PCM Ethics & Professional Standards 2 — Questions and Answers
Question 1: What is the primary ethical obligation when a collection agency receives a written cease communication request from a consumer?
- Determine whether the consumer is attempting to avoid a legitimate debt before complying
- Honor the request immediately, document compliance, and limit further contact to legally permitted purposes (Correct answer)
- Escalate collection efforts one final time before stopping all communication
- Transfer the account to a third-party collector who can continue contact
Correct answer: Honor the request immediately, document compliance, and limit further contact to legally permitted purposes
Ethically and legally, a collection agency must immediately honor a cease communication request, document compliance, and restrict further contact to only those purposes permitted by law.
Question 2: How should a collection manager ethically handle confidential consumer financial information obtained during the collection process?
- Share it with other clients to identify cross-selling or referral opportunities
- Use it only for collection purposes and protect it from unauthorized disclosure (Correct answer)
- Store it indefinitely to support any future collection efforts on related accounts
- Provide it to any party requesting assistance with related debt recovery
Correct answer: Use it only for collection purposes and protect it from unauthorized disclosure
Consumer financial information is confidential and must be used only for legitimate collection purposes, protected from unauthorized access or disclosure under both privacy laws and professional ethics.
Question 3: What does 'informed consent' require in the context of negotiating payment arrangements with consumers?
- The consumer signs any document the collector presents agreeing to pay the amount stated
- The consumer fully understands and voluntarily agrees to all terms and conditions of a payment plan (Correct answer)
- The collection manager approves the payment arrangement on the creditor client's behalf
- The debtor is informed of consequences only after they miss their first scheduled payment
Correct answer: The consumer fully understands and voluntarily agrees to all terms and conditions of a payment plan
Informed consent requires that consumers fully understand all terms, conditions, and implications of any payment arrangement before voluntarily agreeing to it.
Question 4: Which of the following collector behaviors is a clear violation of professional ethics and the FDCPA?
- Documenting all consumer contacts accurately in the collection system
- Verifying debt information before initiating any contact with a consumer
- Threatening legal action that the agency has no actual intention of pursuing (Correct answer)
- Offering multiple payment options to accommodate the consumer's financial situation
Correct answer: Threatening legal action that the agency has no actual intention of pursuing
Threatening legal action that the agency does not intend to pursue is both an ethical violation and a violation of the FDCPA, constituting deceptive misrepresentation.
Question 5: What is the ethical obligation of a collection manager when an account in their portfolio may involve identity theft?
- Continue collection efforts until the consumer provides documented proof of the identity theft claim
- Pause collection activity and conduct a thorough investigation of the claim (Correct answer)
- Intensify collection efforts to maximize recovery before the account is formally disputed
- Transfer the account to a specialized unit without conducting any preliminary investigation
Correct answer: Pause collection activity and conduct a thorough investigation of the claim
When identity theft is suspected, the ethical obligation is to pause collection activity and investigate thoroughly to avoid pursuing and harassing an innocent consumer who did not incur the debt.
Question 6: How does the ethical principle of 'justice' apply specifically to collection management practice?
- It requires pursuing every collectible debt through litigation regardless of cost
- It means applying collection procedures consistently and without discrimination across all consumer accounts (Correct answer)
- It requires maximizing recovery for creditor clients above all other considerations
- It means ensuring collectors receive fair compensation relative to their performance
Correct answer: It means applying collection procedures consistently and without discrimination across all consumer accounts
The principle of justice in collection management requires that procedures and practices be applied consistently, fairly, and without discrimination across all consumer accounts.
Question 7: A collection manager is offered a personal financial incentive by a vendor in exchange for directing business to that vendor. What is the ethical course of action?
- Accept the incentive if the vendor's services are genuinely competitive in the market
- Disclose the offer to senior management and decline the incentive (Correct answer)
- Accept the incentive but donate the full amount to a charitable organization
- Negotiate a better incentive before making any business decision
Correct answer: Disclose the offer to senior management and decline the incentive
Accepting undisclosed financial incentives from vendors creates a conflict of interest; the ethical course of action is to disclose the offer to management and decline it.
PCM Ethics & Professional Standards 2
What is the primary ethical obligation when a collection agency receives a written cease communication request from a consumer?