Commercial-Debt Collection Statutes for Massachusetts:
MASSACHUSETTS-DefinitionsAs used in sections 24 to 28, inclusive the following words shall have the following meanings, unless the context requires otherwise:
- “Consumer”, any natural person obligated or allegedly obligated to pay any debt.
- “Creditor”, any person who offers or extends credit creating a debt or to whom a debt is owed, but the term shall not include a person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of the debt for another.
- “Debt”, any obligation or alleged obligation of a consumer 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, whether or not the obligation has been reduced to judgment.
- “Debt collector”, any person who uses an instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of a debt, or who regularly collects or attempts to collect, directly or indirectly, a debt owed or due or asserted to be owed or due another.
Debt collector shall not include:
- (a) an officer or employee of a creditor while, in the name of the creditor, collecting debts for the creditor;
- (b) a person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for a person to whom it is so related or affiliated and if the principal business of the person is not the collection of a debt;
- (c) an officer or employee of the United States or a state of the United States to the extent that collecting or attempting to collect a debt is in the performance of his official duty;
- (d) a person while serving or attempting to serve legal process on another person in connection with the judicial enforcement of a debt;
- (e) a nonprofit organization which, at the request of a consumer, performs bona fide consumer credit counseling and assists the consumer in the liquidation of debts by receiving payments from the consumer and distributing the amounts to creditors;
- (f) a person collecting or attempting to collect a debt owed or due or asserted to be owed or due another to the extent the activity is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement.
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.” “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.
