State Collection Agency Regulations

Some states require collection agencies to be bonded.

Collection agencies are regulated by federal and state laws. While federal law mainly concerns itself with how collection agencies collect and report debt, state laws address their licensing. In some states, collection agencies are permitted to operate without any special licenses, while in others, they are subject to strict licensing and bonding laws.

Licensing

Not all states require that collection agencies be licensed, but many do. Some states, such as Florida, may license commercial and consumer collection agencies, while others may only license one type of agency. State laws may also require that an out-of-state debt collection agency be licensed in its home state.

Bonding

Some states require that collection agencies be bonded if they are going to operate in that state. In some cases, a collection agency may be required to be bonded in each state in which it is going to attempt to collect a debt.

Debt Collection Practices

All consumer debt collection agencies in the United States are required to abide by the federal Fair Debt Collection Practices Act, which regulates the tactics of third-party debt collectors. For example, the FDCPA prohibits a debt collector from calling someone late at night or early in the morning. It also makes it illegal for a collector to violate someone's privacy or to use abusive language while speaking with a debtor. Some states also have their own version of a fair debt collection practices act, which regulates the behavior of collection agencies trying to collect in that particular state.

References

• Carreon and Associates: State Collection Laws
• Small Business Association: Bonding Law
• PrivacyRights.org: Debt Collection Practices: When Hardball Tactics Go Too Far
• Federal Trade Commission: Debt Collection FAQs: A Guide for Consumers