the collection of debts in Arkansas are well-developed and have been in effect for several decades. The Arkansas General Assembly has enacted many debt collection laws in the last 50 years, which after some revision and repeal establish the ground rules for debt collectors in Arkansas today.
For example, the Arkansas Collection Agency Act of 1965 defined a "collection agency," among other things, as "[a]ny person, firm, association, or corporation which engages in business or offers services to engage in business for any compensation for collection of accounts, bills, notes, dues, debts, judgments, or other claims." Ark. Code Ann. § 17-24-101(3).
The older version of the Act, last amended in 1991, allowed collection agencies to collect on "accounts arising out of a contract, express or implied, or from open account." Ark. Code Ann. § 17-24-305(b). However, with a notable change in 2005, the Arkansas legislature repealed that section and gave the Arkansas Attorney General power to define what debts are actionable under the law. Ark. Code Ann. § 17-24-101(3)-(7) . In a clear nod to citizen-activists seeking to hold predatory lenders accountable, the Arkansas AG can now collect debts from creditors engaged in "unaconscionable [sic] conduct with respect to the collection of debts." Even if a particular debt is not actionable under A.C.A. § 4-88-107, the AG can bring an action "on behalf of the citizens of Arkansas" to end "unconscionable" collection practices. This broad, quasi-moral standard for debt collection laws in Arkansas may be an attempt to protect payday loan consumers from unlawful collection practices.
Arkansas did not adopt the Uniform Commercial Code until 1961. A.C.A. § 2-102. Several articles of the code addressed contracts between debtors and credit card companies and other lenders. The version of the U.C.C. in effect today is based on the 1978 code.
Debtors in Arkansas may face grievous penalties if they act to delay repossessions and foreclosure. Most detailed is the real estate foreclosure process, which gives neighbors the right to seek an injunction against foreclosure where they will be harmed or faces "irreparable injury." A.C.A. § 18-50-103.
Consumer Rights in Debt Collection
Harassment, Deceptive Practices and Misleading Representations Laws
The Arkansas Fair Debt Collection Practices Act and the Federal Fair Debt Collection Practices Act prohibit the collection of consumer debt by debt collectors through unfair or deceptive means, including harassment and abusive practices. These protections include the following:
A collector cannot threaten you with bodily harm, harm to your character, or harm to your credit or reputation.
A collector cannot impersonate any person, including a credit reporting agency or another law firm. For example, a debt collector cannot use a phone number that belongs to another business to place calls (Defendant used a phone number that belonged to the Texas Credit Bureau).
A collector cannot falsely represent the amount of debt owed.
A collector cannot falsely accuse the consumer of shoplifting or another crime.
A collector cannot deceive the consumer into thinking that they are an attorney or affiliated with the government.
A collector cannot call you at all hours of the day or night. The collector cannot call you before 8:00 AM or after 9:00 PM.
A collector cannot make phone calls to your employer after receiving written notice to stop.
A collector cannot use profane or abusive language. (I receive many of these, sometimes in the same sentence)
A collector cannot tell anyone other than yourself of the debt, including telling your family members.
A collector cannot leave messages at your place of employment or on your phone regarding your debt.
Harassment, abuse and other deceptive practices violate both state and federal laws intended to protect consumers. If a debt collector threatens you with physical harm, embarrassment, or false representation to trick you into paying a debt – the collector has violated those laws and you should contact a professional to stop the harassment.
Acceptable Collection Actions
For Arkansan consumers, there are many types of actions a debt collector can take which are considered lawful and proper by the state. For example, collectors are permitted to contact a debtor by phone at any time, including Sundays and late at night (generally before 8 AM or after 9 PM is not proper, yet this is not absolute).
A debt collector can also legally serve a demand letter or summons to a consumer, which requires action by the consumer to resolve the debt in one manner or another. In fact, the law also allows a collector to appear in court on behalf of the creditor, file motions, discovery requests and more. While not permitted, you’ll find a lot of collection agencies will continue to contact you via phone, or through other means, even if you’ve asked them to stop. The Fair Debt Collection Practices Act, lending laws, and Arkansas’ state-specific debt collection laws all limit harassment or intimidation on the part of collectors. Actions such as using abusive language, threatening a consumer with arrest or other legal action, and giving false statements about a debt, limitation periods, etc. are prohibited by state and federal law. Additionally, payments made by the debtor must be applied in the order allowed by law, generally interest before principal, etc.
The Arkansas Fair Debt Collection Practices Act ("Arkansas FDCPA") prohibits the following collection practices:
Unlike the federal Fair Debt Collection Practices Act, the Arkansas FDCPA applies to both original creditors and collectors. Furthermore, Arkansas law prohibits key collectors and loan servicing agencies from:
Actions Not Allowed When Collecting a Debt
Arkansas law prohibits a number of debt collection tactics and behaviors by collection agencies and creditors attempting to collect on debts. In fact, neglected bills or payments that you might be tempted to ignore ultimately won’t ever go away. Under the Fair Debt Collection Practices Act (FDCPA), an illegal threat or intimidation tactic employed by a collection agency to induce your debt repayment can be a legitimate basis to file a claim against the collection agency.
Under the Arkansas Fair Debt Collection Practices Act ("AFDCPA"), a debt collector may not:
Of course, in most cases, the most common form of harassment and abuse by a debt collector is the incessant phone calls. If they are calling you at embarrassing times and in an embarrassing manner, you should take the time to adequately inform them about it. Under the FDCPA, you can write a letter to the collection agency requesting that they do not contact you anymore. Once they receive that letter, they cannot contact you – even for an attempt to collect payment. Of course, they can still contact your attorneys, if they are representing you. If they continue to contact you after you have formally requested that they stop, you have a legitimate basis to file a claim. Under the AFDCPA, you are also protected from debt collectors contacting you at work. If they don’t have an existing agreement with your employer to contact you there, they could be breaking the law.
The Function of the Arkansas Attorney General
The Arkansas Attorney General’s office is a vital resource in upholding and enforcing Arkansas debt collection laws. They monitor businesses operating in the state to verify that debt collectors are following legal practices in their interactions with consumers.
The Arkansas Attorney General’s office investigates debt collection complaints to uncover unfair or deceptive trade practices. If there is evidence of these practices, the agency will take appropriate action against the collector to protect consumers.
Most importantly, the Arkansas Attorney General’s office can go after debt collectors who violate Arkansas debt collection laws as well as the Fair Debt Collection Practices Act . If you have been contacted by a collector in violation of these laws, make sure to turn over all calls and documents related to the unlawful practices. You can file your complaint here, and someone from the agency will contact you regarding your case.
Consumers should be aware that the Arkansas Attorney General’s office may be unable to prosecute all cases that come through, especially if they are unable to find a strong basis for action. For cases that are not prosecuted by the state, consumers may have an avenue of redress through a private counsel.
Always seek the advice of a qualified attorney before taking any legal action for the best chance of a positive outcome.
Filing a Complaint or Going to Court
Filing a complaint is an option if the debt collector has broken the law, typically debts that fall under a state or federal regulation. Complaints can be filed with local or state law enforcement, or with the Better Business Bureau, for example. It is also possible to pursue verifiable information about the collection agency’s use of illegal collection tactics and procedures in other places that deal directly with consumers, such as a consumer research blog or consumer protection sites like those of the Consumer Financial Protection Bureau.
If there is merit to the complaint, the debt collector might be subject to investigations or sanctions. In extreme cases, they may be involved in court agitation.
An even better option is to file a suit against the debt collector. The Law Office of David Allen provides for proven abusive debt collectors including top dollar in damages that can be sought by the consumer. There are a number of relevant acts that allow for filing a suit, including the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA) and the Arkansas Deceptive Trade Practices Act. The Fair Debt Collection Practices Act is the most common act used.
FDCPA guidelines regulate any debt consumer creditors or debt collection agencies, disallowing third party harassment of the consumer. Debt collectors cannot threaten if or not report a consumer to a credit bureau, nor do they have a right to report inaccurate information about a consumer’s payment or debt. Furthermore, the Fair Debt Collection Practices Act gives leverage in that it prohibits third parties from communicating directly with the consumer, and requires them to request communications only from the creditor. As such, the FCRA and Arkansas Deceptive Trade Practices Act create opportunities for an individual to sue a debt collection agency if necessary for appropriate damages.
In Arkansas, there are a number of laws pertaining specifically to debts and creditors where one may file an individual lawsuit. The Arkansas Fair Debt Collection Practices Act, the Trade Practices Act, including the Arkansas Attorney General’s Office and the Arkansas Department of Finance & Administration, and the Arkansas Constitution.
Some acts with specific guidelines and limitations include the Arkansas Bulk Sale Act, the Arkansas Bulk Storage Assets and Acquisition Act, the Arkansas Credit Counseling Act, the Arkansas Lien Priority Act, the Arkansas Recording Act, the Arkansas Uniform Foreign Money-Judgment Act, the Arkansas Uniform Trade Secrets Act, the Arkansas Warehouse Receipts Act, and the Arkansas Adverse Claims Act.
How to Deal with Debt Collectors
Set Up a Voicemail Box
If you are facing multiple creditor calls, set up a separate voicemail box. This way, if a debt collector continues to call, you will have a record of when they called and the number they used to contact you.
Keep Records of all Correspondence
It is critical that you keep a record of all correspondence with each debt collector. This way, if one collects on a debt you believe is not yours, or uses illegal tactics, there is a paper trail that can be examined.
Send Requests in Writing
While the Fair Debt Collection Practices Act allows collectors to reach debtors via phone, mail, email and other communication methods, it is always best to ensure everything is in writing to avoid miscommunication. Consider hiring an attorney to send any requests that your creditors must then abide by.
Know Your Rights
Many Americans are unaware of their rights under Federal debt collection laws. This is why it is so important to consult with an attorney to learn your rights, make sure creditors abide by them and protect your rights from being taken advantage of.
Recent Developments and Changes
In 2018, the Arkansas General Assembly passed the Arkansas Consumer Collection Agencies Act, an amendment to Title 17 Chapter 24 of the Code of Arkansas, which codified existing state law relating to debt collectors. This updated act removed potential areas of confusion by eliminating language in the former Arkansas Fair Debt Collection Practices Act that is more appropriate to creditors, such as prohibitions on "unconscionable means" vs. "unconscionable behavior."
The new act also offers Arkansas consumers greater protections by requiring debt collectors who are acting on behalf of legitimate debt collection businesses to be licensed by the state. This is a significant change for Arkansas consumers, as previously debt collectors did not have to be licensed as long as the creditors whose debts they were collecting from were licensed.
Even with these additional consumer protections, there have been no additional clarifications made to how debt collectors must communicate with consumers, such as by telephone or in writing, and collectors can still make unlimited numbers of communications to consumers for any given debt, as long as those communications are made with the goal of collecting on the debt . This is in contrast to some other states, such as Iowa, which recently passed a new law limiting the ability of debt collectors to make pre-recorded calls to consumers’ cell phones without first acquiring consumer consent to do so.
The U.S. Supreme Court also delivered a ruling in 2017, in Henson v. Santander Consumer USA Inc., that would strip protection from the nearly 70% of U.S. debt collection lawsuits filed in 2015, or about 14.9 million lawsuits, that are solely predicated upon the consumer debts of third parties, rather than directly to those consumers themselves. While this decision does not affect proceedings in state courts, two lower courts in Arkansas had already determined that the state law’s expansive language was on its face intended to provide greater protection to consumers. However, with the latest decision in Henson, it remains unclear how state courts across the nation will rule in the future based on this broader interpretation, and even whether the current state law will apply at all, or whether Arkansas will have to adopt new legislation to regain its standing as a consumer protection state.