Debt Collection A to Z: D is for Deadbeat List

Deadbeat lists are lists of persons who owe money to a creditor.  One simple rule:  do not use them!  While there are some instances where a debtor’s debt and delinquency on the debt can be made publicly known (ex:  liens) these instances are few and somewhat far between.

One motivation for publishing a deadbeat list is to nudge a debtor to pay up or at least make some arrangement to pay up.  In addition to the fact that this nudge thumbs down for deadbeat lists...don't do it!may not work, the publishing of the deadbeat list is a really bad idea because it could subject the publisher to civil liability.  In North Carolina there is a law that sets out  “prohibited acts by debt collectors” and here is what the law says regarding deadbeat lists and the like:

§ 75-53. Unreasonable publication.

No debt collector shall unreasonably publicize information regarding a consumer’s debt. Such unreasonable publication includes, but is not limited to, the following:

(1) Any communication with any person other than the debtor or his attorney, except:

a. With the written permission of the debtor or his attorney given after default;

b. To persons employed by the debt collector, to a credit reporting agency, to a person or business employed to collect the debt on behalf of the creditor, or to a person who makes a legitimate request for the information;

c. To the spouse (or one who stands in place of the spouse) of the debtor, or to the parent or guardian of the debtor if the debtor is a minor and lives in the same household with such parent;

d. For the sole purpose of locating the debtor, if no indication of indebtedness is made;

e. Through legal process.

(2) Using any form of communication which ordinarily would be seen or heard by any person other than the consumer that displays or conveys any information about the alleged debt other than the name, address and phone number of the debt collector except as otherwise provided in this Article.

(3) Disclosing any information relating to a consumer’s debt by publishing or posting any list of consumers, except for credit reporting purposes and the publication and distribution of otherwise permissible “stop lists” to the point-of-sale locations where credit is extended, or by advertising for sale any claim to enforce payment thereof or in any other manner other than through legal process.


And to emphasize the point that publishing a deadbeat list is a really, REALLY bad idea read the damages allowed under the North Carolina law:

§ 75-56. Application.

..(b) Any debt collector who fails to comply with any provision of this Article with respect to any person is liable to such person in a private action in an amount equal to the sum of (i) any actual damage sustained by such person as a result of such failure and (ii) civil penalties the court may allow, but not less than five hundred dollars ($500.00) nor greater than four thousand dollars ($4,000) for each violation.

If one takes the position (and I think it is the correct reading of the law) that each publication of a deadbeat list constitutes a separate violation, the damages could ratchet up pretty quickly. 

If you are a creditor (and remember that in North Carolina, the North Carolina Debt Collection Act applies to all persons collecting on a debt, creditors and collectors) avoid using deadbeat lists as your collection strategy.  If you are a debtor or alleged debtor and find yourself on a deadbeat list contact me to discuss whether and how I might help.



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