Coming up with new articles to write and share with you can, at times, be a struggle.
After all, how many ways can you say the same thing over and over again? Today, however, while doing more research I came across a few important points when it comes to commercial collections that I thought you might find interesting.
Recent changes to the FDCPA
From 1977 through 2010 the FDCPA was enforced primarily by the Federal Trade Commission (FTC), which investigates and sues companies that conduct “unfair and deceptive trade practices.”
The Dodd-Frank Act of 2010 moved primary enforcement responsibility of the law from the FTC to the Consumer Financial Protection Bureau (CFPB), giving it the power to issues rules, guidance and regulations. As of January 2013, the CFPB began overseeing debt collection, focusing (for now) on debt collection agencies with more than $10 million in debt collection-related revenues.
Are you considered a “Debt Collector?”
If you call customer or clients who owe you money are you considered a debt collector?
Under certain circumstances, the answer is YES. In fact, simply trying to collect what is rightfully owed to you could trigger provisions in the law that will make your business subject to debt-collection laws.
There are generally 3 possible scenarios to be aware of:
1. Acting like a debt-collection company
Federal law generally exempts companies that are collecting their own debts.
However (and this point is very important for you), if your business uses certain collection tactics in your efforts to collect the debt you are owed then you’re required to comply with the law.
Clear violations of the law are:
- Using a name other than your company’s official name
- False or misleading representations (i.e. posing as a collection agency or attorney)
- Harassment or abuse
- The threat to take any action that cannot legally be taken
2. Residing in a state where you’re considered a debt-collection company
It’s important to know that the FDCPA sets federal law limits.
However, state laws can go far beyond the minimum imposed by the FDCPA. Which means that compliance with federal law does not guarantee that you are in compliance with state law. What’s more, you need to be in compliance with state law for both where your business resides AND the state(s) where you delinquent customers reside.
Many states specifically include “creditors collecting on their own behalf” within their regulations, such as California, Colorado, Connecticut, Florida, Iowa, Louisiana, Maryland, Massachusetts and New York.
Since these laws can change at any time, it’s important to stay abreast of what’s happening in your state.
3. Being identified by the CFPB as a debt-collection company
The CFPB has tremendous power and flexibility in determining which types of companies are subject to its regulations.
Any company deemed by the CFPB to be a “larger participant” in the finance sector can be regulated by it. Once this happens, the CFPB can define what it considers to be “unfair, deceptive or abusive acts or practices” and prohibit them.
Compliance with collection laws is a serious matter. Which is why it makes sense for most small to mid size businesses to outsource their collection efforts to professional agencies in order to minimize any liability for failing to comply with applicable laws.
Find the right collection agency today
Save time, money and aggravation by hiring a professional who can help you collect some (or all?) of your outstanding revenue.
Click the link and compare free collection agency quotes today.
After all, when you get down to it you really have two choices:
- you can keep doing what you’re doing (and hope for a different result), or
- you can work with a commercial collection agency that can help you recover what’s rightfully yours.
Either way it’s your money… you decide.