Collector - August 2017 - 46
Who Qualifies as a Debt Collector?
States' definitions of terms such as 'debt' and 'debt collector' determine
who may or may not be subject to state regulation.
hile the federal Fair Debt
Collection Practices Act defines
"debt" and "debt collector,"
states are free to enact their own definitions
of the terms-which may broaden or
narrow the scope of who is covered by state
licensing and other collection requirements.
In many instances, a collector will
be subject to both federal and state
requirements. However, sometimes a debt
collector may only be subject to one or the
other. States' varying definitions of the terms
"debt" and "debt collector" add a layer of
uncertainty when considering whether or
not a particular company needs a license to
collect debt in a particular state or whether
it is subject to state regulation, making it
imperative to closely review the laws of the
state(s) in which you intend to collect.
Some states' definitions of these terms are
broader in scope than the FDCPA and may
not be limited to transactions incurred for
personal family or household purposes. As
a result, some obligations that may not be
considered debts under the FDCPA may be
regulated by state law.
For instance, Arizona's and Indiana's
definition of a "claim" fails to restrict the
term to only "personal, family or household
use." Such definitions may be broad enough
to include commercial debts-which are not
regulated by the FDCPA.
As laws evolve, some state definitions
specifically address whether a debt
purchaser falls under the definition of a
debt collector or similar terms. For example,
Illinois expressly includes purchasers in its
definition of collection agency.
Differences also exist under state laws as to
who is exempt from regulation. For instance,
some states provide exemptions to their
licensing requirement for attorneys that are
authorized to practice law in the state. So it's
possible that a collector may be subject to the
FDCPA, but exempt from state requirements.
Some states may also have more than one
set of regulations that govern debt collection
practices, such as separate licensing and
collection statutes, and terms may be defined
differently under both.
For instance, Oregon and West Virginia
provide differing definitions under their
license and collection laws. There may be
instances when a collector is subject to
state licensing requirements, but not state
collection laws, or vice versa. Debt collectors
collecting in these states must make sure they
understand how both laws apply to the types
of debt they are collecting to avoid liability.
Due to the variances across the states,
collectors must carefully review applicable
state definitions. For a more in-depth look
at the issues surrounding states' definition
of debt and debt collector, ACA members
can review ACA SearchPoint™ document
#2030 State Operational Definitions for
Debt Collector and Debt. Members can also
review ACA SearchPoint™ document #3005
Interstate Chart to learn more about state
Have you checked out the memberonly ACA SearchPoint™ library? ACA
SearchPoint™ is filled with documents that
put important compliance information
related to the FDCPA, FCRA, TCPA,
state laws and many other topics at
your fingertips. To access it, visit www.
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