Commercial Collections Blog

January 31, 2013

Agencies Specialize in Consumer or Commercial Debt

Why Most Collection Agencies Specialize in either Consumer or Commercial Debt Collection?

It seems collection agencies are doing much the same thing when collecting commercial and consumer debt.  However, there is a big difference and several things to consider before hiring an agency.  In the end, it may be best to send consumer collections and commercial collections to separate agencies.

There is a common mindset among commercial-debt collections agencies that the Federal Debt Collections Practices Act (FDCPA) never applies to them.  It should be noted the States of Nevada, Tennessee, and Missouri treat commercial and consumer debt the same.

One way to narrow your choices of agencies is to look to see if they are licensed in each state, have surety bonds, they are members of the American Collectors Association (ACA), if they collect credit card data they are Payment Card are Industry (PCI) compliant, have 100 percent recording of calls, no Federal Trade Commission violations (not complaints, but findings, because anyone can complain).

If a commercial agency is “Certified” with the Commercial Law League of America (CLLA), or Commercial Collections Association of America (CCAA).  These associations’ mission statements state the agency will follow ethical standards.  As a note, there is a difference between being a CLLA member and being “Certified”.  Finally, being a member of the Credit Research Foundation (CRF) ensures the agency understands finer nuances of commercial collections and can address specifics on averages in your industry SIC code.

Your brand is one of your most important assets — and you should carefully review any agency you’re considering.   Debt Collections Practices rank 2nd for Federal Trade Commission (FTC) complaints.  There are companies operating in this industry that frankly should not be.

On the consumer front, each call the agency makes must adhere to the the FDCPA.  The debtor must be informed the call is being recorded, they are speaking to the right party, and include the Mini-Miranda announcement.  Each violation can result in a fine of between $1,000 and $16,000.

Finally, if dealing with medical records collectors are required to be Health Information Protection and Portability Act (HIPPA) compliant.