A collection agency is a business that pursues debtors (both individuals and companies) in order to collect money that is owed against their debts. Most of these debt collection services are hired as agents representing the creditor and they collect debts for a fee or even a percentage of the amount owed. While there is no hard and fast rule about when it is time to send a delinquent account to debt collection agencies, the general consensus is the earlier the better. Some agencies will even buy, at a very low price, collection accounts from creditors and then will pursue the debtor for the entire amount owed.
In most countries, as well as the United States, there are certain laws that govern collection agencies and prohibit certain actions and behaviors that may be abusive in nature. It governs on how and when collection agency calls are delivered. If they fail to comply with these laws, then it can result in lawsuits and possibly government regulatory actions. While the primary federal regulator of agency collection is The Federal Trade Commission (FTC), there are many states that have their own requirements that must be adhered to in order for the agency to pursue collections in their state.
The Fair Dept Collections Practices Act is the primary federal law that governs the debt collection services companies and allows consumers to file private lawsuits against any agency collection business that violates the act and they offer recommendations on how to deal with a company that is in non-compliant. However, The Federal Trade Commission and a state Attorney General may also take action against debt collection agencies that are in violation. These actions may include imposing fines, restricting their activities and shutting them down if necessary.
In addition to federal and state laws, most of the United States debt collection services belong to a group called ACA International (Association of Credit and Collection Professionals) and agree to abide by their code of ethics as a condition to membership. Basically, ACA’s standards require the members to treat consumers with respect and dignity; they also appoint an officer with sufficient authority to handle consumer complaints.
Before filing a complaint with the Federal Trade Commission, you may want to consider finding out if the agency is a member of the ACA. This would allow you to file a grievance through their consumer complaint resolution program against the debt collection agencies, which may save you some time and energy. Often times, this type of resolution can be done quicker than filing on the federal level. Of course, if you are not happy with the results, then you should then go ahead and lodge your complaint with the FTC.
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