Commercial-Debt Collection Statutes for Rhode Island:
Rhode Island-Definitions
(1) “Consumer” means any person obligated or allegedly obligated to pay any debt, as defined by 15 U.S.C. 1692a.
(2) “Consumer Reporting Agency” means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.
(3) “Creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but the term shall not include a person to the extent that he/she receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of the debt.
(4) “Debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction primarily for personal, family, or household purposes, whether or not the obligation has been reduced to judgment.
(5) “Debt collector” means any person who uses an instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts or who regularly collects debts owed or asserted to be owed to another.
R.I. Gen. Laws § 19-14.9-3(1)-(5) (West, WESTLAW through Chapter 532 of the 2007 session).
Rhode Island-Exemptions
Debt collector shall not include:
- (a) An officer or employee of a creditor while collecting debts for the creditor.
- (b) A person acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control.
- (c) An officer or employee of the United States or a state of the United States, performing official duties.
- (d) A person serving or attempting to serve legal process on another person.
- (e) A nonprofit organization providing bona fide consumer credit counseling.
- (f) A person collecting a debt owed to another as part of a fiduciary obligation or bona fide escrow arrangement.
- (g) Attorneys-at-law collecting a debt on behalf of a client.
- (h) An agent or independent contractor collecting a bill owed by a tenant to a landlord.
R.I. Gen. Laws § 19-14.9-3(5)(a)-(h) (West, WESTLAW through Chapter 532 of the 2007 session).
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. 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 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).
