The creditor or collection agent can intrude into the privacy of a debtor to a certain extent while pursuing debt collection. The methods adopted for collecting debt should be reasonable. When the methods adopted for collecting debt become unreasonable, there is a violation of the debtor’s right to privacy and the injured debtor can bring an action against the creditor for damages[i].
Mental pressure and strain imposed on a debtor because of methods adopted by the collection agency are negated to a certain degree. If a debtor is subjected to mental distress with the intention to purposefully hurt the debtor, then damages can be recovered from the creditor or collection agent[ii]. In such cases, the debtor need not prove or allege any pecuniary damage to recover damages from the creditor.
The methods adopted by a creditor or his/her agent for collecting a debt should not include assault or institution of criminal proceedings resulting in the arrest of the debtor. An action for malicious prosecution can be brought against a creditor who institutes criminal proceedings against a debtor.
Generally, the courts are of the opinion that the right to privacy is connected with the rights of other individuals. The right to privacy is not an absolute right. A person who lives a very social and entirely open life cannot argue that his/her rights should not be interfered[iii]. However, interference into the right to privacy should not exceed the extent of reasonableness. Therefore the courts have always tried to strike out a balance between the fairness of the methods used by the creditors for collecting debts and debtors’ right to privacy.
A creditor or his/her collecting agent have the following responsibilities towards a debtor:
- he/she should not give undue publicity of private debts[iv];
- he /she should not use coercive tactics, for collection of debt, which in themselves would constitute the tort of invasion of privacy[v];
- he/she should not exploit or appropriate debtor’s personality unnecessarily[vi];
- he/she should not wrongfully intrude into the private activities of the debtor[vii];
However to enforce the payment of debt, the creditor or his/her agent can threaten the debtor with his/her intention to proceed through a court of law[viii]. The creditor or his agent can remind the debtor of the debtor’s legal and moral obligation[ix]. The creditor can give information about the debt to the employer of the debtor. The manner adopted by the creditor for informing the debtor’s employer should be reasonable[x].
If a creditor unlawfully uses a document which resembles the official court papers, the debtor can bring a tort action and collect damages from the creditor. However the debtor will not be allowed to collect the money that he/she had paid to the creditor towards a legitimate debt under the mistaken belief[xi].
[i] Passman v. Commercial Credit Plan of Hammond, Inc., 220 So. 2d 758 (La.App. 1 Cir. 1969)
[ii] Barnett v. Collection Service Co., 214 Iowa 1303 (Iowa 1932)
[iii] Tollefson v. Safeway Stores, Inc., 142 Colo. 442, 444 (Colo. 1960)
[iv] Yoder v. Smith, 253 Iowa 505 (Iowa 1962)
[v] Norris v. Moskin Stores, Inc., 272 Ala. 174 (Ala. 1961)
[vi] Strutner v. Dispatch Printing Co., 2 Ohio App. 3d 377 (Ohio Ct. App., Franklin County 1982)
[viii] Beneficial Finance Co. v. Lamos, 179 N.W.2d 573 (Iowa 1970)
[ix] Rugg v. McCarty, 173 Colo. 170 (Colo. 1970)
[x] Berrier v. Beneficial Finance, Inc., 234 F. Supp. 204 (N.D. Ind. 1964
[xi] Vead v. Rushing, 144 So. 2d 494 (La.App. 4 Cir. 1962)