Albert started getting a stream of phone calls from debt collectors in late 2009. By then, he had already maxed out all his six credit cards and owed Dh75,000 from various banks. He was jobless.
On a typical day, he would get six calls from one bank and his phone would ring almost incessantly, starting from 8:30am. Once, a collector rang and asked where he was. "I'm in Deira," he replied. "In five minutes, the police will be there," came the reply.
The threat was nothing but a bluff, the Filipino expat said. "I've received a lot of calls like that, but until now I haven't been arrested.
"There were instances where I dealt with verbally abusive callers. One of them, a female staff, called to inform I had to pay Dh2,500 at once. I said I could pay only Dh500 because that was all the money I had. Despite my assurances that I was not running away, she got angry and cursed me, saying she didn't care if I was broke, all she needed was to make sure I'd pay," Albert said.
Tonya, another expat, is no stranger to Albert's experience. "I had a payment delay on my loan [with a UAE bank] and the collections department people were calling me and started to tell me indecent words… When I explained why there was a delay on my payment, they told me to shut up and they said they didn't need my explanation," the expat wrote on an online forum.
It's one of those things many borrowers dread:bank staff calling to remind them of their missed payments. What's worse is when callers resort to hardball tactics, including making threats and using foul language. "If you have a weak personality, these nuisance calls could drive you to just end your life once and for all," Albert said.
Collection tactics
Some banks hire a third party to follow up on unpaid dues, others have their own collections departments, tasked mainly to "manage" or "reduce" delinquencies.
"Here in Dubai, the banks employ their own staff to collect from people in arrears and defaults. These staff are under pressure to get results because their salaries are low and commissions on collections make up a large part of their income. If someone leaves the UAE leaving debts behind, the banks will follow them using debt collectors in countries they move to," explains Steve Gregory, a financial adviser at Holborn Assets.
There is no hard and fast rule on how banks treat delinquents, although in most cases they call customers the moment a payment is overdue in the first instance. If three consecutive payments are overdue, the matter is forwarded to the collections department.
"With regard to legal action, a review can happen at any point. Certainly, as an account becomes several payments past due, the likelihood of pursuing legal action increases. Having said this, the exact timing and course of action is handled on a case by case basis, as there are many factors considered, such as, but not limited to, exposure to the bank, type of product, and the customer's willingness to work out an amicable solution," a source said.
Borrowers have the responsibility to ensure their dues are settled promptly. This doesn't mean there are no limits on how far a collector can go. Some legal experts interviewed by Gulf News, said bank customers still deserve some fair treatment.
"However, whereas in some countries there are special laws that penalise abusive debt collection practices, in the UAE, there are none. We do have a debt law, but it provides more protection to the creditor than to the borrower. It always favours the creditors. More often it is the lender that files a complaint against the debtor," a legal consultant who requested anonymity told Gulf News.
Pierre Mehawej, legal consultant at Kanaan and Azhari Advocates and Legal Consultants, said banks are allowed to follow up on missed payments or notify their clients prior to filing a case, but certain methods, such as harassing borrowers, are punishable under the Penal Code.
Legal recourse
Clients who find repeated phone calls hampering their work, for instance, have the right to privacy and demand that collectors stop calling them. "Most of the time, people stop answering the calls. My advice is to complain to the police against any debt collector under Article 250 of the Penal Code," Mehawej told Gulf News.
Use of threats to extract payments should not be tolerated either. "The bank that is instructing his employee [debt collector] to call the debtor and to threaten him in order to collect the unpaid money should be blamed for breaching the ethics of the banking profession, as well as the circulars of the Central Bank and the stipulations of Law No 10 for the year 1980 regulating the said profession. It goes without saying that the bank will be liable for the acts of its employees," he said.
"If the consumer feels harassed or offended, he has the full right to file a complaint before the police or the public prosecution. However, such harassment shall entail the acts mentioned [in the Penal Code] which basically punishes any person who curses, slanders, insults, or publicly ruins someone's reputation or honour," he added.
Gregory said that those who shout, use abusive language or threaten to have a borrower arrested should be reported to authorities.
"This is not acceptable practice, and you can complain, in the case of a bank collector, to the Central Bank of the UAE, but there are other options also."
Another legal consultant also advised offended borrowers to send a letter to the collector's supervisor so that disciplinary action could be taken. "It may be difficult to impose on the bank to stop calling you because you owe them their money. The least you can do is speak to them and ask for a workable solution to settle your dues," she said.
She maintained that any offence by a debt collector is a personal matter, so if a borrower intends to pursue a harassment complaint, he can't drag the bank into the case. "So you can complain against the collector, but it doesn't fall under company charge."
One bank spokesperson, who asked not to be named, said the phone calls only serve as a "gentle reminder" to borrowers.
The consultant maintained that the banks' collection staff always undergo training to ensure they behave in an "appropriate manner" with customers.
"They follow scripts that are legal and compliance-approved, so they won't be able to just say anything. There are guidelines. They're not allowed to resort to abusive acts, such as shouting or insulting a customer. If an offended customer complains, an investigation will be undertaken and the staff concerned can be reprimanded," she said.
"However, it is important to note that customers who are overdue for payments will receive calls from the collections department seven days a week between 7am and 9pm," she added.
Have Your Say
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