The home-based business market, sometimes called the SOHO (small-office/home-office) market, is booming. As more and more B2B businesses expand into these markets, they may find themselves walking a fine line between B2B and B2C.
Why is this important from a legal standpoint? Federal debt collections laws tend to treat business and consumer debt collections--even small business debt collections--quite differently. Why should you even care about the issues of small business debt collection law if you aren't a collection agency? Simple: the line between billing and collections is just as thin as the line between home-based self-employed entrepreneurs and private consumers.
Home-Based Business Debt Collection Laws
Essentially, there are much stricter protocols for handling consumer collections than there are under business debt collection law. Federal consumer collection law is best encapsulated in the Fair Debt Collection Practices Act. The essence of the law is to prevent harassment. But in practice, compliance is not quite so simple. The law has a long list of things you cannot do, including disclosing the debt to a third party or threatening legal action without intending to. How can the FDCPA get you into trouble with home-based business owners?
Possibilities for Ambiguity in Home Business Debt Collection
Fran's company sells paper stock to use in making business cards and business mailings. Her company only markets to businesses. Dave, a home-based business owner who bought some paper stock, has failed to pay for his most recent order. Fran calls the number Dave has on file, which is home file. Dave's daughter answers the phone, and Fran leaves a reminder for Dave to pay the outstanding invoice. Did Fran just break the law?
The Fair Debt Collection Practices Act says that a consumer debt may not be disclosed to a third-party under any circumstance, unless the third party is an attorney or credit bureau. Dave's daughter is neither. So, Fran has broken the law if Dave is a consumer. But she has not broken the law if Dave is a business. After all, how is Fran supposed to know that Dave's daughter wasn't a staff person?
The scariest thing about this hypothetical is that whether Dave is a business or a consumer is entirely out of Fran's control. If Dave used the cardstock for business cards and promotional post cards, it would seem that Dave's a small business; collection laws do not apply. If Dave used the cardstock for his daughter's art project, he is a consumer, not a small business; collection law does apply.
Can You Exempt Your Business from Debt Collections Laws?
Of course, if Dave had explicitly presented himself as a business when ordering, how he used the cardstock might not matter. Perhaps Fran's company could have protected itself by requiring customers to state whether they are businesses or consumers at the time of purchase.
Of course, the above discussion should not be taken as legal advice. It's not even a very careful consideration of the legal issues of small business debt collection law. But the fact that Fran's simple task of reminding a customer of an invoice requires careful legal consideration at all is a wake-up call.
In short, B2B businesses that take on home-based business customers have added a new level of complication: consumer vs. small business debt collections law. They've also found a new reason to outsource their accounts-receivable to a dedicated accounts processor and collection agency.
If you want to learn Collection Laws, then visit http://www.debt-collection-laws.com for the latest information on debt collection laws and collection agency regulation.
Announcements can be handed out as a business cardAnnouncements can... Read More
Small businesses need Public Relations, possibly more than large corporations,... Read More
What types of companies do you want to align yourself... Read More
Everyone wants to succeed in life. Most people want to... Read More
Everyone loves a good story. Whether it's the story of... Read More
When do you need to get more involved with the... Read More
No, I'm not talking about gambling or dairy cows ?... Read More
We all know how glorious those first warm days of... Read More
Rule 15C211Under SEC Rule 15C211, a U.S. securities broker or... Read More
Many auto detailers fall short in their sales presentations. I... Read More
Imagine that you have operated a successful franchise business for... Read More
Many have not experienced a fire up close. One year... Read More
1. Look Over Your Shoulder ? Of course, Punxsutawney Phil... Read More
Whether you operate a chain of restaurants, a mom-and-pop convenience... Read More
Ok, you have successfully accomplished your dream of being the... Read More
Macon, GA goes after garage-gas station conversion detail/hand car washes... Read More
Pity parties are nothing new. In fact, we do it... Read More
So it's time to invest some finances into advertising your... Read More
Ok, so next to the taxman, your company payroll department... Read More
An observation while returning home from a seminar: Getting away... Read More
We hear a lot of talk about junk mail nowadays.... Read More
If you own a mobile car washing, pressure washing or... Read More
If you ask most small business owners what priority CRM... Read More
Running a business on the net these days can be... Read More
Most doctors never distinguish the difference between customers and patients.... Read More
If you run a pressure washer business you need complete... Read More
Are you thinking of starting a small pressure washer business... Read More
As long as you eat and breathe you will stay... Read More
Ok, you have successfully accomplished your dream of being the... Read More
The last time I spoke and went into a bit... Read More
As you reflect on this year and prepare for next... Read More
The FTC, Federal Trade Commission, is considering modifying the franchise... Read More
A Private Investigator is a professional trained in the art... Read More
I meet and talk to hundreds and hundreds of business... Read More
I'll be the first to admit that I went a... Read More
Why? Because they have access to world class public relations... Read More
New Franchisors and Entrepreneurs need to watch out as they... Read More
A suggestion box is a really good idea for your... Read More
Free money! Receive up to $25,000 that never has to... Read More
"So what?" is a lovely question.It can lead to a... Read More
When should you create a foundation in order to solidify... Read More
1. Have A Strong Constitution ? Justices deliver decisions by... Read More
When someone owes your small business money, you certainly feel... Read More
A solopreneur I know disappears from my radar screen for... Read More
So you think you're not justified in taking time away... Read More
In your small business debt collection laws will eventually become... Read More
How many hours do you work a week? When was... Read More
THE PSYCHOLOGY OF PRICINGIn case you hadn't noticed, people can... Read More
In the heavy equipment cleaning business you can make good... Read More
Until the day I learned to play chess I loved... Read More
Small Business |