From Collector: Definitions Matter

State definitions of terms like "debt" and "debt collector" are crucial when determining whether state laws and regulations apply to your business.

8/20/2019 9:00 AM

Collector MagazineNewsState
From Collector: Definitions Matter

While the Fair Debt Collection Practices Act defines “debt” and “debt collector” for the purposes of federal law, states are free to enact their own definitions of these terms, which may expand or narrow the scope of who is covered under state licensing and other collection requirements.

In many instances, a collector will be subject to both federal and state requirements. However, in some cases a debt collector may only be subject to one or the other. The variation among state definitions of these terms can add a layer of complexity when considering whether a business requires a license to collect debt in a particular state or whether the business is subject to state laws and regulations. That’s why it’s imperative that companies closely review the laws of the state(s) in which they intend to collect.

Some state 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 debt purchasers in its definition of a collection agency.

Read more examples of state laws and definitions that may apply to your business in the August issue of Collector magazine.

ACA members can review the recently updated 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 licensing laws.

Have you checked out ACA’s member-only 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 ACA SearchPoint, visit acainternational.org/searchpoint.

Subscriptions to the Collector magazine digital edition and email notifications for each new issue are available for ACA International members by logging in to ACA International’s website here. Members and nonmembers can also purchase a print subscription. Nonmembers can create a guest profile on ACA’s website to subscribe to available publications.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

From Collector: Definitions Matter

While the Fair Debt Collection Practices Act defines “debt” and “debt collector” for the purposes of federal law, states are free to enact their own definitions of these terms, which may expand or narrow the scope of who is covered under state licensing and other collection requirements.

In many instances, a collector will be subject to both federal and state requirements. However, in some cases a debt collector may only be subject to one or the other. The variation among state definitions of these terms can add a layer of complexity when considering whether a business requires a license to collect debt in a particular state or whether the business is subject to state laws and regulations. That’s why it’s imperative that companies closely review the laws of the state(s) in which they intend to collect.

Some state 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 debt purchasers in its definition of a collection agency.

Read more examples of state laws and definitions that may apply to your business in the August issue of Collector magazine.

ACA members can review the recently updated 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 licensing laws.

Have you checked out ACA’s member-only 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 ACA SearchPoint, visit acainternational.org/searchpoint.

Subscriptions to the Collector magazine digital edition and email notifications for each new issue are available for ACA International members by logging in to ACA International’s website here. Members and nonmembers can also purchase a print subscription. Nonmembers can create a guest profile on ACA’s website to subscribe to available publications.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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