8 Collection Tactics That Have Drawn Orders or Supported Claims

Some collection tactics are merely aggressive. Others have already been named in enforcement orders as unlawful, and the collector using them is counting on the merchant never learning the difference.

Each tactic below was treated as unlawful or beyond authority in the captured order, statute or guidance cited with it. Whether any of them supports a claim on a particular business account depends on the agreement, the actor and the governing law, all of which counsel must assess. Nothing here promises that a tactic voids a debt.

Withdrawals Without Express Informed Consent

The 2022 FTC action against RAM Capital Funding and its owner ended with both barred permanently from the merchant cash advance and debt collection industries, on charges that included deceptive and illegal seizures from small businesses in order to collect amounts the merchants disputed. The stipulated order restrained the settling parties from causing debits or withdrawals from any customer bank account without express informed consent and required dismissal of pending customer cases with prejudice within thirty days.

A debit the merchant never authorized in the form the order describes is not a gray area. It was the center of the case. Bank records showing the amounts and dates of each withdrawal preserve and frame the issue while counsel evaluates which forum, if any, reaches the conduct.

Threats Against the Merchant

The same charges included threats, including threats of physical violence, used to extract payment. Most debt buyers know exactly what they are purchasing. They prefer not to examine the methods too closely, and that preference does not transfer to the merchant any obligation to endure them.

Every threat should be preserved with its date, medium and exact words. A collector that will threaten a merchant on the telephone, even casually, will deny the call later, and the recording or the contemporaneous note decides which version survives. Resist the urge to answer the next call without counsel on the line.

Weaponized Confessions of Judgment

The FTC alleged the defendants illegally weaponized confessions of judgment to pursue customer personal assets and obtain uncontested judgments. A New York trial court later found, on a full record against specific funders, that operatives filed false affidavits with various courts to obtain entry of confessions of judgment, conduct the court held fraudulent.

Confession procedure requires a signed sworn affidavit stating the sum and the facts of the debt, with filing restricted by residence and county rules. Texas covered financing law declares a confession provision in a covered contract void and unenforceable, though it creates no private right of action. An affidavit signed before any default exists deserves the suspicion it invites.

Seizure With Breach of the Peace

Secured party repossession law permits self help after default only without breach of the peace. The limitation is short and extremely absolute. A lending party that sends a crew to take equipment from a loading dock over objection has left the statute behind, and no security agreement confers what the section withholds.

Rarely does a statute speak so briefly. The lock stays. The gate stays. The dispute moves to a courtroom.

Restraint Without Exemption Papers

A restraint served on a natural person’s bank account without the exemption notice and the two claim forms is void, and the institution shall not restrain the account; the same failure on levy voids the execution. The rule comes from the exemption claim procedure examined in the levy article, and collectors violate it by treating the papers as optional.

This is the rare violation with a self executing remedy, visible on the face of what the bank received. What the bank received, or failed to receive, decides the issue. The debtor who kept the envelope and its contents holds the proof, which is more than most violations leave behind.

Misleading Cost and Fee Statements

Adopted Texas rules address misleading statements, unauthorized debits and undisclosed fees in covered transactions, requiring accurate disclosures before agreement (the California invitation produces paper, not stays, and counsel should calendar the litigation deadlines as if no complaint had been filed). California guidance prohibits unfair, deceptive or abusive commercial financing practices under October 2023 rules and invites business complaints, while its disclosure regulations effective December 2022 cover advances with funding, finance cost and payment metrics.

A complaint cancels no debt and suspends no litigation; its product is a record with the regulator, a peculiar and sometimes more durable asset than the balance in dispute.

Debits Without Perfected Priority

For covered Texas transactions, the statute permits no automatic debit mechanism unless the provider holds a validly perfected first priority security interest in the recipient’s accounts, a condition that converts many routine sweeps into compliance questions. The requirement sits beside the confession ban in the same chapter, and the chapter’s bar on private actions means remedies run through counsel and regulatory channels rather than self help.

Outside Texas the analysis returns to the signed agreement and the state’s version of Article 9. Counsel should ensure the perfection analysis precedes any admission about the debit. The question travels: what perfected interest, if any, stands behind this morning’s debit.

Liens Maintained After Payoff

The FTC order required the settling parties to file termination statements for UCC liens and to withdraw every other lien, alongside deletion requests for reported derogatory debt. The principle generalizes through statute: termination follows a signed debtor demand when the statutory conditions hold, within twenty days, and payoff alone changes nothing on the public record until the filing is made.

After the balance is paid, a surviving lien remains extremely difficult to refinance around, continues to encumber collateral, appears in business reports that include UCC filings, and deters the refinancing that would end the dispute. Delancey Street is a settlement company, not a law firm. It reviews business debt files in a free confidential initial assessment, ensures demands and releases are documented and tracked, and works alongside independently licensed counsel for any claim or defense. Simply ask for the review before the next debit posts.