Finland's competition and consumer watchdog says collections firms have a duty to provide information about the origin of unpaid debts, the sum outstanding, accrued interest and payment schedules, but many may not be complying with the law.
According to the debtors support organisation VTY, collections agencies may call on debtors to pay debts incurred over 20 years ago in the 1990s, with interest, without the agency providing original bills or order confirmations for purchases made.
Deputy head of the organisation Hilkka Laikko said that there may well be questionable practices employed in the debt collection industry.
"Threats [for example], which violate collections law. An agency told one woman that she should just pay up quietly and that if she fought over it, it would be referred to their lawyers and she would be hit with a huge bill," she said in a Radio Suomi interview.
Laikko noted that there had been cases in which the same expired invoices had been sent to collections repeatedly, as debt collectors cycle through customers. As a result, debtors find it difficult to understand the source of the original liability as the debt is sold on from one collector to another.
"It’s very difficult. Quite often collections agencies say that it’s not their responsibility to check for settlement of old debts, to determine what has been paid to the original creditor or even what may have been paid otherwise," Laikko explained.
Debt snowballs from 30 to 600 euros
Collectors may try to claim payment for debts that are up to 25 years old. In one case an overdue 30-euro health centre fee ballooned to a debt of more than 600 euros over a four-year period.
"It does sound rather unusual. There are limits placed on municipalities’ collectible health centre fees," said lawyer Juha Jokinen of the Consumer and Competition Authority.
He added that it would be worthwhile to find out how an original outstanding payment of a few dozen euros could snowball to debt of hundreds of euros.
"According to collections laws and creditors always have a duty to provide a breakdown of outstanding debts on request, their installments as well as a report on accrued interest on the capital amount outstanding and any related costs. These details should be provided and [if not] then we should be notified,” Jokinen observed.
With respect to old debt recycled from the 1990s, Jokinen called on debtors to find out whether or not their liabilities had expired. At the beginning of the year, one regional administrative authority took the extreme step of revoking the license of a collections firm known as Alektum.
According to the authority, the firm had displayed repeated shortcomings in its operations and had demonstrated contempt for the law, for good collections practices and for official rulings.
Rising cost of living, more consumer credit
"This was just the tip of the iceberg," Laikko declared.
At the beginning of February, collections firm Annomen announced that it was taking over Alektum’s operations in Finland.
Meanwhile, the number of people falling behind on their debts and winding up in the claws of debt collectors continues to rise. In 2018, more than 577,000 people were the subject of collections proceedings, an increase of three percent on the previous year. The majority of them, some 90 percent were private individuals, while the rest were companies.
The rise in collections activity has been attributed to many people living on public support are grappling with rising living costs. In addition many more individuals are relying on consumer credit to make ends meet.