Think Global, Collect Local: Finding Similar Routes to Correction Success in South Korea and China

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All who seek to collect money, at least in the United States, are bound to a certain code of conduct.

The code isn't so much a code, which suggests something agreed to by a group of professionals aiming to maintain an industry-wide ethical standard. It's really just a law, something that people can, and do, break with prodigiously negative consequences. The Fair Debt Collection Practices Act (FDCPA) was added as Title VIII to the Consumer Credit Protection Act in 1978, and has since governed the kind of practices that collectors can and cannot engage in when pursuing a debt from a consumer.

While many of the statute's rules boil down to using common sense and being civil, there are several provisions in the FDCPA that are strikingly specific, especially for a body of law that's often shrouded in vagueness and occasionally misinterpreted. For example, the FDCPA dictates that collection calls to consumers can only be made between the hours of 8:00am and 9:00pm local time. A collector can't contact a debtor once they are known to be represented by an attorney, and also can't engage in any communication that might seem abusive or constitute harassment, which typically means no threatening, no yelling and no swearing.

The FDCPA also goes beyond merely outlawing certain types of behavior, and mandates that certain things be made clear to a consumer when contacting them about collections. The collector must identify themselves and alert the consumer to the fact that they're calling on behalf of a debt collector, verify that the debt exists using documentation if the consumer requests it, and notify the consumer of their right to dispute the debt in question.

As it's written, the FDCPA only applies to consumer debts and third-party debt collection agencies, meaning that inhouse collection professionals seeking a business debt don't necessarily have to comply with these many tenets. A "debt collector," according to the FDCPA, is "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 debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another," and a "debt" is any "obligation or alleged obligation of a consumer ... primarily for personal, family or household purposes."

Those two definitions seem to rule out commercial creditors and their employees calling another company to collect what they're owed. But a number of state laws do fill in the blanks in many corners of the U.S., extending the FDCPA to apply to in-house collection activity, if not to business debts as well. Both California and Pennsylvania have enacted laws that apply the bulk of the FDCPA to creditors collecting their own debts, and the laws apply to any in-house collector who tries to retrieve its debt by using any name other than their own, in order to make it look like a third party is the one calling to collect. Moreover, the Federal Trade Commission (FTC) has repeatedly taken the position that the FDCPA sets standards for fair trade collection practices by all creditors, whether they're collecting for themselves or for someone else. According to NACM's Manual of Credit and Commercial Laws, the Commission has stated that under Section 5 of the FTC Act, it could absolutely pursue creditors and collectors of commercial debts for the type of conduct prohibited by the FDCPA, even if those businesses are technically exempt from the law itself.

The reason why the FDCPA, on a national basis, doesn't apply to in-house creditors is because, logically, these creditors would have less interest in offending their debtors, because they have an interest in retaining them as customers. For a third-party debt collector, they collect the debt, and never have to deal with that debtor again, so regulations seemed necessary to prevent harassment. …

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