Collection agency
Encyclopedia
A collection agency is a business that pursues payments of debt
s owed by individuals or businesses. Most collection agencies operate as agents of creditor
s and collect debts for a fee or percentage of the total amount owed.
There are many types of collection agencies. First-party agencies are oftentimes subsidiaries of the original company the debt is owed to. Third-party agencies are separate companies contracted by a company to collect debts on their behalf for a fee. Debt buyer
s purchase the debt at a percentage of its value, then attempt to collect it. Each country has its own rules and regulations regarding them.
These agencies are called "first-party" because they are part of the first party to the contract (i.e. the creditor). The second party is the consumer (or debtor). Typically, first-party agencies try to collect debts for several months before passing it to a third-party agency or selling the debt and writing off most of its value.
(SLA) that exists between the creditor and the collection agency. The agency takes a percentage of debts successfully collected; sometimes known in the industry as the "Pot Fee" or potential fee upon successful collection. This does not necessarily have to be upon collection of the full balance; very often this fee must be paid by the creditor if they cancel collection efforts before the debt is collected. The collection agency makes money only if money is collected from the debtor (often known as a "No Collection - No Fee" basis). Depending on the type of debt, the age of the account and how many attempts have already been made to collect on it, the fee could range from 10% to 50% (though more typically the fee is 25% to 40%).
Some debt purchasers who purchase sizable portfolios will utilize a Master Servicer to assist in managing their portfolios (often ranging in thousands of files) across multiple collection agencies. Given the time-sensitive nature of these assets, many in the Accounts Receivable Management (ARM) industry believe there is a competitive advantage in utilizing this technique as it gives the debt purchaser more control and flexibility to maximize collections. Master Servicing fees may range from 4% to 6% of gross collections in addition to collection agency fees.
Some agencies offer a flat fee "pre-collection" or "soft collection" service. The service sends a series of increasingly urgent letters, usually ten days apart, instructing debtors to pay the amount owed directly to the creditor or risk a collection action and negative credit report. Depending on the terms of the SLA, these accounts may revert to "hard collection" status at the agency's regular rates if the debtor does not respond.
In many countries there is legislation to limit harassment and practices deemed unfair, for example limiting the hours during which the agency may telephone the debtor, prohibiting communication of the debt to a third party, prohibiting false, deceptive or misleading representations, and prohibiting threats, as distinct from notice of planned and not illegal steps.
.
In the United States, consumer third-party agencies are subject to the federal Fair Debt Collection Practices Act
of 1977 (FDCPA), is administered by the Federal Trade Commission
or FTC.
In the United Kingdom third-party collection agencies that pursue debts regulated by the Consumer Credit Act
must hold a Consumer Credit Licence and work within the framework of the 2003 fair debt collection guidance; licences are issued and regulated by the Office of Fair Trading
.
s", purchase debts from creditors for a percentage of the value of the debt and pursue the debtor
for the full balance, sometimes plus "interest". This prevents a debtor from merely defaulting or forgetting a debt. It also generates immediate revenue, albeit much reduced, for the creditor and reduces the public relations risks involved with defaulted debt collection.
Some states have specific laws regarding debt buying. For example, Kansas
does not allow wage garnishments on purchased debt.
may be highly motivated to convince debtors to pay the debt, often to the point that they are threatening or abusive to debtors, or misrepresent their rights and what may happen to the debtor.
order to the agency, either by letter or, in states such as Wisconsin which allow this, verbally. The collector may not use deceptive practices (for example, threatening the debtor with arrest or impersonating law enforcement). The collector cannot use obscene language and must inform the debtor of their name and the name of the collection company when requested.
Some companies are turning to agent-assisted automation
. The use of automation ensures that the intended message is left, eliminating variations among different human callers and allowing rapid updates without needing to retrain them.
International debt collection is a less common and specialised field. Not many companies specialize in this sort of collection as there may be a need to speak different languages and have a knowledge of the different legal systems and laws. International collection calls are often made in a different language than used in the collecting company.
Collection agencies are sometimes allowed to contact individuals other than the debtor, usually in an attempt to locate the debtor but without mentioning the debt. In the US under the FDCPA a collector is permitted to call a neighbor or relative for help in locating the person who owes a debt. Collectors may only ask for "address, home phone number, and place of work." Collectors are "not permitted to discuss [the] debt with anyone other than [the debtor], [their] spouse, or [their] attorney." Collectors must state their name and must give the name of their employer if the person specifically asks. They may only contact each person once, unless it is believed that the person gave the collector incorrect or incomplete information at the time, but now has complete or updated information. Collectors may contact a debtor at the workplace unless the collector has been informed the employer prohibits such calls, in which case the collector must cease all calls to the debtor's workplace immediately.
At times a person with no connection to the debt or the debtor may be contacted by a collector by error. Examples include victims of identity theft
and people erroneously targeted due to a similar name. Alternatively, the alleged debtor may dispute that the debt is payable. In such cases the alleged debtor can require that the collector or creditor prove that the debt is payable—in no jurisdiction does a debt exist merely because a collector says so. In the United States under the FDCPA, anyone has the right for any reason to request written validation of the debt or to demand the collector cease communication.
Relatives of deceased people do not themselves have to pay the debts of the deceased, but debts must be paid by the deceased person's estate.
or debt
which has been submitted to a collection agency through a creditor. The term is not used on debts with only original creditors.
If a debt is disputed it can only appear as disputed on the alleged debtor's credit report.
The law is typically called the Collection Agencies Act and usually affords a government ministry power to make regulations as needed. Regulations include calling times, frequency of calls and requirements for mailing correspondence prior making telephone contact. Most debts in Ontario and Alberta are subject to a limitation period of two years. Most other provinces the limitation period is 6 years. After the corresponding (two or six, depending on province) anniversary of the last formal intention to pay the debt, the collection agency nor anyone else has legal authority to collect it. Credit bureau
s will still retain the debt and the collection on your credit file for 6–7 years depending on province. Although the collection agency can continue to collect or attempt to collect the debt, they cannot garnish or place a lien on the debtor past the limitation period unless the court upholds a new date of last activity on the account based on other factors.
In Manitoba the governing document is the Manitoba Consumer Protection Act. Complaints regarding violations of the Act should be directed to the Manitoba Consumer Protection Board who will either mediate or enforce the act when it is broken.
For further information, see the Ontario regulations section on prohibited practices.
Province-specific statutes:
. The OFT sets guidelines on how debt collection agencies can operate and lists examples of unfair practices. These guidelines are not law, but do represent a summary and interpretation of various legal areas. Compliance with these guidelines is also used as a test of whether the agency is considered fit to hold a credit licence.
Examples of unfair practices include misrepresenting enforcement powers (e.g. claiming that property may be seized), falsely claiming to be acting in an official capacity, harassment, claiming unenforceable or excessive charges, misrepresenting the legal position to a debtor, and falsely claiming that a court judgement has been obtained when it has not. The legal basis for these practices comes from section 40 of the Administration of Justice Act 1970
.
Collection agencies and their debt collectors in the UK are not the same as court-appointed bailiff
s.
is the primary federal regulator of collection agencies, although the Bureau of Consumer Financial Protection—created in 2010 and housed within the Federal Reserve—will also have regulatory power over collection agencies. Many States and a few cities require collection agencies be licensed
and/or bonded
. In addition, many States have laws regulating debt collection, to which agencies must adhere (see Fair debt collection
).
The Fair Debt Collection Practices Act
is the primary federal law governing debt collection practices. The FDCPA allows aggrieved consumers to file private lawsuits against a collection agency that violates the Act. Alternatively, the Federal Trade Commission
or the state attorney general
may take action against a noncompliant collection agency, including issuing fines, ordering damages, restricting its operations or even closing it down (see, e.g. CAMCO
).
The FDCPA specifies that if a state law is more restrictive than the federal law, the state law will supersede the federal portion of the act. Thus, the more restrictive state laws will apply to any agency that is located in that state or makes calls to debtors inside such a state.
In addition to state and federal laws, a majority of U.S. collection agencies belong to trade group ACA International
and agree to abide by the association's code of ethics as a condition of membership. ACA's standards of conduct require its members to treat consumers with dignity and respect, and to appoint an officer with sufficient authority to handle consumer complaints. Consumers may also resolve disputes brought against a collection agency who is a member of ACA through ACA's consumer complaint resolution program.
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
s owed by individuals or businesses. Most collection agencies operate as agents of creditor
Creditor
A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property or...
s and collect debts for a fee or percentage of the total amount owed.
There are many types of collection agencies. First-party agencies are oftentimes subsidiaries of the original company the debt is owed to. Third-party agencies are separate companies contracted by a company to collect debts on their behalf for a fee. Debt buyer
Debt buyer
A debt buyer is a company, sometimes a collection agency or a private debt collection law firm, that purchases delinquent or charged-off debts from a creditor for a fraction of the face value of the debt...
s purchase the debt at a percentage of its value, then attempt to collect it. Each country has its own rules and regulations regarding them.
First-party agencies
Some collection agencies are departments or subsidiaries of the company that owns the original debt. First-party agencies typically get involved earlier in the debt collection process and have a greater incentive to try to maintain a constructive customer relationship. Because they are a part of the original creditor, first-party agencies may not be subject to legislation which governs third-party collection agencies.These agencies are called "first-party" because they are part of the first party to the contract (i.e. the creditor). The second party is the consumer (or debtor). Typically, first-party agencies try to collect debts for several months before passing it to a third-party agency or selling the debt and writing off most of its value.
Third party agencies
The term collection agency is usually applied to third-party agencies, called such because they were not a party to the original contract. The creditor assigns accounts directly to such an agency on a contingency-fee basis, which usually initially costs nothing to the creditor or merchant, except for the cost of communications. This however is dependent on the individual service level agreementService Level Agreement
A service-level agreement is a part of a service contract where the level of service is formally defined. In practice, the term SLA is sometimes used to refer to the contracted delivery time or performance...
(SLA) that exists between the creditor and the collection agency. The agency takes a percentage of debts successfully collected; sometimes known in the industry as the "Pot Fee" or potential fee upon successful collection. This does not necessarily have to be upon collection of the full balance; very often this fee must be paid by the creditor if they cancel collection efforts before the debt is collected. The collection agency makes money only if money is collected from the debtor (often known as a "No Collection - No Fee" basis). Depending on the type of debt, the age of the account and how many attempts have already been made to collect on it, the fee could range from 10% to 50% (though more typically the fee is 25% to 40%).
Some debt purchasers who purchase sizable portfolios will utilize a Master Servicer to assist in managing their portfolios (often ranging in thousands of files) across multiple collection agencies. Given the time-sensitive nature of these assets, many in the Accounts Receivable Management (ARM) industry believe there is a competitive advantage in utilizing this technique as it gives the debt purchaser more control and flexibility to maximize collections. Master Servicing fees may range from 4% to 6% of gross collections in addition to collection agency fees.
Some agencies offer a flat fee "pre-collection" or "soft collection" service. The service sends a series of increasingly urgent letters, usually ten days apart, instructing debtors to pay the amount owed directly to the creditor or risk a collection action and negative credit report. Depending on the terms of the SLA, these accounts may revert to "hard collection" status at the agency's regular rates if the debtor does not respond.
In many countries there is legislation to limit harassment and practices deemed unfair, for example limiting the hours during which the agency may telephone the debtor, prohibiting communication of the debt to a third party, prohibiting false, deceptive or misleading representations, and prohibiting threats, as distinct from notice of planned and not illegal steps.
.
In the United States, consumer third-party agencies are subject to the federal Fair Debt Collection Practices Act
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act , et seq., is a United States statute added in 1978 as Title VIII of the Consumer Credit Protection Act...
of 1977 (FDCPA), is administered by the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
or FTC.
In the United Kingdom third-party collection agencies that pursue debts regulated by the Consumer Credit Act
Consumer Credit Act
Consumer Credit Act may refer to:*Consumer Credit Act 1974*Consumer Credit Act 2006*Consumer Credit Protection Act...
must hold a Consumer Credit Licence and work within the framework of the 2003 fair debt collection guidance; licences are issued and regulated by the Office of Fair Trading
Office of Fair Trading
The Office of Fair Trading is a not-for-profit and non-ministerial government department of the United Kingdom, established by the Fair Trading Act 1973, which enforces both consumer protection and competition law, acting as the UK's economic regulator...
.
Sale of debts
An increasing number of collection agencies, sometimes referred to as "debt buyerDebt buyer
A debt buyer is a company, sometimes a collection agency or a private debt collection law firm, that purchases delinquent or charged-off debts from a creditor for a fraction of the face value of the debt...
s", purchase debts from creditors for a percentage of the value of the debt and pursue the debtor
Debtor
A debtor is an entity that owes a debt to someone else. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor...
for the full balance, sometimes plus "interest". This prevents a debtor from merely defaulting or forgetting a debt. It also generates immediate revenue, albeit much reduced, for the creditor and reduces the public relations risks involved with defaulted debt collection.
Some states have specific laws regarding debt buying. For example, Kansas
Kansas
Kansas is a US state located in the Midwestern United States. It is named after the Kansas River which flows through it, which in turn was named after the Kansa Native American tribe, which inhabited the area. The tribe's name is often said to mean "people of the wind" or "people of the south...
does not allow wage garnishments on purchased debt.
Debtors
The person who owes the bill or debt is the debtor. Debtors may fail to pay (default) for various reasons: because of a lack of financial planning or overcommitment on their part; due to an unforeseen eventuality such as the loss of a job or health problems; dispute or disagreement over the debt or what is being billed for; or dishonesty. The debtor may be either a person or an entity such as a company. Collection of debts from individual people is subject to much more restrictive rules than enforcement against a business.Collection practices
Debt collectors who work on commissionCommission (remuneration)
The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold...
may be highly motivated to convince debtors to pay the debt, often to the point that they are threatening or abusive to debtors, or misrepresent their rights and what may happen to the debtor.
Collection telephone calls
Collection calls inform debtors of their obligations and motivate repayment. In the US, the FDCPA prohibits calls to the debtor if the call will cost the debtor toll charges (in most other countries recipients of telephone calls are not charged, so this issue does not arise). The FDCPA also establishes what time of day calls can be made at, to whom and where. If a person answers, the call center may track statistics (e.g., the times and days when someone answers) in order to place calls at times when the debtor is more likely to be home; typically this is done by an automated dialing system between the times of 8am and 9pm local standard time. Furthermore, a collection agent must stop all communication (including phone calls and letters) if the debtor sends a cease and desistCease and desist
A cease and desist is an order or request to halt an activity and not to take it up again later or else face legal action. The recipient of the cease-and-desist may be an individual or an organization....
order to the agency, either by letter or, in states such as Wisconsin which allow this, verbally. The collector may not use deceptive practices (for example, threatening the debtor with arrest or impersonating law enforcement). The collector cannot use obscene language and must inform the debtor of their name and the name of the collection company when requested.
Some companies are turning to agent-assisted automation
Agent-assisted automation
Agent-assisted automation is a type of call center technology that automates elements of 1) what the call center agent does with their desktop tools and/or 2) says to customers during the call...
. The use of automation ensures that the intended message is left, eliminating variations among different human callers and allowing rapid updates without needing to retrain them.
International debt collection is a less common and specialised field. Not many companies specialize in this sort of collection as there may be a need to speak different languages and have a knowledge of the different legal systems and laws. International collection calls are often made in a different language than used in the collecting company.
Collection agencies are sometimes allowed to contact individuals other than the debtor, usually in an attempt to locate the debtor but without mentioning the debt. In the US under the FDCPA a collector is permitted to call a neighbor or relative for help in locating the person who owes a debt. Collectors may only ask for "address, home phone number, and place of work." Collectors are "not permitted to discuss [the] debt with anyone other than [the debtor], [their] spouse, or [their] attorney." Collectors must state their name and must give the name of their employer if the person specifically asks. They may only contact each person once, unless it is believed that the person gave the collector incorrect or incomplete information at the time, but now has complete or updated information. Collectors may contact a debtor at the workplace unless the collector has been informed the employer prohibits such calls, in which case the collector must cease all calls to the debtor's workplace immediately.
At times a person with no connection to the debt or the debtor may be contacted by a collector by error. Examples include victims of identity theft
Identity theft
Identity theft is a form of stealing another person's identity in which someone pretends to be someone else by assuming that person's identity, typically in order to access resources or obtain credit and other benefits in that person's name...
and people erroneously targeted due to a similar name. Alternatively, the alleged debtor may dispute that the debt is payable. In such cases the alleged debtor can require that the collector or creditor prove that the debt is payable—in no jurisdiction does a debt exist merely because a collector says so. In the United States under the FDCPA, anyone has the right for any reason to request written validation of the debt or to demand the collector cease communication.
Relatives of deceased people do not themselves have to pay the debts of the deceased, but debts must be paid by the deceased person's estate.
Collection account
Collection account is the term used to describe a person's loanLoan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
or debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
which has been submitted to a collection agency through a creditor. The term is not used on debts with only original creditors.
Credit record
Defaulted debts may appear on a person's credit record, and usually remain for several years, particularly if the debt has been referred to collection agencies or subject to court judgments. In the US this usually happens only when the account has reached Charge Off status from the original creditor. Not every account placed in collections is necessarily a "credit" account and subject to one of the three major credit bureaus reporting systems. If a debtor pays off a collection account, the item will be marked "Paid", but not removed from credit reports.If a debt is disputed it can only appear as disputed on the alleged debtor's credit report.
Canada
In Canada regulation is provided by the province or territory in which they operate.The law is typically called the Collection Agencies Act and usually affords a government ministry power to make regulations as needed. Regulations include calling times, frequency of calls and requirements for mailing correspondence prior making telephone contact. Most debts in Ontario and Alberta are subject to a limitation period of two years. Most other provinces the limitation period is 6 years. After the corresponding (two or six, depending on province) anniversary of the last formal intention to pay the debt, the collection agency nor anyone else has legal authority to collect it. Credit bureau
Credit bureau
A credit bureau , or credit reference agency is a company that collects information from various sources and provides consumer credit information on individual consumers for a variety of uses. It is an organization providing information on individuals' borrowing and bill paying habits...
s will still retain the debt and the collection on your credit file for 6–7 years depending on province. Although the collection agency can continue to collect or attempt to collect the debt, they cannot garnish or place a lien on the debtor past the limitation period unless the court upholds a new date of last activity on the account based on other factors.
In Manitoba the governing document is the Manitoba Consumer Protection Act. Complaints regarding violations of the Act should be directed to the Manitoba Consumer Protection Board who will either mediate or enforce the act when it is broken.
For further information, see the Ontario regulations section on prohibited practices.
Province-specific statutes:
- AlbertaAlbertaAlberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
- Collection Practices Act - British ColumbiaBritish ColumbiaBritish Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858...
- Business Practices and Consumer Protection Act - ManitobaManitobaManitoba is a Canadian prairie province with an area of . The province has over 110,000 lakes and has a largely continental climate because of its flat topography. Agriculture, mostly concentrated in the fertile southern and western parts of the province, is vital to the province's economy; other...
- Consumer Protection Act - New BrunswickNew BrunswickNew Brunswick is one of Canada's three Maritime provinces and is the only province in the federation that is constitutionally bilingual . The provincial capital is Fredericton and Saint John is the most populous city. Greater Moncton is the largest Census Metropolitan Area...
- Collection Agencies Act - Newfoundland and LabradorNewfoundland and LabradorNewfoundland and Labrador is the easternmost province of Canada. Situated in the country's Atlantic region, it incorporates the island of Newfoundland and mainland Labrador with a combined area of . As of April 2011, the province's estimated population is 508,400...
- Collections Act - Nova ScotiaNova ScotiaNova Scotia is one of Canada's three Maritime provinces and is the most populous province in Atlantic Canada. The name of the province is Latin for "New Scotland," but "Nova Scotia" is the recognized, English-language name of the province. The provincial capital is Halifax. Nova Scotia is the...
- Collection Agencies Act - OntarioOntarioOntario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
- Collection Agencies Act and Debt Collectors Act - Prince Edward IslandPrince Edward IslandPrince Edward Island is a Canadian province consisting of an island of the same name, as well as other islands. The maritime province is the smallest in the nation in both land area and population...
- Collection Agencies Act - QuebecQuebecQuebec or is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking population and the only one whose sole official language is French at the provincial level....
- Act Respecting the Collection of Certain Debts - SaskatchewanSaskatchewanSaskatchewan is a prairie province in Canada, which has an area of . Saskatchewan is bordered on the west by Alberta, on the north by the Northwest Territories, on the east by Manitoba, and on the south by the U.S. states of Montana and North Dakota....
- Collection Agents Act
United Kingdom
In the UK, debt collection agencies are licensed and regulated by the Office of Fair TradingOffice of Fair Trading
The Office of Fair Trading is a not-for-profit and non-ministerial government department of the United Kingdom, established by the Fair Trading Act 1973, which enforces both consumer protection and competition law, acting as the UK's economic regulator...
. The OFT sets guidelines on how debt collection agencies can operate and lists examples of unfair practices. These guidelines are not law, but do represent a summary and interpretation of various legal areas. Compliance with these guidelines is also used as a test of whether the agency is considered fit to hold a credit licence.
Examples of unfair practices include misrepresenting enforcement powers (e.g. claiming that property may be seized), falsely claiming to be acting in an official capacity, harassment, claiming unenforceable or excessive charges, misrepresenting the legal position to a debtor, and falsely claiming that a court judgement has been obtained when it has not. The legal basis for these practices comes from section 40 of the Administration of Justice Act 1970
Administration of Justice Act 1970
The Administration of Justice Act 1970 is a UK Act of Parliament. Section 11 reforms the Debtors Act 1869 by further restricting the circumstances in which debtors may be sent to prison...
.
Collection agencies and their debt collectors in the UK are not the same as court-appointed bailiff
Bailiff
A bailiff is a governor or custodian ; a legal officer to whom some degree of authority, care or jurisdiction is committed...
s.
United States of America
The Federal Trade CommissionFederal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
is the primary federal regulator of collection agencies, although the Bureau of Consumer Financial Protection—created in 2010 and housed within the Federal Reserve—will also have regulatory power over collection agencies. Many States and a few cities require collection agencies be licensed
Licensure
Licensure refers to the granting of a license, which gives a "permission to practice." Such licenses are usually issued in order to regulate some activity that is deemed to be dangerous or a threat to the person or the public or which involves a high level of specialized skill...
and/or bonded
Surety bond
A surety bond is a promise to pay one party a certain amount if a second party fails to meet some obligation, such as fulfilling the terms of a contract...
. In addition, many States have laws regulating debt collection, to which agencies must adhere (see Fair debt collection
Fair debt collection
Fair debt collection broadly refers to regulation of the United States debt collection industry at both the federal and state level. At the Federal level, it is primarily governed by the Fair Debt Collection Practices Act . In addition, many U.S...
).
The Fair Debt Collection Practices Act
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act , et seq., is a United States statute added in 1978 as Title VIII of the Consumer Credit Protection Act...
is the primary federal law governing debt collection practices. The FDCPA allows aggrieved consumers to file private lawsuits against a collection agency that violates the Act. Alternatively, the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
or the state attorney general
State Attorney General
The state attorney general in each of the 50 U.S. states and territories is the chief legal advisor to the state government and the state's chief law enforcement officer. In some states, the attorney general serves as the head of a state department of justice, with responsibilities similar to those...
may take action against a noncompliant collection agency, including issuing fines, ordering damages, restricting its operations or even closing it down (see, e.g. CAMCO
Capital Acquisitions and Management Corporation
Capital Acquisitions and Management Corporation was a United States debt collection agency and subsidiary of Risk Management Financial Services, Inc., that was fined and closed down for repeated violations of the Fair Debt Collection Practices Act . Its closure marked the first time a Federal...
).
The FDCPA specifies that if a state law is more restrictive than the federal law, the state law will supersede the federal portion of the act. Thus, the more restrictive state laws will apply to any agency that is located in that state or makes calls to debtors inside such a state.
In addition to state and federal laws, a majority of U.S. collection agencies belong to trade group ACA International
ACA International
ACA International is the largest trade group representing collection agencies, creditors, debt buyers, collection attorneys and debt collection industry service providers. The organization was founded in 1939 as the American Collectors Association and changed its name to ACA International in 2001...
and agree to abide by the association's code of ethics as a condition of membership. ACA's standards of conduct require its members to treat consumers with dignity and respect, and to appoint an officer with sufficient authority to handle consumer complaints. Consumers may also resolve disputes brought against a collection agency who is a member of ACA through ACA's consumer complaint resolution program.
See also
- Distraint or distressDistraintDistraint or distress is "the seizure of someone’s property in order to obtain payment of rent or other money owed", especially in common law countries...
- Tax refund interceptionTax refund interceptionA tax refund interception is the act of an agency responsible for sending tax refunds using all or part of a refund to fulfill an obligation of the taxpayer rather than sending the money to the taxpayer him/herself...
- Predictive analyticsPredictive analyticsPredictive analytics encompasses a variety of statistical techniques from modeling, machine learning, data mining and game theory that analyze current and historical facts to make predictions about future events....
External links
- National Association of Collection Agents® (NACA®).
- Fair Debt Collection Practices Act - Federal Trade Commission.
- Bill and Account Collectors - U.S. Department of Labor, Bureau of Labor Statistics.
- ACA International, the Association of Credit and Collection Professionals.
- CLLA, The Commercial Law League of America.
- State Collection Laws.
- insideARM - Trade publication for the debt collection industry.