The Relentless Chase: A Friend's Ordeal with a Debt Collection Agency and a Call for Change

 

Jane, (not her true name), lived and worked in the vibrant UAE for many years. Like many, she relied on credit facilities for various needs, being the major financial provider of the family in the Philippines.  However, life can take unexpected turns. A job loss when the company closed and some challenges faced by some family members, coupled with her unforeseen health issues, left her in a precarious financial situation, struggling to make ends meet. Years passed, and while she always intended to resolve her debts, circumstances kept her from doing so.

Recently, she was contacted by a third-party debt collection agency regarding a very old credit card debt. What followed was not a professional attempt at resolution, but a relentless and deeply distressing experience that I feel compelled to share, hoping it sparks a much-needed handling of debt collection practices and the human cost involved.

The Pressure Cooker Tactics

The agency's approach was far from empathetic. Despite her clear limitations and the age of the debt, they resorted to:

• Inflated and Unsupported Claims: Demanding amounts significantly higher than the original credit line, with no documentation to back these figures or account for past payments.
• Aggressive and Threatening Communication: Constant phone calls, including to her workplace (despite her clear requests to stop), creating immense stress and jeopardizing her professional life.
• Ignoring Legal Rights: Dismissing her requests for debt validation and authorization to collect, acting as if their demands were absolute and unquestionable.
• Emotional Blackmail: Implying severe legal consequences without providing any legitimate basis, simply to instill fear and force immediate payment.

The sheer stress of these interactions has taken a severe toll on my friend's health, exacerbating pre-existing conditions. Knowing that others might be facing similar or even worse harassment, and the tragic stories of individuals driven to despair by such tactics, compelled me to write something about it.

My friend is now passionately maintaining her stance, guided by a well-reasoned plan, to protect her peace of mind.

The Collection Agency's Business Model: Profit Over People

It's crucial to understand how these third-party agencies operate. They are not acting out of a sense of justice for the original creditor. They are a business. They purchase "bad debt" from banks and financial institutions for a fraction of its face value (mostly 50% or less, depending on the age and amount of bad debts / collectibles). 

For a debt over a decade old, which has already been substantially partially paid, the purchase price is likely at the very low end of that maximum range. Their goal is to make a profit. Any amount they can collect above what they paid for the debt is a gain. This is why they demand a high, lump-sum payment -- they want the biggest profit margin possible.

Your Rights and the Legal Framework: A Warning to Creditors and Agencies

A debtor in the UAE is not without rights. Creditors and collection agencies are bound by a legal framework that is often ignored in their pursuit of profit. There are some key law that respect human dignity and protect debtors, such as:

UAE Central Bank's Consumer Protection Regulation: This prohibits banks and their agents from engaging in abusive or unethical debt collection practices. This includes threatening, harassing, or making excessive contact.

Federal Decree-Law No. (45) of 2021 on the Protection of Personal Data: This law makes it illegal for collection agencies to contact a debtor's family, friends, or workplace and disclose information about their debt without explicit consent. Any entity, including a debtor's current bank, that improperly shares personal data with a third party is in violation of this law. The common issue of multiple agencies chasing the same person for the same debt (collecting different amounts) often stems from this irresponsible data sharing.

The Difference Between Criminal and Civil Cases

It is vital to understand the difference between the two to avoid falling for baseless threats.

• Criminal Case: This involves a violation of a law, punishable by fines or imprisonment. Historically, bounced cheques were treated as a criminal offense.
• Civil Case: This is a dispute between two or more parties, where the outcome is typically financial. A creditor would file a civil case to get a court order for the recovery of a debt.

How to Avoid Imprisonment and a Travel Ban

A key legal reform in the UAE has changed how bounced cheques are handled, particularly for personal debt.

• The AED200,000 Threshold: Under recent legal changes, bounced cheques with an amount of less than AED 200,000 are often no longer treated as criminal offenses punishable by imprisonment.
• A Fine, Not Jail: Instead of a criminal case, the issue (considered as 'a simple offense') is often resolved with a financial penalty, and civil case. Offenders may face fines ranging from AED2K to AED10K depending on the cheque amount of cheque.  (If the bounced cheque amount is more AED 200,000, the case is then referred to the criminal court for further investigation and judgment).
• No Imprisonment for Debts: You cannot be imprisoned solely for failing to pay a civil debt. Imprisonment would only occur if a court order for payment is not complied with.

If a travel ban is imposed as part of a court order, you can check it online via platforms provided by Dubai Police or the ICP (Federal Authority for Identity and Citizenship). You can also visit a local police station or immigration office to seek their assistance. 

The ban can be lifted upon the settlement of the debt or the payment of the court-ordered fine, such as the  amount so determined by authorities (AED2K to AED10K based on cheque amount) for  a 'simple offense' bounced cheque.


 A Call for Pro-Humanity Solutions

According to Nestor Mandela,

Overcoming poverty is not a gesture of charity.  It is an act of justice.  It is the protection of a fundamental human right, the right to dignity and a decent life.  While poverty persists, there is no true freedom.

The current debt collection landscape, in some instances, seems to prioritize profit over people. It's time for a more humane and regulated approach that considers the vulnerabilities of debtors while still allowing creditors to recover legitimate dues. Here are some suggested solutions.

For Debtors:

1. Know Your Rights: Educate yourself on the UAE's consumer protection laws and data privacy regulations. Understand that you have the right to demand debt validation and to stop harassment.
2. Document Everything: Keep records of all communication, including dates, times, names of individuals, and the content of conversations. This will be crucial if you need to file a complaint.
3. Communicate Clearly and Firmly (in writing): Follow the example of the formal letter: dispute the debt, demand validation, state your limitations, and propose a realistic settlement offer based on your capacity.
4. Don't Be Afraid to Report: If collection agencies violate your rights through harassment, unauthorized contact, or data breaches, report them to the UAE Central Bank, the Dubai Economic Department, or even the police if threats are made.
5. Seek Support: Talk to trusted friends or family. Consider seeking advice from legal professionals or financial advisors who can guide you through the process.

For Creditors:

1. Responsible Lending Practices: Implement thorough assessments of borrowers' ability to repay before granting credit.
2. Ethical Recovery Processes: Prioritize early intervention and communication with struggling borrowers to find mutually agreeable solutions before resorting to aggressive collection tactics or selling debts to agencies known for such practices.
3. Provide Full Transparency: When selling receivables (debts), ensure collection agencies have complete and accurate documentation. Be accountable for the actions of the agencies representing you.

For Collection Agencies:

1. Strict Adherence to Regulations: Respect consumer protection laws, data privacy regulations, and ethical communication standards.
2. Prioritize Validation and Transparency: Always provide debtors with clear and verifiable proof of the debt and your authorization to collect it.
3. Empathy and Understanding: Recognize that debtors are often in difficult circumstances. Adopt a respectful and solution-oriented approach, focusing on finding realistic repayment plans rather than resorting to harassment. Review your collection scripts.
4. Fair Profit Margins: While profit is a motive, it should not come at the expense of human dignity and well-being. Consider the age and circumstances of the debt when pursuing collection.

For the Government:

1. Strengthen and Enforce Regulations: Continuously review and enhance consumer protection laws related to debt collection. Ensure robust enforcement mechanisms are in place to penalize agencies that engage in illegal and unethical practices.
2. Establish a Clear Code of Conduct: Implement a specific code of conduct for debt collection agencies, outlining permissible and prohibited actions, with clear penalties for violations.
3. Increase Public Awareness: Launch campaigns to educate residents about their rights as debtors and the resources available to them if they face harassment.
4. Consider Debt Relief Initiatives: Explore options for individuals facing long-term financial hardship, such as mediation programs and regulated debt restructuring frameworks, among others.
5. Monitor Collection Agency Activities: Implement stricter oversight and licensing procedures for debt collection agencies operating in the UAE.

A Hope for a More Humane Future

My friend's experience, while deeply troubling, has also fueled a desire for change. I believe that a balance can be struck between the rights of creditors to recover their dues and the right of debtors to be treated with dignity and respect.

This credit collection company's system is fundamentally flawed and counterproductive. How can a person be expected to pay a debt if the very act of collection makes him sick with stress and fear? A debtor cannot earn an income from behind bars. The more debtors are harassed and the more severe the threats, the less likely they are to ever recover and pay. This desperate, short-sighted approach has led to tragic consequences, pushing vulnerable people to the brink. We all know that these days are tough times, with many unpredictables and uncertainties ahead.

These counterproductive tactics harm everyone involved. A system that drives people into illness and despair, is not a system that works. It is simply a way to chase short-term profits at the expense of human lives and a truly just society. The relentless chase needs to evolve and pave way towards a humane and effective resolution.

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Image: This blogger's design