Magazine article Business Credit

The Check Is in the Mail

Magazine article Business Credit

The Check Is in the Mail

Article excerpt

"The check is in the mail." That excuse is as old as both the Commercial Law League of America and the National Association of Credit Management combined.

Unfortunately, if several members of Congress have their way, "the check is in the mail" will no longer be just an excuse. Rather, it will be a warning to every credit grantor and debt collector that the outstanding balance on an account may not be what they think it is.

H.R. 1963, introduced by Rep. John McHugh (R-NY) and co-sponsored by at least 20 other members of the House of Representatives, provides that any payment sent by mail that was properly addressed and had the correct postage affixed in the form of stamps, must be considered made when the envelope was postmarked rather than when it was received and processed by the credit grantor.

This bill has already been the subject of two hearings before the House Subcommittee on the Postal Service of the Committee on Government Reform and Oversight. It is reported that the legislation is the brainchild of radio talk show host Brace Williams, who has given this cause significant airtime and delivered to the Subcommittee over 4,000 pieces of mail from listeners favoring the legislation.

The Commercial Law League of America has expressed its strong opposition to this legislation both through the filing of a position paper with the Subcommittee and by discussions with key members and staffers on Capitol Hill. In addition to concerns about the cost of complying for credit grantors, both large and small, the CLLA has grave concerns about the unintended consequences that could follow from making the date a payment is post-marked the official date a bill is considered paid.

This legislation could make every attempt to collect a debt a potential violation of the FDCPA. That Act wakes it illegal, among other things, to "misrepresent the amount of a debt." Consider the following situation: A credit grantor turns over an account to a debt collector and reports the outstanding balance as $1,500 on June 1. A subsequent payment is received for $600 that was postmarked on May 31. The request for payment from the debtor of $1,500 is a misrepresentation and subjects the debt collector to a $1,000 penalty plus attorney's fees that could be several times that amount.

This undoubtedly is bad for those in whom you entrust the responsibility of managing your receivables. However, credit grantors are also severely impacted. Besides never having any idea what a customer actually owes, you will now be responsible for maintaining information about the postmark date (assuming, of course, that is was legible on the envelope when received) and storing the envelope or some acceptable copy. While the vast majority of those paying generally pay on time, you will undoubtedly find yourself devoting even more resources to that very small percentage of difficult customers.

And speaking of the FDCPA, don't for a minute believe that as a credit grantor you will remain immune from the nightmarish consequences of the FDCPA for very much longer. Noises have already been made by some at the Federal Trade Commission that creditors should be included under the FDCPA.

If you think that the cost of maintaining a system to read postmarks and store envelopes is going to be high, wait until you experience the cost of paying off plaintiff's attorneys seeking $1,000 in damage claims and $5,000 or more in attorney's fees for technical violations of the Act. …

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