Your receptionist does not owe the MCA company anything. Your office manager signed nothing. Your warehouse staff made no personal guarantee. And yet the phone at the front desk rings, and a voice on the other end tells whoever answers that the business is in default, that legal action is imminent, that the owner should call back immediately or face consequences. This happens. It happens often enough that the pattern has become its own category of violation.
Inform Your Staff Immediately
The worst outcome is an employee who receives a threatening call and does not tell you about it. The second worst outcome is an employee who panics, provides information to the caller, or makes commitments on your behalf. Before either of those things happens, you need a brief, direct conversation with anyone who answers the phone at your business.
The message is simple. A collection company may call. They are not law enforcement. They have no authority to demand information. The only correct response is to take the caller’s name and number and hand the note to you. Nothing else. No confirmation that you are the owner. No discussion of the business’s financial condition. No promise that you will return the call.
This conversation takes five minutes. Its absence can cost considerably more.
Record the Calls
If your phone system permits recording and your jurisdiction allows it, activate the recording function. In one party consent states, the employee receiving the call is the consenting party, and no disclosure to the caller is required. In two party consent states, the employee must inform the caller that the conversation is being recorded before the recording begins.
The recording captures what the collector actually said, not what anyone remembers the collector having said three weeks later. Memories compress. Recordings do not. And the content of these calls, the threats, the misrepresentations, the implied authority, is frequently more extreme than what the caller would repeat in a courtroom.
Preserve Written Evidence of Every Contact
Ask each employee who received a call to write down what happened while the conversation is fresh. Date, time, caller’s name or identifying information, what was said, what was requested. If the contact came by email or text, preserve the original without forwarding it through a chain that might strip metadata. Screenshot it. Save it. File it somewhere that will not be accidentally deleted during a routine phone cleanup in April.
Written contemporaneous notes carry weight in litigation because they were created near the event, before the litigation itself shaped anyone’s recollection. A note taken on the day of the call is worth more, as evidence, than a detailed deposition answer given eighteen months later.
Engage an Attorney and Redirect Communication
Once counsel is retained, the collector must communicate with the attorney, not with you and certainly not with your employees. Your attorney sends a representation letter to the MCA company. The letter identifies the client, states that counsel has been retained, and directs all future communication to the attorney’s office. After receipt of that letter, each subsequent call to your business is a separate violation of the applicable collection statute.
The representation letter does not resolve the underlying debt. It does not settle the dispute. What it does is install a barrier between the collector and your employees that the collector cannot lawfully breach.
Assess Whether the Threats Constitute Criminal Conduct
A collector who tells your employee that the owner will be arrested has made a false statement about criminal process. A collector who tells your employee that the business will be “shut down by the authorities” has implied governmental action that is not occurring. Depending on jurisdiction, these statements may constitute criminal harassment, coercion, or making terroristic threats. The line between aggressive collection and criminal conduct is thinner than most collectors appreciate, and it is crossed more often than most borrowers realize.
If the statements made to your employees rise to a criminal level, a police report is appropriate. The report may not result in prosecution. It will, however, create an official record of the conduct that becomes admissible in any subsequent civil proceeding. And the existence of that police report changes the settlement conversation in ways that favor the borrower.
File Regulatory Complaints
The FTC, the CFPB, and your state’s attorney general office all accept complaints about collection practices that target employees. The complaint should include the name of the MCA company, the name of any collection firm involved, the dates of contact, and a summary of what was communicated to your employees. Attach recordings or written notes if available.
State regulators have taken an increasingly active posture toward MCA collection practices. The New Jersey Attorney General’s settlement with an MCA company over unfair and deceptive practices included specific findings related to the manner in which the company pursued collections. California’s DFPI has expanded its authority over commercial financing transactions. These agencies act on complaints. Filing one is not symbolic. It is functional.
Consider a Workplace Harassment Claim
Your employees have their own rights. An employee who is subjected to threatening, abusive, or intimidating phone calls at work may have a basis for a harassment claim independent of any claim you hold against the MCA company. The collector is creating a hostile work environment not for the debtor, but for third parties who have no involvement in the debt. That is a separate tort with its own elements and its own damages.
We acknowledge this is an aggressive legal theory. Not every jurisdiction has recognized it, and the case law is sparse. But the theory is sound, and in the right factual circumstances, it adds a dimension to the dispute that the MCA company did not anticipate.
Use the Evidence to Strengthen Your Negotiating Position
Everything documented in the steps above becomes leverage in the settlement conversation. An MCA company that threatened your employees has created exposure for itself that exists independent of whether you owe the underlying balance. The company knows this once your attorney communicates the evidence. And the company’s willingness to settle, and the terms on which it will settle, shift accordingly.
The pattern we observe is consistent. The MCA company begins collection with an assumption that the borrower will absorb the abuse and eventually pay. When the borrower instead documents the abuse, retains counsel, and presents the documented violations as the basis for counterclaims, the company recalculates. The recalculation favors the borrower nearly every time, because the statutory exposure from collection violations can exceed the amount of the underlying debt.
Eight actions, and most of them cost nothing except attention. The collector’s advantage is chaos. Your advantage is order. A filing cabinet, a phone log, an attorney’s letterhead. These are not dramatic instruments. They are effective ones.
If an MCA company has contacted your employees, we are available for a consultation at no cost. The conversation begins with what was said to your staff, and it moves toward what we can do about it.
Related Articles:
