A telecommunications company sold its receivables to a collection agency that collected overdue phone bills en masse from thousands of people. Disagreement arose over the collection fees charged. According to the Finnish Consumer Agency, the collection agency does not have the right to charge the fees that were demanded in the collection notices. The District Court and the Court of Appeal dismissed the Agency's claim. The Agency is now applying for an appeal to the Supreme Court.
When the telecom company ACN Communications Finland Oy stopped operating in Finland, it sold its receivables, based on phone service sales, to the collection agency Alektum Perintä Oy. Alektum Perintä Oy sent approximately 16,000 collection letters to the company's former customers. The bills were for the years 2004–2005.
The disagreement concerns the amount that can be charged as a collection fee. According to reports sent in by consumers, Alektum Perintä Oy is charging 21 euro for each collection letter. If the collection agency were collecting receivables on behalf of a client, it would send a demand for payment and charge the fee accordingly. In this case, however, it has purchased the receivables for itself, thus becoming an ordinary creditor who can charge a maximum of 5 euro to send a reminder notice about receivables owed to it.
Under the Debt Collection Act, when a creditor is collecting its own receivables from consumers, it has the right to add interest on arrears and a charge of up to 5 euro to cover collection expenses. If the job has been given to a professional collection agency, however, the agency must send the debtor a standard demand for payment if it wishes to take legal action. When collecting receivables by the order of a client, a collection agency may charge up to 21 euro for a demand for payment if the amount due is less than 250 euro, or up to 45 euro if the amount due is more than 250 euro. The situation is different, however, if the collection agency has itself become the creditor.
Alektum Perintä Oy brought the case to Helsinki District Court in May 2006 as a debt collection matter against a consumer. The Consumer Agency is assisting the consumer, who is the defendant. The District Court decided that the company does have the right to charge 21 euro for collection expenses. The collection agency was not exactly collecting its own receivables, according to the District Court, since the receivables had been purchased. On 19 March 2008, the Court of Appeal decided not to overturn the District Court's decision.
The Consumer Agency is applying to the Supreme Court for leave to appeal the matter because it is important to set a precedent for application of the law to other, similar cases. The matter is financially significant for consumers because it is now more common for collection agencies to buy receivables than it was when the Debt Collection Act was enacted.
Sale of Receivables Led to Dispute Over Collection Charges (Current Issues on Consumer Law 4/2006)