Debt Collection: Follow the rules

Unless you are paid immediately upon providing a service or product, your business will have to deal with late or unpaid accounts. You can hire a debt collection service or handle the problem yourself. The US Fair Debt Collections Act was initially meant to control the practices of debt collecting companies against consumers. However, over time some states have passed even more stringent laws which regulate anyone collecting debts.

The US Fair Debt Collections Act does not control Business-to-Business transactions.

If you are collecting money from individuals, do NOT:
  • Call at unreasonable hours
  • Add additional fees or interest that weren’t part of the original agreement
  • Purposely delay posting the payment to the customer’s account for the sake of adding more fees and interest
  • Confiscate property despite not having the legal authority to do so
  • Tell the debtor's employer or co-workers about the debt (if it’s a person and not a company)
  • Lie about how much the debtor owes
  • Pretend to be a lawyer to intimidate the debtor
  • Pretend you represent the government
  • Lie about whether or not you'll report the debt to the credit bureaus
  • Make false threats about suing the debtor, having them arrested or sending them to prison for non-payment
Information from: https://www.americanexpress.com/us/small-business/openforum/articles/getting-paid-youre-owed-without-breaking-law/

Full text of the US Fair Debt Collections Act

Debt collection: Do's, Don'ts and sample letters