Does the FDCPA Apply to Commercial Collections?
The Fair Debt Collection Practices Act (FDCPA) is a federal law regulating the behavior of debt collectors when attempting to collect a debt from consumers. The FDCPA prohibits certain types of conduct by debt collectors and gives consumers specific rights in dealing with debt collectors, including using abusive language and calling repeatedly or at inconvenient times.
This raises a fundamental question: Does the FDCPA apply to commercial collection? The short answer is “no”—the statute only applies to consumer debt. Notably, California has a nearly equivalent state law that does not apply to commercial collections. Our Los Angeles business-to-business collection attorney explains the key things about the FDCPA and commercial collections.
Federal Law: FDCPA Does Not Apply to Commercial Collections
Commercial collections are subject to different regulations than consumer regulations. Most notably, the FDCPA does not apply to business-to-business and other commercial collections. As stated simply by the Federal Reserve, “the FDCPA applies only to the collection of debt incurred by a consumer primarily for personal, family, or household purposes.” Knowing the difference between consumer and business debt and the laws that apply to each can help companies navigate the debt collection process and avoid potential legal issues.
California State Law: Rosenthal FDCPA Does Not Apply to Commercial Collections
California has its own state-based debt collection regulations. The state’s primary debt collection statute is called the Rosenthal Fair Debt Collection Practices Act. While not identical, there are many similarities between the California Rosenthal statute and the federal FDCPA. For example, Rosenthal FCDPA applies to both debt collectors and creditors. The federal FDCPA only applies to debt collectors. However, neither statute applies to commercial collections. They only apply to consumer debt collection practices.
Commercial Debt Collection is Still Extremely Complex
Even though the Fair Debt Collection Practices Act (FDCPA) does not apply to commercial debt collection, the process can still be extremely complex. Many issues can arise when a business is attempting to collect a debt from another business, such as disputes over the terms of the original contract or the debt’s validity.
A proactive approach is a must. Navigating these complex legal issues can be challenging for businesses, which is why it is often beneficial to work with a skilled Los Angeles debt collection lawyer. A debt collection attorney can help businesses understand their rights and obligations, develop strategies for collecting debts, and handle disputes or legal action if necessary.
Get Help From a Commercial Collections Attorney in Los Angeles
At Law Offices of Andrew Ritholz, our Los Angeles commercial collection lawyer is a diligent, solutions-driven advocate for clients. If you have any specific questions about the FDCPA or commercial collections more broadly, we are here to help. Contact us today to arrange your confidential, no-obligation initial consultation. We provide commercial collections representation in Los Angeles and throughout Southern California from our law offices in Pasadena and Monrovia.