On the evening of Wednesday November 2, 2011 my Blackberry started buzzing. The e-mails were all the same; they all said “are you watching The Dragon’s Den on CBC?” I wasn’t; I was in the office. So this morning I went to the CBC website, and pulled up the video for Dragon’s Den Season 6, Episode 7. (It’s the second segment of the show, at around the 9:30 mark).
For those of you who are not familiar with the show, the “Dragons”, a group of business people, listen to pitches for people who want the Dragons to invest in their company.
What was so interesting on this episode? Apparently a business called “The Law Offices” wanted a $500,000 investment to finance a debt collection agency.
The plan was to use the money to buy debt for “2 to 8 cents on the dollar”, and then collect it in full. Obviously that’s a great business. If you could invest 2 cents and make 100, why not?
Apparently the plan is to buy U.S. debt, because the Canadian debt buyers market is already dominated by two big companies. Apparently saying you are calling from “The Law Offices”, even though you aren’t a lawyer, scares people into paying their debts.
The woman who wanted the investment says that she will be collecting money from “professional debtors who have thought of every excuse to not pay the debt”
Two of the dragons, Robert Herjavec and Arlene Dickinson, disagreed. When they were both younger they worked as collection agents, and they said that in most cases people who owe money are average people who have fallen behind.
Robert Herjavec made the comment that he was a debt collector, and the sales pressure on him was so much that he told one debtor that “he would have a heart attack if he didn’t pay me”. The next day “I felt like a piece of crap” for doing it.
He went on to say that “in my experience most people who don’t pay their bills are not the professional sleazy people. I think they are people who have fallen mostly on hard times, and given the opportunity would pay…”
In the end, Kevin O’Leary agreed to put in $500,000 for half of the debt buying company to “help people, and get rich”. (He defines “helping people” as “helping them pay their debts”, although I’m not sure the debtors would consider collection calls “helping”). He said “I don’t break laws, ever”, but beyond that, he has no problem with any type of business.
Section 361 of the Criminal Code of Canada says it’s a crime to do something under false pretence:
361. (1) A false pretence is a representation of a matter of fact either present or past, made by words or otherwise, that is known by the person who makes it to be false and that is made with a fraudulent intent to induce the person to whom it is made to act on it.
I’m not a lawyer, but in my opinion saying you are “The Law Office” when in fact you are not a Law office is an obvious “false pretence”, and yes, a false pretence is illegal. Perhaps the fact that it’s U.S. debt they will be collecting renders the Canadian Criminal Code invalid, so perhaps he’s correct; perhaps this isn’t technically illegal. Again, I’m not a lawyer, so I can’t give a legal opinion.
Even if it isn’t illegal, how can someone in good conscience pretend they are a lawyer to collect money?
Kevin O’Leary may not have a problem with it, but I agree with Robert and Arlene; this is a “half truth” type of business.
I agree that if you owe money you should pay it. I agree that if you don’t pay collection agencies have the right to call you and attempt to collect the money. They have the right to take you to court and sue you. That’s how the law works.
I disagree, however, that collection agents should be permitted to lie.
If you get a call from a debt collector and they say they are a lawyer, ask them to send you a letter so that you can determine if they are being honest with you. A letter from a lawyer will have a lawyer’s name on it, so even if the letterhead says “The Law Offices”, be sure that the letter is from an actual lawyer. If it is, and if you owe the money, make arrangements to pay it. If you can’t pay it, then you have to consider your other options, like bankruptcy or a consumer proposal.
You should research your options and take action, but you should know your rights, and you should not be intimidated by “half truths”.
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