Commercial Debt Collection Statutes for Tennessee

Commercial-Debt Collection Statutes for:

TENNESSEE

As used in this chapter, unless the context otherwise requires:

• (3) “Collection service” means any person who engages in, or attempts to engage in, the collection of delinquent accounts, bills, or other forms of indebtedness irrespective of whether the person engaging in or attempting to engage in collection activity has received the indebtedness by assignment or whether the indebtedness was purchased by the person engaging in, or attempting to engage in, the collection activity.
• “Collection service” includes but is not limited to:
• (A) Any deputy sheriff, constable, or other individual who accepts any compensation other than that fixed by statute in connection with the collection of an account;
• (B) Any person who, in the process of collecting that person’s own accounts, uses a fictitious name that would indicate to the debtor that a third party is handling the accounts;
• (C) Any person who offers for sale or uses any letter or form designed for use in the collection of accounts that deceives the receiver into believing the account is in the hands of a third party;
• (D) Any person who engages in the solicitation of claims or judgments for the purpose of collecting them or who solicits the purchase of claims or judgments to engage in collection activity.

Op.Atty.Gen. No. 97-131, Sept. 23, 1997: A debt buyer’s licensure requirement depends on whether they are buying accounts for collection or for factoring purposes. No license is required if the accounts are not in default at the time of purchase.

• (a) The provisions of this chapter shall not apply to:
• (1) Persons handling collections under court order;
• (2) Attorneys at law;
• (3) Persons collecting debts incurred in the normal course of business of a parent, subsidiary, or affiliated firm.
• (b) This chapter shall not require an individual or entity collecting only its own unpaid accounts to submit to licensure by the Collection Service Board.

Tenn. Code Ann. §§ 62-20-102(3), 62-20-103

What is the Fair Debt Collection Practices Act?

The U.S. Congress enacted the FDCPA in 1977 and added it to the Consumer Credit Protection Act in 1978. Its purpose is to eliminate abusive practices of third-party debt collectors. To that end, the Act establishes guidelines for the conduct of debt collectors, defines the rights of consumers, and prescribes penalties for violations.

The FDCPA defines “debt collectors” as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debt … asserted to be owed or due another.”

“Consumers” and “debt” covered under the FDCPA are defined as specifically referring to personal, family, or household transactions. Therefore, debts owed by businesses or by individuals for business purposes (commercial debts) are not subject to the FDCPA.

So, if the FDCPA does not apply to commercial debt collection by third parties, how are commercial collectors regulated?

There are no U.S. federal laws, similar to the FDCPA, that regulate third-party commercial (business-to-business) debt collection or provide guidelines for the conduct of commercial debt collectors.

Who is protecting the rights of commercial creditors and debtors?

Commercial Collection Agency Association

The premier body governing the activities of commercial debt collectors is the Commercial Collection Agency Association (CCAA), an arm of the Commercial Law League of America (CLLA). These organizations are not government bodies, but they require high standards of practice and ethics for a commercial collection agency to become a certified member.

The Commercial Collection Agency Association was established in 1972 to “improve the quality and reputation of the commercial collection industry.” It currently has over 200 members. Approximately 100 core members represent the most prestigious commercial collection agencies in the United States.

The CCAA is an arm of the Commercial Law League of America (CLLA), the oldest creditor’s rights organization in the country, established in 1895.

Membership in the CCAA

• The agency must have been in business at least four years prior to application for membership.
• 80% of the agency’s business must be commercial (business-to-business).
• The agency must maintain a separate Trust Account into which all monies belonging to creditors are placed. This Trust Account is reviewed twice annually by the Executive Director of the CCAA.
• The agency must agree to abide by the CCAA Code of Ethics, which sets ethical standards for dealing with creditors, debtors, and attorneys.
• Executives of the agency must meet continuing educational requirements and attend regular CCAA meetings. The member agency must complete sixty continuing educational credits annually.
• The agency must post a surety bond of at least $300,000 for the protection of the creditors it serves.
• One person in the agency must also be a member of the Commercial Law League of America.
• The agency must agree to random periodic site visits from the CCAA Executive Director.
• The agency must be in compliance with all local and state licensing requirements and regulations governing commercial collection firms.

Burt And Associates is a member of both CCAA and CLLA. Also, we are licensed and bonded in all 50 states (where required).