Commercial-Debt Collection Statutes for ARIZONA:
1. “Claim” means an obligation for the payment of money or its equivalent and a sum or sums owed, due or asserted to be owed or due to another, for which a person is employed to demand payment and collect or enforce such payment, and includes:
(a) Obligations for the payment of money to another, in the form of conditional sales agreements, notwithstanding the personal property sold thereunder, for which payment is claimed or may be
or is repossessed in lieu of payment.
(b) An obligation for the payment of money or its equivalent and a sum or sums owed, due or asserted to be owed or due which is sold or assigned to a purchaser or assignee for which either:
(i) The final payment has not been tendered to the seller or assignor.
(ii) Title has not yet passed.
(iii) The purchaser or assignee has a right of recourse against the seller or assignor.
2. “Collection agency” means:
(a) All persons engaged directly or indirectly in soliciting claims for collection or in collection of claims owed, due or asserted to be owed or due.
(b) Any person who, in the process of collecting debts occurring in the operation of his own business, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.
Ariz. Rev. Stat. Ann. § 32-1001(1)-(2) (West, WESTLAW through leg. eff. Apr. 22, 2008).
A. The following persons are exempt from the provisions of this chapter when engaged in the regular course of their respective businesses but shall comply with the requirements of § 32-1051, paragraphs 2
through 7 and§ 32-1055, subsection C and subsection D, and, paragraphs 1, 2, 3 and 5:
2. A person regularly employed on a regular wage or salary in the capacity of credit person or a similar capacity, except as an independent contractor.
3. Banks, including trust departments of a bank, fiduciaries and financing and lending institutions.
4. Common carriers.
5. Title insurers, title insurance agents and abstract companies while doing an escrow business.
6. Licensed real estate brokers.
7. Employees of licensees under this chapter.
8. Substation payment offices employed by or serving as independent contractors or public utilities.
9. A person licensed pursuant to title 6, chapter 7.
10. A person licensed pursuant to title 6, chapter 9.
11. A person licensed pursuant to title 6, chapter 14, article 1.
12. A participant in a finance transaction in which a lender receives the right to collect commercial claims due the borrower by assignment, by purchase or by the taking of a security interest in those commercial claims.
13. An accounting, bookkeeping or billing service provider that complies with all of the following:
(a) Does not accept accounts that are contractually past due at the time of receipt.
(b) Does not initiate any contact with individual debtors except for the initial written notice of the amount owing and one written follow-up notice.
(c) Does not give or send to any debtor a written communication that requests or demands payment.
(d) Does not receive or have access to monies paid by debtors or their insurers.
(e) All communications with the debtors are done in the name of the creditor.
14. A person collecting claims owed, due or asserted to be owed or due to a financial institution the deposits of which are insured by an agency of the federal government, or any affiliate of the financial institution, if the person is related by common ownership or affiliated by corporate control with the financial institution and collects the claims only for the financial institution or any affiliate of the financial institution.
15. A person who is licensed pursuant to title 20, chapter 2, article 3, 3.1, 3.2, 3.3 or 3.4 and who is authorized to collect premiums under an insurance policy financed by a premium finance agreement as defined in § 6-1401.
B. For the purposes of subsection A, paragraph 12 of this section:
1. A transaction shall not be deemed a finance transaction if the primary purpose is to facilitate the collection of claims.
2. “Commercial claim” does not include an account arising from the purchase of a service or
product intended for personal, family or household use.
Ariz. Rev. Stat. Ann. § 32-1004 (West, WESTLAW through leg. eff. Apr. 22, 2008).
What is the Fair Debt Collection Practices Act?
The U.S. Congress enacted the FDCPA in 1977 and added it to the Consumer Credit Protection Act in 1978. Its purpose is to eliminate abusive practices of third-party debt collectors. To that end, the Act establishes guidelines for the conduct of debt collectors, defines the rights of consumers, and prescribes penalties for violations.
The FDCPA defines “debt collectors” as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debt … asserted to be owed or due another.”
In other words, “debt collectors” are defined as third parties collecting for a creditor. (As of a 1986 amendment, the FDCPA definition of “debt collector” also includes attorneys who collect debts on a regular basis.)
“Consumers” and “debt” covered under the FDCPA are defined as specifically referring to personal, family or household transactions. Therefore, debts owed by businesses or by individuals for business purposes (commercial debts) are not subject to the FDCPA.
So, if the FDCPA does not apply to commercial debt collection by third parties, how are commercial collectors regulated?
There are no U.S. federal laws, similar to the FDCPA, that regulate third-party commercial (business-to-business) debt collection or provide guidelines for the conduct of commercial debt collectors.
Who is protecting the rights of commercial creditors and debtors?
Commercial Collection Agency Association
The premier body governing the activities of commercial debt collectors is the Commercial Collection Agency Association (CCAA), an arm of the Commercial Law League of America (CLLA). These organizations are not government bodies, nor do they have any jurisdiction over non-members. However, both require high standards of practice and ethics in order for a commercial collection agency to become a certified member.
The Commercial Collection Agency Association was established in 1972 to “improve the quality and reputation of the commercial collection industry.” It currently has more than 200 members. Approximately 100 core members represent the most prestigious commercial collection agencies in the United States.
The CCAA is an arm of the Commercial Law League of America (CLLA), the oldest creditor’s rights organization in the country established in 1895.
Membership in the CCAA
Members of the CCAA are the only collection agencies in the United States certified by the Commercial Law League of America. In order to obtain certification, the agency must meet rigorous criteria.
- The agency must have been in business at least four years prior to application for membership.
- 80% of the agency’s business must be commercial (business-to-business).
- The agency must maintain a separate Trust Account into which all monies belonging to creditors are placed. This Trust Account is reviewed twice annually by the Executive Director of the CCAA.
- The agency must agree to abide by the CCAA Code of Ethics, which sets ethical standards for dealing with creditors, debtors and attorneys.
- Executives of the agency must meet continuing educational requirements and attend regular CCAA meetings. The member agency must complete sixty continuing educational credits annually.
- The agency must post a surety bond of at least $300,000 for the protection of the creditors it serves.
- One person in the agency must also be a member of the Commercial Law League of America.
- The agency must agree to random periodic site visits from the CCAA Executive Director.
- The agency must be in compliance with all local and state licensing requirements and regulations governing commercial collection firms.
Primarily, the Commercial Law League of America and its Commercial Collection Agency Association have assumed responsibility for looking after the needs and rights of creditors and their customers/debtors. State governments that require licensing and bonding of commercial debt collectors also play an important role.
However, since membership in the CCAA is not compulsory, and some firms may provide collection services in a state but never get licensed, it is up to creditors to ensure they (and their debtors) are receiving the most ethical and highest level of commercial collection service.
How? Check to see if your Agency is both a member of the Commercial Collection Agency Association and therefore certified by the Commercial Law League of America, and is licensed in the U.S. states requiring such licensing.
Burt And Associates is a member of both CCAA and CLLA. Also, we are licensed in bonded in all 50 states (where required).