The debt collection industry publication, InsideARM, recently published some insights about the rules of the road when it comes to debt collectors accepting check payments over the phone. It’s worth reading the entire article, which can be found here, but these are the primary takeaways:
1. When you verbally tell a debt collector that he can electronically transfer funds from your checking account, it’s a one-time authorization.
2. You have to provide a written, signed authorization for the debt collector to do a recurring transfer (as in a monthly payment). A debt collector can call you each month for a verbal authorization.
3. With your authorization, a debt collector can create a paper check with your account information, and deposit that check in the bank. You can verbally give your permission for recurring withdrawals via a paper check facsimile.
4. A debt collector can make recurring credit card charges with your verbal authorization.
The Inside ARM article contains valuable information about your rights and the responsibilities of debt collection agencies. However, because some debt collection agencies get their wires crossed or simply run afoul of the law, we recommend that you never give a debt collection agency your bank account or credit card information. This includes sending a debt collection agency a personal check, since your account information is on the paper check. Instead, it’s best to mail a bank check or money order.