collection agency
A collection agency is any person or company, often hired by creditors, to collect or attempt to collect debts due or asserted to be due to another person or entity.
Some states, like Illinois, define a collection agency as “any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in the collection of a debt.” Other states, like North Carolina, do not explicitly provide that a person collecting debt on behalf of himself or herself is a collection agency. However, many states explicitly exclude certain persons from the definition of a “collection agency.” Such common exclusions are, banks, trust companies, licensed attorneys, insurance companies, etc.
The Fair Debt Collection Practices Act (FDCPA) regulates what collection agencies can and cannot do. According to 15 U.S.C. § 1692e, debt collectors “may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692c (a) only allows collection agencies to communicate with consumers between 8AM and 9PM local time. 15 U.S.C. § 1692b(6) prohibits collection agencies from communicating with a consumer directly if they know that an attorney represents the consumer.
[Last reviewed in January of 2025 by the Wex Definitions Team]
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