Commercial-Debt Collection Statutes for TENNESSEE:
As used in this chapter, unless the context otherwise requires:
(3) “Collection service” means any person who engages in, or attempts to engage in, the collection of delinquent accounts, bills or other forms of indebtedness irrespective of whether the person engaging in or attempting to engage in collection activity has received the indebtedness by assignment or whether the
indebtedness was purchased by the person engaging in, or attempting to engage in, the collection activity. “Collection service” includes, but is not limited to:
(A) Any deputy sheriff, constable or other individual who, in the course of that person’s duties, accepts any compensation other than that fixed by statute in connection with the collection of an account;
(B) Any person who, in the process of collecting that person’s own accounts, uses or causes to be used any fictitious name which would indicate to the debtor that a third party is handling the accounts;
(C) Any person who offers for sale, gives away, or uses any letter or form designed for use in the collection of accounts which deceives the receiver into believing that an account is in the hands of a third party, even though the letter or form may instruct the debtor to pay directly to the debtor’s creditor; and
(D) Any person who engages in the solicitation of claims or judgments for the purpose of collecting or attempting to collect such claims or judgments or who solicits the purchase of claims or judgments for the purpose of collecting or attempting to collect such claims or judgments by engaging in or attempting to engage in collection activity relative to such claims or judgments.
Tenn. Code Ann. § 62-20-102(3) (West, WESTLAW through laws from the 2009 First Reg. Sess., eff. through 4/15/2009).
Whether a debt buyer is acting as a “collection service” as defined in § 62- 20-102(13), depends upon whether the debt buyer is buying the accounts to collect on the debts (for which it would be required to obtain a license) or whether the debt buyer is simply engaging in the purchase of factored accounts receivable, whereby it may not need a license. If the accounts being purchased have not reached maturity at the time of purchase, no debt collection service license would be required. [Possible Debt Buyer and Debts Not In Default Exemption] Op.Atty.Gen. No. 97-131, Sept. 23, 1997.
(a) The provisions of this chapter shall not apply to:
(1) Any person handling claims, accounts or collections under order of any court; (2) Attorneys at law; or
(3) Any person engaged in the collection of indebtedness incurred in the normal course of
business, or the business of a parent, subsidiary, or affiliated firm or corporation; however, no person who is or represents such person to be a collection service is exempt from this chapter.
(b) Nothing contained within this chapter shall be construed to require an individual or business entity, which collects only the individual’s or its own unpaid accounts, to submit to licensure or regulation by the collection service board.
Tenn. Code Ann. § 62-20-103 (West, WESTLAW through laws from 2005 First Reg. Sess. eff. through
June 30, 2005).
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).