The term collection refers to a creditor’s pulled direct debit payment. A collection agency is a business that pursues payments on debts owed by individuals or businesses. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed.
The Federal Trade Commission is the primary federal regulator of collection agencies. The Fair Debt Collection Practices Act governs debt collection practices. Moreover, there are many state laws regulating debt collection, to which agencies must adhere. State debt collection laws regulate the credit and collection industry and protect consumer debtors from abusive and deceptive practices. If a state law is more restrictive than the federal law, the state will prevail over the federal law.
In addition to state and federal laws, a majority of U.S. collection agencies belong to the trade group ACA International. The agencies agree to abide by the association’s code of ethics as a condition of membership. ACA’s standards of conduct require its members to treat consumers with dignity and respect and to appoint an officer with sufficient authority to handle consumer complaints. ACA’s consumer complaint resolution helps consumers, who are members of ACA, to resolve disputes brought against a collection agency.