Debt collections fall broadly into two categories: Consumer collections, and Commercial collections. Consumer collections involve collection activities between a business and a consumer. Consumer collections are highly regulated. These laws are intended to protect consumers from overly aggressive or deceptive practices used against inexperienced and unsophisticated consumers.
Commercial collection deals with debts owed by one business to another. Commercial collection is largely regulated. Why? Because it is assumed that businesses are sophisticated enough to understand their rights when dealing with a creditor.
The laws, rules and regulations governing credit and collection activities change dramatically based on whether the debtor is (a) a consumer or (b) a customer. In my opinion, the collector must have a thorough understanding of the regulations and laws governing debt collection activities before ever picking up the phone.
Are your activities in full compliance with state and local laws? If you sell internationally, are your collection efforts permissible or unlawful in the countries in which your company sells products? Do you know what laws govern your collection activities? I look forward to your comments.
This topic will be covered at the upcoming CreditScape Fall Summit, September 17-18 at the Tropicana in Las Vegas. For more information about the conference, visit www.creditscapeconference.com. I hope to see you there.
Michael C. Dennis is the author of the Encyclopedia of Credit (www.encyclopediaofcredit.com), a free, fast, internet resource for credit and collection professionals. He is a frequent instructor at CMA-sponsored educational events. His most recent book, “Happy Customers, Faster Cash,” is available at amazon.com. He can be contacted at 949-584-9685.