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.

In The News:


pen paper and inkwell


cat break through


Never Burn a Bridge

Why should you always maintain a good report with a... Read More

Small Businesses With Work Trucks; A Warning

If you are a non-operator owner of many work trucks,... Read More

When and Why YOU Are the Best Writer for Your Business Plan

WHEN you are operating or planning a small business that... Read More

Do Your Best; Hire the Rest

One of the hidden perks of raising six children is... Read More

How to Prepare for Your Start-Up Venture!

When you awoke this morning, you found yourself buzzing with... Read More

Small Business Failures in America - Cash Flow Issues

We are noticing an increase in the length of time... Read More

Banking and Company Credit Card Policies for Small Business

Does your small business have a banking and credit card... Read More

How to Give Informative Talks

Why should you do informative talks to smaller groups?Informative talks... Read More

A Look at Small Business Incorporating in Florida

The choice to incorporate a small business in Florida has... Read More

Window Cleaning Business Start Up

Should you buy a business opportunity or Franchise if you... Read More

Building Marketing Momentum For Your Small Business

The success of your business depends on your ability to... Read More

Mobile Detailing Environmental Concern in the Deep South

Macon, GA goes after garage-gas station conversion detail/hand car washes... Read More

Finding the Right People for your Business

Where do you find the right people for a business... Read More

Who Makes the BEST Business Partner

How do you find the best business partners?Finding a good... Read More

Small Business Debt Collection Laws

In your small business debt collection laws will eventually become... Read More

Detailing Business Options

So you want to get into the auto detailing business... Read More

The More you GIVE the More you GET

Why give freebies?We have all seen freebies at trade shows... Read More

Using Holidays to Put Some Extra Cheer in Your Cash Box

No matter your age or station in life, we all... Read More

Common Mistakes When Planning Your Medical Spa

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

How Is the LEGAL SYSTEM Dishing Out JUSTICE in Your Town?

Thankfully, most of us will never find out. That is... Read More

The Franchisors Heavy Load

Why are we over regulation the franchising industry, what purpose... Read More

Starting A Concrete Cleaning Pressure Washer Business

Concrete cleaning can be a lucrative business to start. Here... Read More

10 Best Practices to Consider as Your SBIR Negotations Approach Contract Signature

10 Best Practices to consider as your SBIR negotiations approach... Read More

Lack of Vigilance Can Harm the Bottom Line

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

Where Can I Get Clients From?

The following tips have come from a wide variety of... Read More

Conquering Confidence Killers for Small Business Success

"The way to develop self-confidence is to do the thing... Read More

Expanding your business.

Are you a small business owner who wants to expand... Read More

Small Business Strategies - Four Critical Success Factors

Scenario OneDuring a recent presentation, a business owner was given... Read More

Starting a New Business in a Small Town

Q. I am a former pastor who left the ministry... Read More

20 Great Ways to Market Your Business Locally

Whether your target audience is in your neighborhood or across... Read More

If You Want To Be Remembered...

Send handwritten notes. That applies whether you're a guy or... Read More

Selling Your Business, Entrepreneurs Role

$elling $elling $ellingWhat makes a great sales person? Well, the... Read More

Wichita Kansas is a Great Place to Run a Business

We love Wichita because it has great all round weather... Read More