Debt collectors and debt buyers should have basic facts about a consumer debt before contacting consumers or filing lawsuits against them to collect on the debt. But blatantly wrong information about accounts has long been one of the major, persistent problems in debt collection. It appears Visa recently issued a rule that touches on the issue.
A debt collection site published this new Visa, Inc. rule for collection agencies, with requirements for sharing key facts about a debt with the consumer before collecting on it.
Under the payment processor’s new rule, which will become effective April 15, entities collecting debt on behalf of another entity “must disclose the following to the cardholder before the transaction occurs:
• Name of the original lender or creditor
• Information to identify the transaction such as: Account / reference number from the original lender or creditor; Description of the debt or overdue receivables; Date of the repayment contract
• Instructions for the cardholder on how to obtain additional information about the underlying transaction…”
It also said “acquirers must immediately report to Visa any illegal transactions or activity by the entity collecting the debt or overdue receivables along with a remediation plan. Visa reserves the right to prohibit such a merchant from using Visa for collections if it has acted illegally or carries out actions that Visa deems likely to damage the Visa brand.”
According to the notice, Visa issued the new rule “to promote transparency and reduce cardholder confusion.”
It’s an interesting development that shows how financial institutions can hold each other accountable. Sometimes these actions may even help to keep the market fair and safe for consumers.