campus aca
By David Cherner
Licensing Tips for Asset Buyers
Five suggestions to help asset buyers understand and comply with state laws and regulations
Credit and collection industry
members are well aware of the
diversity in state licensing laws
and regulations. Asset buyers in
particular have caught the attention of
state regulators and other licensing
authorities in part because they do not
always fit the mold of traditional third-party debt collectors.
Nevertheless, because licensing
definitions and exceptions can vary
significantly from state to state, asset
buyers must dedicate sufficient resources
to understand these laws and regulations
and act accordingly. Asset buyers may
want to:
1. Review state laws to determine
whether you fall within the definition
of a debt collector. While the Fair
Debt Collection Practices Act
(FDCPA) is the standard-bearer for
defining a debt collector, the
FDCPA’s definition of a debt
collector may not apply to state
licensing statutes. In fact, state law
provides a variety of definitions for
debt collectors regarding licensing, so
asset buyers must examine each state’s
GUIDES
Understanding Asset Buying and Selling
ACA’s Asset Buyers Division (ABD) has compiled its working knowledge on asset buying
and selling in three publications—Buying Receivables, Due Diligence Guidelines and
AGuidefor Understanding Purchaseand Sale Agreements—which are available for
purchase at http://www.acainternational.org/store. Learn how to successfully purchase
accounts, perform due diligence and draft a purchase and sale agreement from these
invaluable guides. For more information or to apply for ABD membership, e-mail
abd@acainternational.orgor call +1(952) 926-6547.
definition to consider whether
obtaining licensure as a debt collector
is appropriate.
2. Determine whether you are exempt
from licensure under state law.
Certain states expressly provide that
asset buyers are not considered debt
collectors under their licensing
statutes and regulations.
3. Consider whether you are pursuing
accounts in default or not in default.
Similar to the FDCPA, many state
laws exclude those
collecting on accounts
not in default from the
definition of a debt
collector for licensing
purposes.
4. Understand your
business model. At least
one state prohibits a
consumer collection
agency from purchasing
debt for the purposes of
collection or filing suit,
which means asset
buyers who collect their
own accounts must
appreciate how their
business practices and structure may
impact their ability to obtain
licensure as a debt collector.
5. Keep in mind that definitions for
state licensing laws and state debt
collection practices laws do not
always mirror each other. Just
because an asset buyer does not
qualify as a debt collector under a
state’s licensing requirements does
not necessarily exempt that asset
buyer from abiding by the state’s
general debt collection laws. Asset
buyers must examine definitions
under both subjects to determine how
state licensing and collection practice
laws and regulations apply.
Additional information regarding
licensing for asset buyer is available via
E-Compliance document #4553 at
http://www.acainternational.org/
ecompliance. cm
David Cherner is ACA International’s
legal counsel and legislative director of
state government affairs.
