Commercial Debt Collection Statutes for Connecticut

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Commercial-Debt Collection Statutes for CONNECTICUT:

CONNECTICUT-Definitions As used in sections 36a-800 to 36a-810, inclusive, unless the context otherwise requires: (1) “Consumer collection agency” means any person engaged in the business of collecting or receiving for payment for others of any account, bill or other indebtedness from a consumer debtor or engaged in the business of collecting or receiving for payment property tax from a property tax debtor on behalf of a municipality, including any person who, by any device, subterfuge or pretense, makes a pretended purchase or takes a pretended assignment of accounts from any other person or municipality of such indebtedness for the purpose of evading the provisions of sections 36a-800 to 36a-810, inclusive.  It includes persons who furnish collection systems carrying a name which simulates the name of a consumer collection agency and who supply forms or form letters to be used by the creditor, even though such forms direct the consumer debtor or property tax debtor to make payments directly to the creditor rather than to such fictitious agency.   “Consumer collection agency” further includes any person who, in attempting to collect or in collecting such person’s own accounts or claims from a consumer debtor, uses a fictitious name or any name other than such person’s own name which would indicate to the consumer debtor that a third person is collecting or attempting to collect such account or claim. (2) “Consumer debtor” means any natural person, not an organization, who has incurred indebtedness or owes a debt for personal, family or household purposes, including current or past due child support, or who has incurred indebtedness or owes a debt to a municipality due to a levy by such municipality of a personal property tax; (3) “Creditor” means a person, including a municipality, that retains, hires, or engages the services of a consumer collection agency; (4) “Municipality” means any town, city or borough, consolidated town and city, consolidated town and borough, district as defined in section 7-324 or municipal special services district established under chapter 105a; (5) “Organization” means a corporation, partnership, association, trust or any other legal entity or an individual operating under a trade name or a name having appended to it a commercial, occupational or professional designation; (6) “Property tax” has the meaning given to the term in section 7-560; (7) “Property tax debtor” means any natural person or organization who has incurred indebtedness or owes a debt to a municipality due to a levy by such municipality of a property tax. Conn. Gen. Stat. Ann. § 36a-800 (West, WESTLAW through 2005 Jan. Reg. Sess. Leg. approved by the Gov. on or before 6-24-05). As used in sections 36a-645 to 36a-647, inclusive, unless the context otherwise requires: (1) “Consumer debtor” means any natural person residing in this state who owes a debt to a creditor. (2) “Creditor” means (A) any person to whom a debt is owed by a consumer debtor and such debt results from a transaction occurring in the ordinary course of such person’s business, or (B) any person to whom such debt is assigned. “Creditor” shall not include a consumer collection agency, as defined in section 36a-800, or any department or agency of the United States, this state, any other state, or any political subdivision thereof. (3) “Debt” means an obligation or alleged obligation arising out of a transaction in which the money, property, goods or services which are the subject of the transaction are for personal, family or household purposes, whether or not such obligation has been reduced to judgment. Conn. Gen. Stat. Ann. § 36a-645 (West, WESTLAW through 2005 Jan. Reg. Sess. Leg. approved by the Gov. on or before 6-24-05). As used in Sections 36a-809-1 to 36-809-5, inclusive, of these regulations: (1) “Commissioner” means the commissioner of banking. (3) “Consumer collection agency” has the same meaning as provided in Section 42-127 of the Connecticut General Statutes. (4) “Consumer debtor” has the same meaning as provided in Section 42-127 of the Connecticut General Statutes. (5) “Creditor” has the same meaning as provided in Section 42-127 of the Connecticut General Statutes. (6) “Debt” means any obligation or alleged obligation of a consumer debtor to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family or household purposes, or arising out of a levy of a personal property tax by a municipality, as defined in Section 42-127 of the Connecticut General Statutes, whether or not such obligation has been reduced to judgment. Conn. Agencies Regs. § 36a-809-3(1), (3)-(6) (West, WESTLAW through 2005 Jan. Reg. Sess. Leg. approved by the Gov. on or before 6-24-05). CONNECTICUT-Exemptions “Consumer collection agency” does not include (A) an individual employed on the staff of a licensed consumer collection agency, or by a creditor who is exempt from licensing, when attempting to collect on behalf of such consumer collection agency, (B) persons not primarily engaged in the collection of debts from consumer debtors who receive funds in escrow for subsequent distribution to others, including, but not limited to, real estate brokers and lenders holding funds of borrowers for payment of taxes or insurance, (C) any public officer or a person acting under the order of any court, (D) any member of the bar of this state, and (E) a person who services loans or accounts for the owners thereof when the arrangement includes, in addition to requesting payment from delinquent consumer debtors, the providing of other services such as receipt of payment, accounting, record-keeping, data processing services and remitting, for loans or accounts which are current as well as those which are delinquent. Any person not included in the definition contained in this subsection is, for purposes of sections 36a-645 to 36a-647, inclusive, a “creditor”, as defined in subdivision (3) of section 36a-645; Conn. Gen. Stat. Ann. § 36a-800(1) (West, WESTLAW through 2005 Jan. Reg. Sess. Leg. approved by the Gov. on or before 6-24-05).

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. Certification Requirements
  • 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).