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What Is the Difference Between Consumer and Commercial Collections?

When a creditor takes steps to collect on a debt, it is extremely important to recognize that there are distinctions between collection on consumer debt and collecting on commercial debt. Different laws govern consumer and commercial collections, and creditors need to be aware of the distinctions when moving forward to collect on a debt. The following is key information about the ways in which consumer and commercial collections often differ from one another.

The Fair Debt Collection Practices Act (FDCPA) Governs Consumer Debt Collections 

Consumer debts can be both small and large, and specific consumer protection laws regulate debt collection practices concerning individual debtors. When a consumer owes a debt, any collection actions are governed by the Fair Debt Collection Practices Act (FDCPA). According to the Consumer Financial Protection Bureau (CFPB), the FDCPA prohibits debt collectors engaging consumer collections from doing any of the following:

  • Contacting debtors before 8 a.m. and after 9 p.m.;
  • Contacting debtors at work after the debtor asks to stop communication at work;
  • Harassing debtors or anyone connected to the debtor; and
  • Contacting a debtor directing despite knowing that the debtor is represented by an attorney.

Creditors attempting to collect money owed from debtors are not governed by the FDCPA, however. As the CFPB explains, the definition of a debt collector under the FDCPA includes “collection agencies, debt buyers, and lawyers who regularly collect debts as part of their business.” If you are a creditor and collecting debts is not a regular business practice, the FDCPA is not applicable.

It is important to note that the FDCPA does not govern business debts when an individual owes business debts as a sole proprietor, for example. Creditors who are seeking to hire a debt collection agency should know that any business debts typically are handled by collection companies that specialize in commercial debt.

Commercial Debt Collections and the Commercial Collection Agency Association (CCAA)

Most creditors that are seeking to collect commercial debts will turn to a collection agency that is certified by the Commercial Collection Agency Association (CCAA). The CCAA has a declaration of fair practices that is designed to regulate commercial debt collection practices.

While creditors sometimes will attempt to collect on individual consumer debt before hiring a debt collection company, most creditors do use a debt collection company to collect on commercial, or business, debt. This debt most frequently is known as “business to business,” or “B2B” debt. Since commercial collections often involve larger amounts of money and more entities than consumer debt, a majority of creditors assume that it is worth the cost—and the amount of time saved—to work with a debt collection company that specializes in commercial collections. 

Contact a Columbia Creditors’ Rights Attorney 

Do you need assistance determining how to move forward on collection actions? Do you need help considering the best methods for consumer or commercial collections? An aggressive Columbia creditors’ rights lawyer can begin working with you today. The advocates at our firm have years of experience serving creditors in South Carolina, and we can get started on your case immediately. Contact Crawford & von Keller, LLC for more information.


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