Commercial-Debt Collection Statutes for ILLINOIS:
The Illinois Department of Financial and Professional Regulation has provided ACA with informal guidance asserting the Illinois Collection Agency licensing requirements would apply to those that collect commercial debt.
A person, association, partnership, corporation, or other legal entity acts as a collection agency when he or it:
(a) Engages in the business of collection for others of any account, bill or other indebtedness;
(b) Receives, by assignment or otherwise, accounts, bills, or other indebtedness from any person owning or controlling 20% or more of the business receiving the assignment, with the purpose of collecting
monies due on such account, bill or other indebtedness;
(c) Sells or attempts to sell, or gives away or attempts to give away to any other person, other than one registered under this Act, any system of collection, letters, demand forms, or other printed matter where the name of any person, other than that of the creditor, appears in such a manner as to indicate, directly or indirectly, that a request or demand is being made by any person other than the creditor for the payment of the sum or sums due or asserted to be due;
(d) Buys accounts, bills or other indebtedness and engages in collecting the same; or
(e) Uses a fictitious name in collecting its own accounts, bills, or debts with the intention of conveying to the debtor that a third party has been employed to make such collection.
225 Ill. Comp. Stat. Ann. § 425/3 (West, WESTLAW through P.A. 95-702 of the 2007 Reg. Sess.).
Effective Jan. 1, 2013
“Charge-off balance” is defined as: an account principal and other legally collectible costs, expenses, and interest accrued prior to the charge-off date, less any payments or settlement.
“Charge-off date” is defined as: the date on which a receivable is treated as a loss or expense.
“Consumer credit transaction” is defined as: a transaction between a natural person and another person in which property, service, or money is acquired on credit by that natural person from such other person primarily for personal, family, or household purposes.
“Consumer debt” or “consumer credit” is defined as: money, property, or their equivalent, due or owing or alleged to be due or owing from a natural person by reason of a consumer credit transaction.
“Creditor” is defined as: a person who extends consumer credit to a debtor.
“Current balance” is defined as: the charge -off balance plus any legally collectible costs, expenses, and interest, less any credits or payments.
“Debt” is defined as: money, property, or their equivalent which is due or owing or alleged to be due or owing from a natural person to another person.
“Debt buyer” is defined as: a person or entity engaged in the business of purchasing delinquent or
charged-off consumer loans or consumer credit accounts or other delinquent consumer debt for collection purposes, whether it collects the debt itself or hires a third-party for collection or an attorney-at-law for litigation in order to collect such debt.
“Debt collection” is defined as: any act or practice in connection with the collection of consumer debts.
“Debt collector”, “collection agency”, or “agency” is defined as: any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection.
“Debtor” is defined as: a natural person from whom a debt collector seeks to collect a consumer debt that is due and owing or alleged to be due and owing from such person.
“Department” is defined as: Division of Professional Regulation within the Department of Financial and
“Director” is defined as: the Director of the Division of Professional Regulation within the Department of
Financial and Professional Regulation.
“Person” is defined as: a natural person, partnership, corporation, limited liability company, trust, estate, cooperative, association, or other similar entity.
H.B. 5016 (Ill. 2012) amending 225 Ill. Comp. Stat. 425/2 (West, WESTLAW through P.A. 97-1025 of the 2012 Reg. Sess.).
This Act does not apply to persons whose collection activities are confined to and are directly related to the operation of a business other than that of a collection agency, and specifically does not include the following:
1. Banks, including trust departments, affiliates and subsidiaries thereof, fiduciaries, and financing and lending institutions (except those who own or operate collection agencies);
2. Abstract companies doing an escrow business;
3. Real estate brokers when acting in the pursuit of their profession;
4. Public officers and judicial officers acting under order of a court;
5. Licensed attorneys at law;
6. Insurance companies;
7. Credit unions, including affiliates and subsidiaries thereof;
8. Loan and finance companies;
9. Retail stores collecting their own accounts;
10. Unit Owner’s Associations established under the Condominium Property Act, and their duly authorized agents, when collecting assessments from unit owners; and
11. Any person or business under contract with a creditor to notify the creditor’s debtors of a debt using only the creditor’s name.
225 Ill. Comp. Stat. Ann. § 425/2.03 (West, WESTLAW through P.A. 95-702 of the 2007 Reg. Sess.).
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).