The Debt Collection Act was recently passed by the National Legislative Assembly and will come into force at the end of the 180 days of the publication in the Government Gazette.
Contrary to the initial draft approved by the Cabinet, the definition of “debt collectors” governed by the Act was extended to cover any creditors entitled to accept performance of debt originated from any action in their ordinary or usual course of business, regardless of its legitimacy, their agent or sub-agent. This means all trade and other creditors, except those personal creditors who grant non-business loans to their friend or family and other creditors entitled to any other non-commercial debts, e.g. debt incurred from a wrongful act, will be subjected to this Act.
Besides the administrative control of debt collection businesses, required to be registered with the competent authority, the Act imposes prohibitions and sanctions upon business creditors and other debt collectors as well as their directors, managers and other authorized persons of a juristic entity as highlighted below:
(1) A debt collector must not communicate with other persons than the debtor for debt collection and the contact persons identified by the debtor specifically for debt collection, except for the purpose of enquiring or confirming the contact address of the debtor, subject to the specified prohibitions, including:
No indebtedness related information of the debtor will be disclosed to any persons other than the spouse or any of the parents, or descendants of the debtor, who has enquired about the reasons for the communication.
Neither texts, marks, signs nor business name of the debt collector will be displayed on any letters, documents or other media used for the communication in such manner indicating the debt collection purpose.
(2) The contact address, time and frequency will be limited to those statutorily provided, e.g. in case of communication in person or by mail, the communication will be made at or to the address given by the debtor for the debt collection purpose, or, in case of absence of the address or failure to make a contact at the specified address, the residences, domicile or workplace of the debtor.
(3) No threatening, violent or other actions detrimental to the body, reputation or property of the debtor or other person will be made.
(4) No communication will be made via postcard, unsealed letter, facsimile or any other methods which apparently indicates the debt collection.
(5) A debt collector is not allowed to charge fees or expenses greater than the rate prescribed by the Debt Collection Monitoring Commission (the “Commission”) established under the act.
(6) The sanctions under the Act are composed of the following administrative and criminal penalties:
(a) An administrative fine not exceeding THB 100,000 will be imposed upon failure to comply with the order of a Provincial Debt Collection Monitoring Commission to cease the violation of any of the specified requirements, including (4) and (7) above, or to take action properly within the specified period. In other words, a cure period will be allowed before inflicting the administration sanction.
(b) A criminal punishment, featuring a fine of THB 30,000-500,000, an imprisonment for 3 months to 5 years or both, will be inflicted upon violation of almost prohibitions set out by the Act, including (1)-(3) and (5)-(6) above.
(7) Where the debt collector is a juristic person, both of the administrative and criminal sanctions may be imposed on the directors, managers or other persons authorized to manage on behalf of the debt collector.
Undoubtedly, the law is meant to protect debtors, suppressing those aggressive and repulsive tactics currently used by debt collectors for debt collection. After the law comes into effect, whoever uses debt collection services ought to pay more attention to their practices or they may be sanctioned though the offense has been committed by the outsourced debt collectors.
Authors: Phongsak Sirirakwongsa