Can a creditor tell my employer I'm late on a lease payment?

Dear Consumer Ed:

I have been leasing a new car for the past seven months. I was late on a payment for the first time, and someone called my office and told two of my managers that I owe them money. That is absolutely none of my managers’ business. Not only was that bad business, but was it also illegal?

A: While calling your employer and divulging your private financial information is certainly a distasteful tactic, it may not actually be illegal. To answer that question, a little more information is needed. First, it is important to find out who actually called your office. If it was a third-party debt collector and not your actual creditor, you are likely protected by the Fair Debt Collections Practices Act (“FDCPA”), which prohibits certain kinds of contact, including calls to your employer or other third parties for any reason except to verify your employment and/or your location. In that case, you should notify the debt collector in writing that you do not wish for the collector to continue contacting you or your employer without your express permission. If the communications continue, go to www.consumer.ftc.gov and file a complaint with the Federal Trade Commission.

If, however, the phone call came from your actual creditor, and not a third-party debt collector, then you probably would not be protected under the FDCPA. However, there may be other protections available. For example, if your actual creditor is a bank or other financial institution, there may be other federal protections that would prohibit it from disclosing this information, provided there’s no language in your sales contract permitting it to do so. You should take a look at your loan documents to determine what the agreement says about the creditor’s ability to disclose information, and whether there is any kind of grace period before your account gets sent to collections. There could be statements allowing or restricting communication to third parties; most such agreements will also specify whether you’re entitled to written notice before your account goes into collections. If the language of the document permits it, or if your employers are listed on the agreement as either credit references or as sources to provide confirmation about your current employee status, the creditor may have some leeway to call them to inquire about you.

On the other hand, if there was language in the sales agreement that set a specified grace period and the creditor ignored it, and/or if there was nothing in the agreement that implicitly permitted contact with your employer, then the actions could still be considered a violation of Georgia’s Fair Business Practices Act. To file a complaint, you can contact the Governor’s Office of Consumer Protection at 404-651-8600, or visit our website at www.consumer.ga.gov.

You can also report his behavior to the Better Business Bureau. Go to www.bbb.org to find your local Better Business Bureau chapter, and follow the prompts if you decide to file a complaint. This will inform other potential customers of these bad business practices and hopefully help end any abusive behavior.

Consumer Ed is brought to you by the Governor’s Office of Consumer Protection. Go to ConsumerEd.com to submit your question and read additional consumer tips. Remember…we do not give legal advice. Always consult a lawyer about legal issues.