Michigan Collections Manager License Practice Test

What is a violation related to client representation in collection practices?

1. Contacting a debtor directly

2. Issuing a false notice

3. Failing to inform the client

4. Writing misleading advertisements

The correct answer is: Contacting a debtor directly

The choice of contacting a debtor directly is indeed a violation related to client representation in collection practices under specific circumstances. Generally, collection agencies and professionals must operate within the ethical guidelines and legal framework established to protect consumers. When representing a client, particularly in collections, the practice often requires adherence to certain protocols designed to prevent harassment or unauthorized communication. When a debt collector contacts a debtor directly without proper authorization from the client, it may undermine the established client-debtor relationship and violate the client's preferences or agreements. This direct contact could also contravene laws like the Fair Debt Collection Practices Act (FDCPA), which regulates how and when collectors can communicate with debtors. The legal stipulations in place often dictate that collectors must follow specific procedures—this includes not contacting debtors directly if instructed otherwise by the client. In contexts where such direct communication is inappropriate or unauthorized, it can harm the reputation of the collecting agency, cause legal ramifications, and damage the trust between the client and the collector. Therefore, ensuring that any communication with a debtor is properly sanctioned by the client is crucial to maintaining ethical standards and complying with legal requirements in collections.