Commercial Debt Collection Statutes for Pennsylvania

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Commercial-Debt Collection Statutes for PENNSYLVANIA:

PENNSYLVANIA-Definitions

The following words and phrases when used in this act shall have the meanings given to them in this section unless the context clearly indicates otherwise:

  • “Debt.” An actual or alleged past due obligation, claim, demand, note or other similar liability of a consumer to pay money, arising out of a single account as a result of a purchase, lease or loan of goods, services or real or personal property for personal, family or household purposes or as a result of a loan of money or extension of credit primarily for personal, family, or household purposes.
  • “Debt collector.” (1) A person not a creditor conducting business within this Commonwealth, acting on behalf of a creditor, engaging or aiding directly or indirectly in collecting a debt owed or alleged to be owed a creditor or assignee of a creditor.

73 Pa. Cons. Stat. Ann. § 2270.3(1) (West, WESTLAW through Act 2007-77).

PENNSYLVANIA-Exemptions

“Debt collector.”

  • The term does not include:
    • (i) Any officer or employee of a creditor while collecting debts for such creditor.
    • (ii) A person collecting a debt for a creditor both of whom are related by common ownership or affiliated by corporate control.
    • (iii) A person collecting a debt that was not in default at the time it was obtained or was obtained by a secured party in a commercial credit transaction.
  • The term does include:
    • (a) A creditor who uses a name other than their own to indicate a third party is collecting the debt.
    • (b) An attorney, except in connection with the filing or service of pleadings or the prosecution of a lawsuit.

73 Pa. Cons. Stat. Ann. § 2270.3(2)-(3) (West, WESTLAW through Act 2007-77).

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, nor do they have any jurisdiction over non-members. However, both require high standards of practice and ethics in order 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 more than 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).