Collector - July 2018 - 21
permissible, it's important to know whether
the laws of the state allow the consumer to
be charged those fees.
For example, Arizona law states that a
collection agency cannot threaten or attempt
to collect any attorney fees, collection cost,
or other fee not provided in the contract
creating the debt. However, certain states
are silent as to the permissibility of adding
fees, including Alabama, Maryland and
South Dakota. The contrast between
state laws underscores the importance of
understanding each individual state's stance
on adding fees in order to limit liability.
DECISIONS OF NOTE
Take a close look at relevant court decisions
within the jurisdiction you're considering
to determine what collection practices
may be risky. When federal and state laws
and regulations are unclear, it's necessary
to look to court decisions for guidance.
However, as judicial opinions can vary
from state to state (and sometimes court to
court), researching case law on pertinent
issues can help you devise compliance
strategies for new markets.
One example that illustrates the
importance case law plays in determining
best practices for collection comes from
the Third Circuit, which is composed of
Pennsylvania, New Jersey and Delaware.
The U.S. Court of Appeals for the Third
Circuit held that a mere string of numbers
(subsequently identified as an account
number) displayed through a glassine
window on the envelope of a debt collection
letter violates the FDCPA. The appellate
court reasoned that the consumer's account
number was not "benign" or "meaningless"
because "it could be used to expose her
financial predicament." However, a majority
of courts in other circuits have expressly
rejected or narrowed the holding.
A debt collector interested in collecting in
a state within the Third Circuit would want
to be cognizant of this ruling when deciding
what information is placed on the outside
of an envelope addressed to consumers, as
ignorance of the ruling could lead to issues
of liability that may not be present in your
home state. That's why it's critical to conduct
a thorough search of case law in another
state before attempting to collect there.
Expanding your collection business into
a new state is a big undertaking, requiring
both an adventurous mindset and a clear
roadmap. Cultivating a firm understanding
of state law and employee requirements
will provide a guiding light to the riches of
expanding into new territories.
Laura Dadd is ACA International's
Looking to expand into a new asset class, too?
Get tips on diversification here:
Some states may not
have a statewide licensing
requirement but do require
a license at the municipal or
Because a collection
agency manager has
a lot of responsibility,
some states require them
to go through a licensing
process. Some even regulate
what should happen if the
collection manager were to
leave the company or die.
While including multiple
state disclosures in a
single form letter may seem
like a logical move, this
can open an agency up to