Understanding "Debt Collection Services" and the Legal Consequences of Various Issues Through Legal Provisions, Especially in Cases Where Creditors Hire Collectors and Abuse Debtors, Which May Result in Liability for Both the Client and the Collector

Creditors, whether legal entities or individuals, who are creditors from lending money or commercial creditors from business operations, may initiate debt collection when debtors default on repayment. This can be done either by the creditor themselves or by hiring individuals, groups, or legal entities that specialize in debt collection.

Creditors may hire someone to locate the debtor's address or assets, such as where movable property is located, or to act as a debt collector. Debt collection methods can range from gentle reminders to aggressive threats, including the use of physical force.

If a hired collector engages in abusive actions against the debtor, not only is the collector directly liable, but the hiring party, whether an individual or a legal entity such as a financial institution, is also jointly liable as the employer. The Supreme Court has established a precedent in its ruling 6543/2561, which states:

Defendant 1 is an employee of Defendant 3, who was hired by Defendant 4 (a financial institution) to collect debts from defaulting customers. Defendant 1 called the plaintiff to collect the debt and informed others at the school, which was not in accordance with the debt collection practices of the Bank of Thailand and constituted a violation against the plaintiff under Section 420 of the Civil and Commercial Code.

Defendant 3 assigned Defendant 1 the task of collecting debts from the plaintiff, which is an activity that Defendant 3, as the employer, entrusted to Defendant 1. Defendant 3 cannot claim that the violation occurred because Defendant 1 violated internal regulations or operational manuals, as this is an internal matter of Defendant 1 and does not absolve Defendant 3 from liability towards the plaintiff, who is an external party.

When Defendant 1 collected the debt from the plaintiff with the intent to harm the plaintiff's reputation, Defendant 3 must also be liable to the plaintiff for the damages caused by Defendant 1's actions in the course of employment under Section 425 of the Civil and Commercial Code. Although the service contract between Defendant 4 and Defendant 3 is a contract for services, it contains provisions indicating that Defendant 4 assigned Defendant 3 to collect debts from Defendant 4's debtors, with Defendant 3 receiving compensation from Defendant 4. Therefore, Defendant 3 and Defendant 4 have a legal relationship where Defendant 3 acts as an implicit representative of Defendant 4, with compensation related to debt collection from Defendant 4's debtors.

When Defendant 3 assigned Defendant 1 to collect debts from the plaintiff, who is a debtor of Defendant 4, it can be concluded that Defendant 1 is also an implicit representative of Defendant 4 in relation to collecting debts from Defendant 4's debtors, according to Section 797, paragraph two of the Civil and Commercial Code. Even if the contract between Defendant 3 and Defendant 4 prohibits Defendant 3's employees from collecting debts from Defendant 4's debtors through illegal means, this cannot be used as a defense against the plaintiff, who is an external party. Therefore, Defendant 4 is also liable for the torts committed by Defendant 1 against the plaintiff under Section 427 in conjunction with Section 425.

In 2015, the Debt Collection Act B.E. 2558 was enacted to protect individual debtors from abusive debt collection practices, including harassment, threats, physical violence, and defamation. The law aims to establish specific regulations for debt collection. The key provisions of this law state that:

Debt collection businesses must register with the registrar appointed by the Minister of the Interior, establish prohibitions on debt collection practices, and set guidelines for debt collection. Violators face both administrative and criminal penalties.

SOURCE : www.bangkokbiznews.com