Do Home Businesses Complicate Small Business Debt Collection Laws?

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.

---

Racing the Competition

What is the Big Race all about when it comes... Read More

How to become a Career Coach for Profit

A career coach could be simply defined your job seeking... Read More

Todays Chef, Tomorrows Restaurateur -- Startup Tips by Restaurant Consultants Inc

Researching information for a recent business plan, I came across... Read More

How to let go of your EGO

When does your ego get in the way?Let's go back... Read More

Mattress Cleaning Business: How To Manual

A Mattress Cleaning Business might be just for you if... Read More

Top 7 Small Business Resources for 2005

If you want to start a business in 2005, and... Read More

Do You Love Food? - Then Maybe Opening a Restaurant is Not Such a Crazy Idea

The restaurant industry in the United States employs an estimated... Read More

Women and Small Business

In the book Women and Small Business author gives all... Read More

Basic Psychology of Franchisee Ownership and Expansion

If you are a franchisee of a large franchise system;... Read More

Web Based CRM Systems: Get Mobile; Get Results

Everyday more web based companies enter the business scene. The... Read More

Incorporating a Small Business: S corporations versus C corporations

If you've been considering incorporating your small business, you've probably... Read More

Lack of Vigilance Can Harm the Bottom Line

The easiest way to lift profits is to cut the... Read More

Self-Employment: Do you know the Difference between Rates and Wages

The difference between rates and wages is not always clear... Read More

Carwash Franchisor Case Study

There are only a handful of car wash franchises in... Read More

The 5 Habits of Highly Successful Small-Business Owners

Have you ever wondered what the difference is between a... Read More

Start a Technical Writing Service

Technical writing services are employed to explain the details of... Read More

Building Your Business for Success in 2005

It's a strange anomaly.Most people who set out to start... Read More

What is Rule 15c211 and Reverse Merger

Rule 15C211Under SEC Rule 15C211, a U.S. securities broker or... Read More

Common Mistakes When Planning Your Medical Spa

Everything starts with a business plan: If you don't have... Read More

Is Your Small Business Name Important?

You bet a name is important. Many small business owners... Read More

Proper Care and Feeding of the Business Owner

That sizzling sound you're hearing may be a symptom of... Read More

North County San Diego Small Business

North County San Diego has had some significant growth, and... Read More

Consistency Builds Trust

You know your prospects need what you sell. You know... Read More

Arranging Your Fundraiser

When deciding to host a fundraiser for your company or... Read More

To Buy Or Not To Buy: Lawn Mowing Business

TRUTH IN THE LAWN MOWING INDUSTRYWe do not wish to... Read More

Five Tips for First Time Entrepreneurs

It seems so long ago that I started my first... Read More

Small Business Mistakes: Are You Making Enough of Them?

That's right ­ are you making enough mistakes in your... Read More

Truck Wash Business Case Study

Often smart entrepreneurs look for out of the way businesses,... Read More

Franchisee; Vacation Managing

Do you own a franchised business? Over 400,000 franchised businesses... Read More

New Habits, Rebounding Economy Help To Sell Giftware and Collectibles

Just a few years ago, when one thought of a... Read More

Employee Monitoring - Business Risks For Employers And How To Avoid Them

E-mail and Internet use are integral parts of the typical... Read More

Franchise Company Operations Manual Sample Outline

Many companies wish to expand and a few wish to... Read More

Lubbock TX Good Market for a Service Business

We very much like what we see in Lubbock, TX... Read More