ACA Member FAQs

Find Answers to Common Questions About ACA and the Accounts Receivable Management Industry

Here is a list of frequently asked questions about ACA membership, advocacy, insurance, compliance, publications, and more. If you don’t find the answer to your question here, please send us a message or use the chat function on our homepage.
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Membership

Yes, it’s right here.  Select a business line to narrow results to third-party collection, asset buying, law firm members, etc.; choose “affiliate” to view vendors offering services to the ARM industry.

Yes! ACA International’s Alliance ACA program develops strategic partnerships with industry vendors so you can get discounts and enhanced offerings on critical services and products. See the list of our current partners and learn more on the Alliance ACA page

The IAF is an ongoing initiative established by the ACA Board of Directors in 2014 to protect the long-term viability of the accounts receivable management industry. The IAF not only helps shape regulation and legislation, it also represents the association’s interests in the courts. Since its inception, we have seen positive results from our efforts to obtain favorable rulings. Learn more on the IAF pageThe IAF fee is required to be paid by all members annually.

Yes, dual membership in the affiliated state/regional membership is required for ACA membership. Company membership is a combined package of national and unit benefits. Units consist of one or more states and are your local source for information, education, networking, legislative advocacy, and more. Learn more on the State Units page. 

Click on your name in the upper right of the screen. Click on Profile and then Change Password. If you are still having trouble, please contact ACA’s Member Services Department and they can assist you.

Yes! Click on your name in the upper right of the screen. Click on Profile and then Invoices. Click on the invoice you’d like to pay. You can pay by credit card or ACH electronic transfer. If you are still having trouble, please contact ACA’s Member Services Department and they can assist you. 

Education

The All-Access Training Zone gives you and everyone at your location access to all of ACA’s live and recorded webinars for one low price. With a full year, ACA members can get tons of training for just $999, $1,499, or $1,999 (price varies on location size). Purchase it here. 

Visit the designations page to see the list of required courses for each designation.

General

Feel free to look for third-party debt collector members in our Membership Directory

Advocacy

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 provided the Consumer Financial Protection Bureau with the first-ever rule writing authority for the Fair Debt Collection Practices Act (FDCPA). ACA has been working with the bureau since its inception to seek clarity on outdated provisions of the FDCPA and how to use modern communications. In 2020, the CFPB issued Regulation F. The release of this rule signals the biggest development in the accounts receivable management (ARM) industry since passage of the FDCPA more than 40 years ago. Learn more about ACA’s Advocacy efforts with the CFPB.

ACA members contact consumers exclusively for non-telemarketing and legitimate business reasons. The use of modern technology is critical for the ability to contact consumers in a timely and efficient manner. Often if consumers are put on notice of a debt sooner and earlier in the collection process, their chances improve of resolving that matter favorably. Litigation surrounding the TCPA, and how it applies to consumers, has had a significant impact on the industry. Given the importance of effective communication to successful debt recovery, ACA continues to lead advocacy efforts at the Federal Communications Commission, in Congress, and in the courts to seek clear rules of the road and to modernize the TCPA to better balance consumer privacy with legitimate business communications.

Check out ACA’s Federal Advocacy Book within the tools section of the Advocacy Resources page. 

A political action committee raises and donates campaign funds to candidates seeking political office. ACPAC is ACA’s voluntary, bipartisan political action committee. ACPAC’s primary goal is to support and enhance the effectiveness of ACA’s lobbying and political advocacy efforts on Capitol Hill. Learn more on the ACPAC page.

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Accounts Receivable Management Industry FAQ

Third-party debt collection services collect on past-due accounts referred to them by various credit grantors, such as credit card issuers, banks, car dealers, retail stores or health care facilities—any business that extends credit or offers payment installment plans.
Often creditors cannot locate consumers who have moved or changed their phone numbers. The first thing a collection service must do is obtain the consumer’s current address or phone number through a process called skiptracing. The collection office then sends the consumer a notice that allows him or her to dispute the validity of the debt and/or request verification of the debt. Once the notice is received, a collector may call or write to the consumer and ask for full payment of the debt. If payment in full is not possible, the collector helps the consumer make arrangements to solve the problem.
Most accounts are referred for collection because they have gone unpaid for several months, and the creditor has not received communication from the consumer. Third-party collection services, which use specialized phone systems, computers and software designed for the collection industry, are often more effective than creditors at collecting payment on such delinquent accounts.
Under the Fair Debt Collection Practices Act (FDCPA), third-party collectors may not: make repetitive or excessively frequent phone calls to annoy or harass you; misrepresent their identity; and threaten to take any action that is illegal or that the debt collector does not actually intend to take.
Most accounts are referred for collection because they have gone unpaid for several months. Without the quick actions of collection services, unpaid debt is often reflected by higher consumer prices. Since there is a limit on how high prices can be increased before businesses begin losing customers, bad debt also results in business failure and job loss.

Insurance

Collectors Insurance Agency® provides ACA members exclusive access to world-class risk management products and services tailored to each member’s specific needs. Learn more on our Insurance page

Collectors Insurance Agency offers a comprehensive portfolio of insurance products. We have industry-specific programs tailored to receivables management, including errors and omissions, business owners, and cyber insurance.
We can provide you with discounted registered agent services for all states through our valued vendor partner, CT Corp.
Yes, Collectors Insurance Agency offers Statutory bonds, Client, and Blanket bonds for our members.

Yes. Collectors Insurance Agency, a subsidiary of ACA International, has been licensing our valued members since 1998. Our professional staff, proprietary automation and ACA’s Compliance Department combine to bring you the finest, most affordable licensing service available. Learn more on our Licensing page

Compliance

While we don’t formally license compliance officers, we do offer industry-specific compliance designations.  ACA offers multiple professional development designations for credit and collection professionals, including our Credit and Collection Compliance Professional (CCCP) Designation, Credit and Collection Compliance Officer (CCCO) Designation and Credit and Collection Compliance Attorney (CCCA). Learn about these and more on our Designations page.

The ACA Blueprint Quality Management System provides a compliance checklist and more to help you craft compliance policies and procedures and document corrective actions to ensure continuous improvement.  ACA SearchPoint also has documents that can help you build your compliance program.

So many places! Tune into the ACA Huddle each Wednesday, order one of our compliance guidebooks on the Products page, watch a Hot Topic webinar, check out our ACA SearchPoint compliance library, or subscribe to the ACA Daily newsletter. That’s just the beginning! For even more resources, visit the Compliance page. 

Please visit our Compliance page or our News page and see the compliance articles section. Members can also search ACA SearchPoint documents by topic.

See the resources mentioned above. ACA members who have a question for the compliance officer of the day can fill out the Help Desk form on this page

Disputes

Anytime a consumer disputes a debt, either orally or in writing, the FDCPA requires the debt collector to notate the debt’s disputed status in the debt collector’s file regarding the debt. If the debt collector has reported the debt to a consumer reporting agency, the collector must also notify the CRA to which it furnished the information of the debt’s disputed status.

The FDCPA does not require a debt collector to provide verification of a debt after the 30-day validation period has expired; however, debt collectors may choose to do so.

Upon receipt of a consumer’s written or oral dispute, the FDCPA requires the debt collector to mark the consumer’s debt as disputed. If the debt is being reported to a consumer reporting agency, the furnisher must report the dispute to the consumer reporting agency as well. Debt collectors have additional responsibilities if the dispute was submitted in writing during the 30-day validation period.

If the consumer submits a written dispute during the 30-day validation period, the debt collector must cease all collection activity until the debt collector sends verification of the debt to the consumer. Once the debt collector sends verification to the consumer, the collector may resume collection activity. If the debt collector cannot verify the debt, collection efforts may not resume.

Although the FDCPA does not require a debt collector to provide verification of the debt if the dispute is not in writing or not submitted within the 30-day validation period, debt collectors may still opt to send verification to the consumer.

For more information, please see ACA SearchPoint® documents #3014 Disputes FDCPA and FCRA and #1126 Verification of a Debt.

The answer depends on whether the consumer submits the dispute directly to the debt collector or the dispute is forwarded to the debt collector from a CRA. Both types of disputes are addressed below:

1. Direct Dispute
In the case of a dispute received directly from consumer furnishers must conduct a reasonable investigation of a direct dispute if the dispute relates to:

  • The consumer’s liability for a credit account;
  • The terms of a credit account;
  • The consumer’s performance or conduct related to an account; or
  • Any other information related to the consumer’s credit standing, character, or reputation.

The furnisher must complete its investigation within 30 days from the date the furnisher receives the dispute from the consumer and inform the consumer of the results. The reinvestigation period may be extended up to 15 additional days if the consumer submits additional information during the 30-day period that is relevant to the investigation. If the investigation results in a finding that information reported by the furnisher was inaccurate, the furnisher must promptly notify each CRA to which the furnisher reported the inaccurate information and provide to the CRA any corrections necessary to make the information accurate.

A furnisher is not required to conduct an investigation if the direct dispute relates to:

  • The consumer’s identifying information such as the consumer’s name, date of birth, Social Security number, telephone number(s), or address(es);
  • The identity of past or present employers;
  • Inquiries or requests for a consumer report;
  • Information derived from public records, such as judgments, bankruptcies, liens, and other legal matters;
  • Information related to fraud alerts or active duty alerts;
  • Information provided to a CRA by another furnisher; or
  • If the dispute is frivolous or irrelevant.

For further information on investigating direct disputes, please see ACA SearchPoint document #1522 Direct Disputes from Consumers to Furnishers under the FCRA

2. Dispute forwarded by CRA
In the case of a dispute forwarded by a CRA, the furnisher must:

  • Conduct an investigation regarding the disputed item;
  • Review all relevant supplementary documentation provided to the CRA by the consumer and the furnisher’s own information with respect to the dispute;
  • Report the outcome of the investigation to the CRA;
  • If the investigation reveals information that is inaccurate or incomplete, inform all CRAs which compile and maintain consumer information on a nationwide basis of the result of the investigation; and
  • If an item is determined to be inaccurate, incomplete, or unverifiable, modify or delete the item in the consumer report or permanently block the reporting of that item.

The data furnisher must complete its investigation within 30 days from the date the dispute was received by the CRA. A data furnisher may receive an additional 15 days to complete the investigation if relevant information is received after the start of the investigation.

For further information on investigating disputes from CRAs, please see ACA SearchPoint document #1526 Data Furnisher Responsibilities Under the FCRA.

Yes, a furnisher is required to respond to the CRA or the information will likely be deleted from the consumer’s credit report. Furnishers cannot deem these types of disputes frivolous or irrelevant. Although a CRA may terminate a reinvestigation if the CRA reasonably determines the consumer’s dispute is frivolous or irrelevant, if a data furnisher receives a dispute from a CRA, the data furnisher cannot make the determination of the dispute’s status as frivolous or irrelevant. Instead, the data furnisher must conduct an investigation of a disputed item as outlined in the previous answer above if the data furnisher receives a notice of a dispute directly from a CRA.

Not necessarily. Unlike disputes forwarded by a CRA, the FCRA allows furnishers to determine that a dispute received directly from a consumer is “frivolous or irrelevant,” which includes disputes that are “substantially the same as a dispute previously submitted by or on behalf of the consumer, regardless of whether the dispute had been previously submitted directly or through a CRA, so long as the consumer has not provided additional supporting information regarding the dispute.” Based on this provision, a furnisher does not have to investigate a dispute that is substantially the same as a previous dispute sent by the consumer. Furnishers are required to notify consumers that the dispute has been deemed frivolous within five business days of making the determination; however, once a consumer has received that notification, subsequent disputes that are “substantially the same” as a previous dispute would not trigger a furnisher’s duty to conduct an investigation or respond to the consumer.

Credit Reporting

The answer depends on whether the consumer submits the dispute directly to the debt collector or the dispute is forwarded to the debt collector from a CRA. Both types of disputes are addressed below:

1. Direct Dispute
In the case of a dispute received directly from a consumer, furnishers must conduct a reasonable investigation of a direct dispute if the dispute relates to:

  • The consumer’s liability for a credit account;
  • The terms of a credit account;
  • The consumer’s performance or conduct related to an account; or
  • Any other information related to the consumer’s credit standing, character, or reputation.

The furnisher must complete its investigation within 30 days from the date the furnisher receives the dispute from the consumer and inform the consumer of the results. The reinvestigation period may be extended up to 15 additional days if the consumer submits additional information during the 30-day period that is relevant to the investigation. If the investigation results in a finding that information reported by the furnisher was inaccurate, the furnisher must promptly notify each CRA to which the furnisher reported the inaccurate information and provide to the CRA any corrections necessary to make the information accurate.

A furnisher is not required to conduct an investigation if the direct dispute relates to:

  • The consumer’s identifying information, such as the consumer’s name, date of birth, Social Security number, telephone number(s), or address(es);
  • The identity of past or present employers;
  • Inquiries or requests for a consumer report;
  • Information derived from public records, such as judgments, bankruptcies, liens, and other legal matters;
  • Information related to fraud alerts or active-duty alerts;
  • Information provided to a CRA by another furnisher; or
  • If the dispute is frivolous or irrelevant.

For further information on investigating direct disputes, please see ACA SearchPoint document #1522 Direct Disputes from Consumers to Furnishers under the FCRA

2. Dispute Forwarded by CRA
In the case of a dispute forwarded by a CRA, the furnisher must:

  • Conduct an investigation regarding the disputed item;
  • Review all relevant supplementary documentation provided to the CRA by the consumer and the furnisher’s own information with respect to the dispute;
  • Report the outcome of the investigation to the CRA;
  • If the investigation reveals information that is inaccurate or incomplete, inform all CRAs which compile and maintain consumer information on a nationwide basis of the result of the investigation; and
  • If an item is determined to be inaccurate, incomplete, or unverifiable, modify or delete the item in the consumer report or permanently block the reporting of that item.

The data furnisher must complete its investigation within 30 days from the date the dispute was received by the CRA. A data furnisher may receive an additional 15 days to complete the investigation if relevant information is received after the start of the investigation.

For further information on investigating disputes from CRAs, please see ACA SearchPoint document #1526 Data Furnisher Responsibilities Under the FCRA.

Yes, a furnisher is required to respond to the CRA or the information will likely be deleted from the consumer’s credit report. Furnishers cannot deem these types of disputes frivolous or irrelevant. Although a CRA may terminate a reinvestigation if the CRA reasonably determines the consumer’s dispute is frivolous or irrelevant, if a data furnisher receives a dispute from a CRA, the data furnisher cannot make the determination of the dispute’s status as frivolous or irrelevant. Instead, the data furnisher must conduct an investigation of a disputed item as outlined in the previous answer above if the data furnisher receives a notice of a dispute directly from a CRA.

Not necessarily. Unlike disputes forwarded by a CRA, the FCRA allows furnishers to determine that a dispute received directly from a consumer is “frivolous or irrelevant,” which includes disputes that are “substantially the same as a dispute previously submitted by or on behalf of the consumer, regardless of whether the dispute had been previously submitted directly or through a CRA, so long as the consumer has not provided additional supporting information regarding the dispute.” Based on this provision, a furnisher does not have to investigate a dispute that is substantially the same as a previous dispute sent by the consumer. Furnishers are required to notify consumers that the dispute has been deemed frivolous within five business days of making the determination; however, once a consumer has received that notification, subsequent disputes that are “substantially the same” as a previous dispute would not trigger a furnisher’s duty to conduct an investigation or respond to the consumer.

Upon receipt of a valid dispute, furnishers must conduct a “reasonable” investigation. The reasonableness of an investigation will likely depend on the circumstances of the case, including the information the CRA provided the furnisher about the nature of the dispute, information the furnisher has in its own files and the status of the furnisher (e.g., original creditor, third-party debt collector, asset buyer, “down-the-line” asset buyer). When conducting an investigation, it may be reasonable for the furnisher to contact the original creditor or other reliable sources of the disputed information to verify the accuracy or completeness of the item, as well as review the supporting documentation accompanying the notice of dispute. Simply verifying that basic account information matches the furnisher’s internal account records may not be sufficient. If the furnisher cannot locate the documentation necessary to investigate the dispute, it may be appropriate to report the dispute as unverifiable and process it accordingly.

The CFPB has addressed the issue of deleting information from a consumer’s credit file in response to a dispute rather than conducting an investigation of the dispute. In 2014 the CFPB issued Bulletin 2014-01, wherein the regulator stressed the need to conduct an investigation as required under the FCRA and its corresponding regulations (Regulation V), rather than deleting the information without investigating the dispute. 

In the Bulletin, the CFPB stated that “investigations of disputes are important because they provide a critical check on the accuracy of furnished items. Not only do they prompt a furnisher to reconsider information that a consumer has identified as incorrect, investigations can also help a furnisher identify problems with respect to the general accuracy of the information that it furnishes to CRAs. That is, when the furnisher conducts an investigation, it may learn of a systemic problem, thereby benefiting not only the consumer who raised the dispute, but also other similarly situated consumers who did not submit disputes. In addition, if a furnisher does not conduct investigations, consumers can be harmed because the furnisher may not carry out additional steps that the FCRA calls for with respect to a dispute. These include the obligation of a furnisher to provide notice of information found to be inaccurate to all consumer reporting agencies to which it reported.”

The CFPB further stated that “a consumer submits a dispute to a CRA regarding an account in a consumer report and the CRA provides the furnisher of that account with notice of that dispute, the furnisher should investigate the dispute, and, if appropriate, direct the CRA to correct or delete the disputed information. Similarly, if the consumer submits a direct dispute notice to the furnisher, the furnisher generally should conduct an investigation of the dispute and then, based on the results of the investigation, provide appropriate instructions to the CRA.”

The CFPB also stated in Bulletin 2014-01 that if it determines that a furnisher has engaged in any acts or practices that violate the FCRA or other Federal consumer financial laws and regulations, it will take appropriate supervisory and enforcement actions to address violations. To view the 2014 guidance bulletin please click here . For further information on the CFPB and disputes from CRAs, please see ACA SearchPoint documents #3057 Overview of the Consumer Financial Protection Bureau#1526 Data Furnisher Responsibilities under the FCRAand #1522 Direct Disputes from Consumers to Furnishers under the FCRA.

Often referred to as “credit bartering” this is an area of some ambiguity. The FCRA does not have a specific provision regarding deleting or continuing reporting an account that is paid in full. Thus, some people argue that once an account has been paid in full, it is within the data furnisher’s discretion to continue reporting the account as paid in full or to delete the information from the consumer report. Others argue that because the FCRA requires information to be accurate, it could be considered an inaccuracy to delete a paid account instead of marking it as paid. Additionally, removing accurate information about a debt also weakens the credit reporting system as a whole by failing to reflect the consumer’s credit history accurately.

It’s also important to know that the agreements between data furnishers and the respective CRAs may prohibit agencies from deleting paid accounts and instead the CRAs require paid accounts to be marked as paid in full. Thus, deleting accurate information may violate the agreement between a furnisher and the CRA to which it reports, which could potentially jeopardize the furnisher’s ability to report debts if the CRA decides to terminate the agreement.

For further information on the CFPB and disputes from CRAs, please see ACA SearchPoint documents #3057 Overview of the Consumer Financial Protection Bureau#1526 Data Furnisher Responsibilities under the FCRA, and #1522 Direct Disputes from Consumers to Furnishers under the FCRA.

As a result of a settlement agreement with multiple state attorneys general, in 2015, the three major CRAs (Equifax, TransUnion and Experian) announced the National Consumer Assistance Plan (NCAP). The plan impacts many aspects of the credit reporting industry including the reporting of delinquent debts. The requirements are being implemented nationwide, and will be phased in over three years with some mandates already in effect. The new reporting requirements that impact debt collectors and other furnishers are summarized below:

Requirements for Debt Collectors

  • Report the original creditor name and the valid creditor classification code according to the Metro 2® format. These fields are required for each account item reported (required by June 15, 2016).
  • Do not report debt that did not arise from a contract or agreement to pay, including, but not limited to, certain fines, tickets, and other assessments. For example, library fees or fines, parking tickets, speeding tickets, and court fees or fines (required by June 15, 2016).
  • To avoid potential deletion of data by CRAs, report a full file monthly including accounts that are open, that are paid in the last 90 days, or that require deletion or correction. (required by Sept. 15, 2016).
  • CRAs are required to revise training materials and instruct new and existing collection agencies on accurately reporting and deleting accounts that are sold, transferred, or no longer managed by the reporting entity (required by June 8, 2016).
  • Retirement of the Metro 1 format. Thereafter (at the end of a reasonable notice period provided to furnishers) the CRAs will no longer accept any data from furnishers utilizing the Metro 1 data reporting format. Rather all furnishers will need to use the Metro 2 format (required by June 8, 2018).

Medical Information Furnishers

  • Do not report Medical Debt collection accounts (as defined by Creditor Classification Code 02) until they are at least 180 days past the Date of the First Delinquency with the original creditor that led to the account being sold or placed for collection (required by Sept. 15, 2017).
  • Report a delete for accounts that are being paid by insurance or were paid in full through insurance (not by the consumer) (required by Sept. 15, 2017).
  • CRAs must implement a process designed to remove or suppress known medical collections furnished by collection agencies from files within the CRAs’ databases when a medical debt is reported either as having been paid in full by insurance or as being paid by insurance (required by June 8, 2018).

General Requirements for Data Furnishers

  • Prohibit furnishers from reporting authorized users without a date of birth (using month and year on new accounts and reject data that does not comply with this requirement) (required by June 8, 2018).
  • Inform furnishers of the mandatory reporting requirement relating to additions of authorized users on newly opened accounts and rejection such data that is not provided with a date of birth using the month and year (required by Sept. 8, 2015).

For further information on NCAP please click here. For further information on reportable information, please see ACA SearchPoint document #3001 Reportable Information.

Section 623(a)(5) of the FCRA provides three methods for determining the date of delinquency that satisfy the requirement for accurate reporting (as long as the consumer does not dispute the information used to calculate the date).

  1. The first allows the furnisher to use the same date of delinquency the original creditor previously reported, if the original creditor reported the debt. This is method is generally preferable, as the original creditor has direct access to the records needed to determine the date accurately.
  2. The second method is to follow reasonable procedures to obtain the date of delinquency from the original creditor or other reliable source. The CFPB has not yet published regulations defining what an “other reliable source” may be, though it would be reasonable to assume these sources include a previous furnisher, a CRA or a purchaser of the debt.
  3. The third method allows a furnisher to report an alternate date that undoubtedly precedes the actual date of delinquency. Under this method, a furnisher with little access to the original creditor’s records can follow a reasonable procedure to report an alternative to the actual date of delinquency. Thus, in cases in which the first two methods are not feasible, a furnisher may establish a policy of using the date of service as the date of delinquency, since that date undoubtedly precedes the actual date of delinquency. As long as this information is not disputed by the consumer, reporting the date of service satisfies the furnisher’s duty to provide accurate information.

For more information on the date of delinquency, review ACA SearchPoint document #1510 Date of Delinquency Reporting Requirements.

Generally, yes. In order to access someone’s credit report, you have to have a permissible purpose. There are a number of permissible purposes under the FCRA, including the collection of an account. Although the FCRA does not specifically define “collection of an account,” case law on this issue concludes that “collection of an account” is equivalent to the collection of a debt. Thus, a debt collector generally has a permissible purpose to obtain a consumer report for use in attempting to collect the consumer’s debt. However, a decision of the U.S. Court of Appeals for the Ninth Circuit found that in order to provide a permissible purpose for debt collection, the “debt” in question must be the result of a voluntary credit transaction. Therefore, at least in the Ninth Circuit, debts that did not arise from a voluntary transaction (e.g., parking tickets, fines, towing/impound charges etc.) do not provide a permissible purpose to access the consumer’s credit report.

For more information in permissible purposes generally, members can access ACA SearchPoint document #1154 Permissible Purposes under the FCRA. For more information on the Ninth Circuit case discussed above, including what types of debts may constitute a voluntary credit transaction, members may access ACA SearchPoint document #1163 Ninth Circuit Decision Impacts Collectors’ Ability to Obtain Consumer Reports.

Licensing

Maybe. A certificate of authority (sometimes called a qualification or registration) is an authorization for a business entity to do business in a state other than that in which the entity is organized. Obtaining such authority subjects the entity to state jurisdiction and taxation. Factors to be considered when determining if a certificate of authority is required include whether the business contacts within the state are permanent, continuous, and regular and whether the sort of business activity to be performed is vital and essential to the entity’s business. Some states exempt those collecting debts and/or that only transact business in interstate commerce; other states require possession of a certificate of authority before they will issue a collection license. Whether a certificate of authority is required is a question of law; please consult your attorney when making the decision. Failure to obtain a certificate when required can result in the imposition of back taxes and penalties.

Yes, but a few states will allow irregular collections under some circumstances. Review state exemptions from licensing and contact the state regulator or an attorney when in doubt.

If the debt collector is not licensed to do business in the consumer’s state of residence, providing such information about the debt to the consumer can expose the collector to liability for engaging in unlicensed collection activity, even if it is the consumer who initiates the communication. Unless the collector qualifies for an exemption from the state’s licensing requirement, collectors are generally advised to refer the consumer back to the original creditor or forward the account to another collection agency that can legally collect within the state and refer the consumer to such agency.

(“Consumer X” is a consumer who resides in a state where the collector is not licensed.)

While this is an undecided area of law, the conservative approach would be to return the payment to the consumer with instructions to contact the forwarding agency (if applicable) or the creditor.

(“Consumer X” is a consumer who resides in a state where the collector is not licensed.)

No, you cannot send the receipt. The “attempt” to convey information about a debt to a consumer in a state that requires a license is likely a violation. Send the request for the receipt to the forwarding agency handling the account (which should be licensed in the state) or to the credit grantor to fulfill the consumer’s request for a receipt.

(“Consumer X” is a consumer who resides in a state where the collector is not licensed.)

No, you cannot convey any information about a debt to a consumer in a state with a license requirement. You should simply state: “I’m sorry I am unable to assist you or answer your questions. Please contact (Forwarding Agency or Creditor) at (Phone and Address for Forwarding Agency or Creditor).”

(“Consumer X” is a consumer who resides in a state where the collector is not licensed.)

Still no.  You cannot convey information about the debt to that third party because the consumer resides in a state that requires a license. You should refer the third party to call the forwarding agency or credit grantor.

This is an unsettled issue. Some argue that you could furnish credit information to a consumer reporting agency regardless of where the consumer lives. Others would say that furnishing data constitutes a collection activity and is not permitted. Even assuming it is permissible to report the information, doing so could present compliance challenges down the road. For instance, if the consumer contacts the unlicensed debt collector to dispute the reported debt, this dispute may trigger the collector’s duties under the federal Fair Debt Collection Practices Act or the Fair Credit Reporting Act to send a validation notice and/or conduct an investigation of the dispute and report the results to the consumer. This would put the collector in a difficult position because sending such notification would likely violate the state’s licensing law, however failing to send either notification could violate federal law. Due to potential risks, collectors may want to consult with an attorney prior to engaging in this practice.

Not necessarily. In some states, while the law may exempt a collection agency from licensing, the state’s enumerated collection laws—some of which may exceed the FDCPA—still apply and can be enforced against an out-of-state or otherwise exempt collection agency.

No. Some states have specific requirements for collection notices sent to consumers in their state and debt collectors must review the collection notice requirements of each state before sending notices to consumers.

Autodialers

Yes, but you must have the consumer’s prior express consent. The TCPA permits autodialed debt collection calls to residential numbers, but the Act places a broad ban on the use of an autodialer or prerecorded message to call a consumer’s wireless line. The Act prohibits any autodialed or prerecorded message call to a wireless number, other than a call made for emergency purposes or made with the “prior express consent of the called party.” This prohibition on calls to wireless numbers applies to debt collectors. Thus, a debt collector must have the prior express consent of the called party (written or oral) in order to contact a consumer’s wireless phone number using an autodialer or a prerecorded message. While oral or written consent is permissible for wireless calls, the FCC has repeatedly stated that the burden of demonstrating consent lies with the caller; therefore, it is imperative that consent be well documented.

The TCPA requires a consumer’s prior express consent in order to contact them on their wireless phone with an autodialer. This consent can be provided by the consumer to the creditor at the time the debt is created or it can be provided directly to the debt collector by the consumer. Consent can be written or oral, but must be well documented as the burden of showing consent is on the caller. Crucial to debt collectors and creditors, the FCC issued a Declaratory Ruling in 2008 clarifying that a “called party” provides prior express consent to be called at a wireless number via an autodialer or prerecorded message if he or she knowingly releases a wireless telephone number at the time of a transaction to the creditor. The 2008 ruling also confirmed that a consumer who gives prior express consent to the creditor at the time of the transaction similarly gives such consent to the debt collector calling on behalf of the creditor. Thus, if a consumer provides a wireless number to a creditor as part of the transaction that created the debt, the creditor (and a debt collector working on the creditor’s behalf) will have consent to call the wireless number. 

It’s important to recognize, however, that if the number was obtained via skip tracing or some other source, it would not be considered consent.

Debt collectors must also be aware of the laws of the states they are collecting in, as some states have laws concerning autodialers that are more restrictive than the TCPA.

For further information on contacting a consumer using an autodialer, please see ACA SearchPoint documents #9511 Telephone Consumer Protection Act (TCPA): Autodialers, Prerecorded Messages, and Consent, #2308 State Laws Governing the Use of Automated Dialing and Announcing Devices (ADADs), and #9512 Telephone Consumer Protection Act (TCPA): Definition of Autodialer.

Yes. In its 2015 TCPA ruling, the FCC clarified that consumers have the right to revoke any prior consent to receive autodialed or prerecorded message calls using any reasonable method at any time. Consent can therefore be revoked orally or in writing and can likely be done through a variety of communication methods. The FCC opined that the reasonableness of the consumer’s revocation will be assessed by looking at the “totality of the facts and circumstances surrounding that specific situation.”

While debt collectors can use an autodialer to make calls to wireless numbers with the prior express consent of the called party, in the event a wireless number is reassigned to another consumer, consent to call the number lapses with the number’s reassignment. This is because consent to call a wireless number with an autodialer or prerecorded message must come from the actual, not intended, “called party.”

The FCC’s interpretation of the term “called party” only refers to a current subscriber or a customary user of the number, rather than the intended recipient. Therefore, when calls are placed to a reassigned number, the new subscriber is the “called party” and the new subscriber must consent to the call. This means that once a wireless number is reassigned to a new subscriber, any consent provided to the creditor or the debt collector lapses with the reassignment and, with limited exceptions, any subsequent autodialed or prerecorded message calls to that number violate the TCPA.

Yes, a limited safe harbor exists. The FCC’s 2015 ruling clarified that callers using an autodialer will have a one call “safe harbor” for a single call or text to a reassigned number to gain actual or constructive knowledge of the number’s reassignment. Notably, this “safe harbor” is very limited in scope and only allows a single call attempt, whether or not the caller gains actual knowledge that the number was reassigned. The FCC also clarified that this single call covers all company affiliates, including subsidiaries. For example, two affiliated entities may only make one call in total.

For further information on calling reassigned numbers, please see ACA SearchPoint document #9511 Telephone Consumer Protection Act (TCPA): Autodialers, Prerecorded Messages and Consent.

The TCPA defines an “automatic telephone dialing system” as equipment which has the capacity to: (1) store or produce telephone numbers to be called, using a random or sequential number generator; and (2) to dial such numbers. The Federal Communications Commission (FCC) regulations under the TCPA define “telephone dialing system” and “autodialer” to mean “equipment which has the capacity to store or produce telephone numbers to be called using a random or sequential number generator and to dial such numbers.” The FCC interprets the definition of an ATDS to include any automated dialing technology that has the capacity to possess the elements of the statutory definition, regardless of whether the system actually uses the functions to store, produce or call random or sequentially generated numbers.

Yes, the FCC has addressed the issue of predictive dialers, concluding that such equipment categorically falls under the definition of an ATDS, regardless of whether it possesses the statutory elements of an “automatic telephone dialing system” at the time a call is made. 

Yes. The TCPA permits manually dialed calls to wireless phones. Thus, a debt collector can call a consumer’s wireless number so long as no autodialer, predictive dialer or any other equipment that would meet the definition of an “automatic telephone dialing system” is involved with the call.

For more information on the TCPA and the definition of an autodialer, review ACA SearchPoint document #9512, Telephone Consumer Protection Act (TCPA): Definition of Autodialer.

ACA is aware of products that claim to fall outside the scope of the TCPA because they do not “call” a wireless phone, but instead deliver a message on the phone’s voicemail system. Presently ACA is not aware of any courts that have ruled on this type of technology, and the FCC has not issued a ruling on this product at this time. While the reasoning used by the makers of such technology as to why such products should be exempt from the TCPA’s coverage may indeed have merit (and could provide a potential solution), it is ultimately a business decision whether or not a company chooses to utilize this option (especially until the FCC or a number of courts concluded the product is not governed by the TCPA).

Yes. Whether a call is placed to a residential or wireless line, all prerecorded messages must clearly state the following:

  • At the beginning of the message, the identity of the business, individual, or other entity that is responsible for initiating the call, and
  • During or after the message, the telephone number (other than that of the autodialer or prerecorded message player that placed the call) of such business, other entity, or individual.

The FCC clarified in a 2005 ruling that parties making calls for the purpose of debt collection are not required to identify the caller’s state-registered name in prerecorded messages if doing so would conflict with federal or state laws, such as § 805(b) of the Fair Debt Collection Practices Act (FDCPA) which bars third-party disclosureRather, where such a conflict exists, the debt collector may identify herself by individual name. The FCC still requires debt collectors to state clearly the telephone number (other than that of an autodialer or prerecorded message player that placed the call) of the business.

The regulations also require that a telemarketer’s prerecorded message must provide an automated, interactive voice and/or key press-activated mechanism that allows an individual to make a do-not-call request.

For additional information regarding prerecorded message regulations and the need for prior express consent, please see SearchPoint documents #9511 Telephone Consumer Protection Act (TCPA): Autodialers, Prerecorded Messages and Consent and #9515 Telephone Consumer Protection Act (TCPA): An Overview of the TCPA and the FCC’s Regulations.

For further information on the TCPA, please see ACA SearchPoint documents #9511 Telephone Consumer Protection Act (TCPA): Autodialers, Prerecorded Messages, and Consent, #2308 State Laws Governing the Use of Automated Dialing and Announcing Devices (ADADs), and #9512 Telephone Consumer Protection Act (TCPA): Definition of Autodialer.

CFPB

While debt collectors are not required to sign up for the CFPB’s complaint portal, ACA highly encourages collectors to do so. The failure to sign up may result in a debt collector’s inability to timely respond to a consumer complaint that was submitted to the CFPB regarding its company. The CFPB has stated that unanswered complaint volume is as a factor it will use when considering agencies for examination. To sign up for the complaint portal please click here .

For more information on the CFPB, please see ACA SearchPoint document #3057 Overview of the Consumer Financial Protection Bureau.

UDAAP refers to unfair, deceptive or abusive acts or practices. The CFPB has the authority to identify and prohibit UDAAPs. The CFPB will closely review the practices of those engaged in the collection of consumer debts for potential UDAAPs. The CFPB will use all appropriate tools to assess whether supervisory, enforcement, or other actions may be necessary.

The obligation to avoid UDAAPs is in addition to any obligations that may arise under the FDCPA. Original creditors and other covered persons and service providers involved in collecting debt are also subject to the prohibition against UDAAPs.  The CFPB uses the following criteria to determine whether an act or practice constitutes a UDAAP:

Unfair
An act or practice may be unfair if:

  • The act or practice causes or is likely to cause substantial injury to consumers;
  • The injury is not reasonably avoidable by consumers; and
  • Such substantial injury is not outweighed by countervailing benefits to consumers or to competition. 

Deceptive
An act or practice may be deceptive if:

  • The act or practice misleads or is likely to mislead the consumer;
  • The consumer’s interpretation is reasonable under the circumstances; and
  • The misleading act or practice is material.

Abusive
An act or practice may be abusive when it:

  • Materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or
  • Takes unreasonable advantage of: 
    • A consumer’s lack of understanding of the material risks, costs, or conditions of the product or service;
    • A consumer’s inability to protect his or her interests in selecting or using a consumer financial product or service; or
    • A consumer’s reasonable reliance on a covered person to act in his or her interests.

The CFPB issued Compliance Bulletin 2013-07  that provides a non-exhaustive list of examples of conduct that may constitute UDAAPs. For more information on UDAAP, including a list of conduct the CFPB has identified as UDAAPs, review SearchPoint document, #2336, Unfair, Deceptive or Abusive Acts and Practices.

Potentially, yes. The CFPB has supervisory authority over non-depository covered persons deemed “larger market participants” for consumer financial products or services. Debt collectors may be considered a “larger market participant” if the entity has more than $10 million in annual receipts resulting from consumer debt collection activities. As part of its authority to supervise larger market participants, the CFPB has the authority to conduct examinations of these entities.

The CFPB also has the authority to supervise nonbanks about which it has “reasonable cause” to determine is engaging, or has engaged, in conduct that poses risks to consumers with regard to consumer financial products—regardless of the company’s size. Thus, the CFPB has the authority to potentially supervise and/or examine debt collectors of all sizes, not solely those deemed larger market participants.

For more information on the CFPB and its supervisory and enforcement functions, review ACA SearchPoint document #3057 Overview of the Consumer Financial Protection Bureau.

The CFPB expects debt collectors of all sizes (as well as other covered persons) to have an effective compliance management system (CMS). The CFPB has stated there is no “one size fits all” approach to a CMS. The CFPB expects that an effective CMS will include the following key elements:

  • Board of Director and management oversight
  • A compliance program (including policies and procedures, employee training, and monitoring and corrective action)
  • A consumer complaint management program
  • Independent and internal compliance audits

For further information on the CFPB and compliance management systems, please see ACA SearchPoint document #3057 Overview of the Consumer Financial Protection Bureau.

Communication

There is currently no fail-safe approach to leaving messages. In recent years, a majority of courts addressing have found that leaving a message on a consumer’s answering machine or voice mail is a “communication” as defined under the FDCPA, even if the message does not specifically mention a debt and only requests a consumer return the debt collector’s call. As a result, many courts have concluded that in order to comply with the requirements of the FDCPA, a debt collector must provide meaningful disclosure of its identity and the fact the call is from a debt collector (the mini-Miranda disclosure) in voice messages left for consumers. However, by disclosing that the call is from a debt collector on a message, a debt collector risks a third-party disclosure if someone other than the consumer listens to the message. 

It’s worth noting that some courts have found that messages that disclose the fact that the call if from a debt collector but do not state the consumer’s name may be compliant with the FDCPA. However, court analysis of such messages is fairly limited at this time, meaning other courts may still find such a message to be a violation.

Until definitive clarification is provided by the regulators or courts, debt collectors should enlist the services of an attorney to determine the best approach to leaving messages. For more information on voice mail messages, including analysis of recent case law and the pros and cons of various messages including messages that omit the consumer’s name, please see ACA SearchPoint document, #1146 Leaving Messages for Consumers.

No. ACA does not have a recommended message. However, ACA does provide an analysis of relevant court decisions on the issue. Members should work with an attorney to determine the best approach to leaving messages.

ACA SearchPoint document #1146 Leaving Messages for Consumers includes an analysis of recent court decisions on leaving messages.

The FDCPA does not specify how a debt collector should verify a consumer’s identity. It is generally presumed that this should be done in order to avoid a third-party disclosure violation of the FDCPA, but it’s ultimately up to the business to decide on a specific policy. Thus, it is really a business decision as to what method or process to use to verify that the debt collector has reached the correct consumer. While there are no specific requirements under the FDCPA, typical methods used to confirm a consumer’s identity include verifying one of more of the following pieces of information: the consumer’s name, mailing address, date of birth, last four digits of the SSN or some other unique piece of information that the debt collector can access from the account notes.  

Possibly. Debt collectors should consider variances in court opinions when determining whether to display an account number or other information on a collection letter envelope. The U.S. Court of Appeals for the Third Circuit held that a 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. Also, some district courts in the Third Circuit have held that a QR (quick response) code or barcode on the outside of an envelope posed a potential threat to a consumer’s identity because third parties could access account information by using a smart phone app to read the barcodes and QR codes. Although, to date, no other appellate court has issued an opinion on the display of account numbers on envelopes, multiple decisions from district courts within the Second, Seventh, Eighth, Ninth and Tenth Circuits have expressly rejected or narrowed the Third Circuit’s holding.

For more information on envelopes please see ACA SearchPoint document #1155 Envelopes and the FDCPA.

The FDCPA does not expressly address the use of e-mail communications. While not prohibited by the FDCPA, using e-mail to collect debts poses both risks and potential benefits for collectors. Until e-mails are specifically addressed under the FDCPA, collectors should take into account the following three elements to avoid potential violations:

1. E-mails are considered “writings”
2. E-mails benefit from the Mailbox Rule
3. E-mails should comply with the Electronic Signatures in Global and National Commerce (E-SIGN) Act

For more information on the pros and cons of using email for debt collection please see ACA SearchPoint document #2332 Communicating with Consumers via E-mail.

The FDCPA requires that a debt collector disclose the following in the initial written communication with the consumer: “This communication is from a debt collector. This is an attempt to collect a debt and any information obtained will be used for that purpose.” Additionally, if the initial communication with the consumer is oral, the disclosure must be provided in that initial oral communication as well. Subsequent communications must disclose that the communication is from a debt collector. Debt collectors also need to look at the laws of the states in which they are collecting, as some state have laws concerning the mini-Miranda that are more restrictive than the FDCPA.

Yes. The FDCPA expressly states that the mini-Miranda is not required in formal pleadings made in connection with a legal action. However, communications in conjunction with litigation activity that are not legal pleadings are subject to the mini-Miranda requirements. Some courts have also held that the mini-Miranda is not required if a communication does not demand payment. Some courts have also found that the mini-Miranda is not required in communications with a consumer’s attorney; however, other courts disagree, and hold that the mini-Miranda needs to be provided in communications with a consumer’s attorney. Because of the inconsistency between court decisions on this issue, debt collectors may want to provide the mini-Miranda in all communications with a consumer’s attorney.

For more information on mini-Miranda requirements please see ACA SearchPoint document #1145 Mini-Miranda Disclosure: Federal and State Requirements.

Yes, a collector can continue to collect the debt during the validation period provided the consumer has not disputed the debt in writing, or if the consumer has disputed the debt in writing, the collector has mailed sufficient verification of the debt to the consumer. However, while such communications are permissible, debt collectors must exercise care not to “overshadow” the validation notice. The term “overshadowing” refers to collection efforts that in some way obscure or confuse the consumer’s right to dispute the debt during the 30-day validation period. The validation notice is contradicted when other language in the letter or subsequent communications are logically inconsistent with the validation notice. Courts vary as to what is considered overshadowing, but examples of communications that may constitute overshadowing include demands for immediate payment during the validation period. For instance, statements telling a consumer to pay “today,” “immediately,” or “at once,” may be problematic if given to a consumer within the 30-day validation time frame.

Additionally, use of the terms like “urgent” or similar language may also overshadow that validation notice. When communicating during the validation period, the collector should ask the question, does the communication convey a false sense of urgency or does it leave the least sophisticated consumer confused as to their statutory rights? If certain language confuses the consumer, odds are there may be a potential overshadowing problem.

For more information on overshadowing, review ACA SearchPoint document, #1172 Collection Efforts During the 30-day Validation Period.

The FDCPA does not prohibit settlement offers during the 30-day validation period, but debt collectors must be careful if providing settlement offers during the validation period. A settlement offer presented in the initial communication with a consumer may potentially overshadow the consumer’s right to dispute the debt and/or obtain verification, especially if the offer expires during the 30-day validation period. A collector wishing to present a settlement offer in the initial notice to a consumer may want to hold the offer open for a meaningful time period of time in excess of 30 days (i.e., at least 45-60 days after the consumer receives the letter), as a time period of less than 30 days may overshadow the validation period.

For more information on settlement offers and overshadowing the validation period please see the ACA SearchPoint documents, #1142 Settlement Offers and #1172 Collection Efforts During the 30-day Validation Period.

Only in limited instances. In connection with the collection of any debt, a debt collector may not communicate with any person other than the consumer, the consumer’ attorney, consumer reporting agency (if permitted under law), the creditor, the attorney of the creditor or the attorney of the debt collector. The FDCPA permits debt collectors to communicate with the consumer’s spouse, attorney, parent (if consumer is a minor), guardian, executor, administrator, creditor to whom the debt is owed, and co-debtor or other person legally obligated to pay the debt. Debt collectors may also contact a third party with the consumer or court’s permission.

Debt collectors may contact a third party, such as the consumer’s neighbors, friends, relatives or employer for the purpose of acquiring location information about a consumer (i.e., skiptracing). A debt collector must adhere to the provisions found in § 804 when skiptracing. The only information a debt collector can request from a third party is the consumer’s location information. Location information is defined to only include the consumer’s home address, home telephone number and place of employment. Asking a third party for any other information is prohibited under the FDCPA.

Debt collectors should research the laws of the state they are collecting in if they intend to contact the consumer’s spouse, as some states have laws more restrictive than the FDCPA.

For more information on speaking with third parties, please see ACA SearchPoint documents #2067 Third-Party Communications#2040 State Collection Laws: Communication with Spouses#2011 State Laws Governing Oral Communication With Consumersand #1153 Age of Majority.

When communicating with a third party for the purpose of obtaining location information for a consumer, collectors must abide by the following requirements:

  • Identify herself, state that she is confirming or correcting location information concerning the consumer;
  • Only identify her employer if expressly asked by the third party;
  • Not state that the consumer owes any debt;
  • Not communicate with a third party more than once unless the person requests the debt collector contact her again of if the collector reasonably believes the previous response was erroneous or incomplete and the third party now has correct or complete information;
  • Not communicate by postcard;
  • Not use any language or symbol on an envelope that that indicates the collector is in the debt collection business or that the communication relates to debt collection; and
  • Not communicate with any person if the collector knows the consumer is represented by an attorney.

For more information on obtaining location information, please see ACA SearchPoint document #2067 Third-Party Communication.

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