Commercial Debt Collection Statutes for Rhode Island

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Commercial-Debt Collection Statutes for Rhode Island:

Rhode Island-Definitions

(1) “Consumer” means any person obligated or allegedly obligated to pay any debt, as defined by 15

U.S.C. 1692a.

(2) “Consumer Reporting Agency” means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.

(3) “Creditor” means 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/she receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of the debt.

(4) “Debt” means 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.

(5) “Debt collector” means any person who uses an instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (f) below, debt collector shall include a creditor who,

in the process of collecting his/her own debt, uses any name other than his/her own which would indicate that a third person is collecting or attempting to collect the debt. Debt collector shall also include a

person who uses an instrumentality of interstate commerce or the mails in a business the principal purpose of which is the enforcement of security interests.

R.I. Gen. Laws § 19-14.9-3(1)-(5) (West, WESTLAW through Chapter 532 of the 2007 session).

 

Rhode Island-Exemptions

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/her 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:

(1) Is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement, or; (2) Concerns a debt which was originated by the person;

(3) Concerns a debt which was not in default at the time it was obtained by the person or in connection with a debt secured by a mortgage, when first serviced by the person;

(4) Concerns a debt obtained by the person as a secured party in a commercial credit transaction involving the creditor;

(g) Attorneys-at-law collecting a debt on behalf of a client.

(h) An agent or independent contractor employed for the purpose of collecting a charge or bill owed by a tenant to a landlord or owed by a customer to a corporation subject to the supervision of the department of business regulation insofar as the person collects charges or bills only for the landlord or supervised corporations.

“Department” means the department of business regulation.

“Director” means the director of the department of business regulation or the director’s designee. “Obligor” means an individual or company that owes the debt created by the issuing of a bond required under section 19-14.9-13.

“Registrant” means an entity registered under this chapter.

R.I. Gen. Laws § 19-14.9-3(5)(a)-(h) (West, WESTLAW through Chapter 532 of the 2007 session).

 

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).