Capital One backs away from invasive debt collection policy

Card agreements allow visits at home and work, calls anytime, anyplace

Capital One is backing away from terms in its credit card agreements that say it can visit you at home or at work, and manipulate how its phone number appears on your caller ID.

After a Feb. 17 Los Angeles Times article caused a furor about language that allows the company to spoof its phone number and show up on your doorstep, Capital One spokeswoman Pam Girardo said the company is reviewing the terms.

With limited exceptions, "Capital One does not visit our cardholders, nor do we send debt collectors to their homes or work," Girardo said in an email. "We are reviewing the language because we do not want to create any unnecessary insecurity among our customers."

Capital One's credit card agreement

The language is a long-standing part of Capital One's consumer credit card agreements, not a recent update, Girardo said. 

However, consumer attorneys said that the language can also empower debt buyers that buy up the company's charged-off balances and attempt to collect it. The permissive contact rules in Capital One's agreement stay attached to the debt.

"It's definitely an attempt to make the debt more valuable," said Ronald Wilcox, a consumer attorney in San Jose, Calif., and member of the National Association of Consumer Advocates. "They don't want to sell debt for 5 cents on the dollar."

Contact OK anytime, anyplace
In the "Communications" section, Capital One card agreements assert a number of ways the company can contact cardholders, "unless the law says we cannot." These include by phone or personal visit; via mobile phone; at home or at work. They say they may "contact you  at any time, including weekends and holidays," and "with any frequency."

Numerous states, including California, Texas, Iowa and West Virginia, have consumer protection laws that restrict creditors from calling debtors at work or at inconvenient times, consumer lawyers said. However, Capital One's card agreements specify that the laws of its home state of Virginia should apply in disputes over a debt.

The agreement also says the company "may modify or suppress caller ID and similar services and identify ourselves on these services in any manner we choose."

Many of the terms conflict with state and federal consumer protection laws that limit the actions of creditors and their debt collectors.

"All of those things are tricky," said Robert Hobbs, deputy director of the National Consumer Law Center. "Most states have laws protecting people's privacy."

The federal Fair Debt Collection Practices Act, for example, bars third-party debt collectors from contacting consumers at inconvenient times, such as before 8 a.m. and after 9 p.m. Lenders themselves are not covered by the law.

Girardo said Capital One only visits someone's home "as a last resort" in the case of repossession of certain purchases -- such as snow mobiles and personal watercraft -- that are pledged as collateral for secured loans. The company is considering creating a separate card category for these items to avoid having the language apply to its general cardholder base, she said.

Right to repossess
Several store cards issued by Capital One give the lender a right to repossess items bought with the cards, a review by found, including store cards for use at Costco, Big Lots and Guitar Center. Debtors need court permission and assistance from the local sheriff to seize collateral from your home, lawyers said.

As for caller ID, "We want our phone calls to display as Capital One on caller ID and that's the way they are programmed. However, some local phone exchanges may display our number differently," Girardo said, adding that the company wants customers to be aware of that.

The contract language itself, however, permits spoofing the number where laws allow it, and collectors who inherit delinquent accounts may be eager to take advantage of this ability, consumer lawyers said. Cases of collectors using spoofing to hide their number, or even to make the call seem local, have been widely reported. The practice of masking the collector's number is not explicitly banned, attorneys said.

Debt buyer Allied Interstate argued in a 2006 case that its caller ID spoofing of debtors' phones was not outlawed by requirements that collectors identify themselves. For one thing, the company's name would not fit on the caller ID display, the company said. A federal court in Minnesota allowed consumer Joseph Knoll's case against the debt buyer to continue, but a settlement left the spoofing question unsettled.

Since then, Wilcox said he has encountered caller ID spoofing in cases against debt collectors. In one 2013 case in California, a church pastor picked up collection calls because they appeared to be from local telephones, and "his belief was that he was getting calls from members of his church," Wilcox said. The case, which did not hinge on the spoofing allegations, was settled before reaching a decision.

See related: Robo-signed debt collection under fire

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Updated: 02-18-2019