Any time you learn more about the process of debt collections and the regulations surrounding them, you gain an advantage over anyone trying to avoid paying you. That said, you can always rely on Summit A•R to keep you informed about whatever particular issue you might be curious to know more about.
You can also rely on our team to take complete control of your account should you decide that the best option for you is to leave the collections to the experts so that you can focus on running your business. On the other hand, if you want to know more about debt collections to stay ahead of the game, a great place to start is to gain a better understanding of how collections and the rules that guide them have changed over time.
Debt Collections Historically
Taking advantage of the services of a company like Summit A•R collection agency to help your business recover lost income may be a new experience for you, but the practice of individuals and businesses alike seeking out the assistance of a third party to help recover money is an old one.
In fact, the economic anthropologist David Graeber argues that the collection of debt is older than the invention and use of currency since it was employed when people were still using bartering systems. Whether or not that point is arguable, we can leave it up to the academics. Still, the fact that debt and money have a shared history that stretches back to the most ancient civilizations is easy enough to understand.
The history of debt collection follows the history of money and political development quite closely. For example, in the medieval ages, a debt collector was called a catchpole, who was employed by the bailiff. Later, the concept of debt helped to intensify immigration from Europe to the new world since those who couldn’t pay their debts were eager to flee the harsh treatment accorded to them in 18th and 19th century Europe.
Another significant period in the history of debt collection occurred during the great depression, when banks commonly resorted to foreclosure to regain capital from unpaid mortgages. Without the presence of the modern consumer debt collection agency and the regulations that govern it, people had little recourse at the time for protection against harsh treatment.
The Introduction of Modern Regulations
Given the tie between debt and hardship displayed in the history of collections, it isn’t difficult to see why debt collections agencies acquired a bad reputation in the past. However, with the introduction of modern regulations, the entire situation involving debt collections practice and philosophy began to change for the better of everyone.
The Fair Debt Collection Practices Act (FDCPA)
The most significant change in debt collections practices occurred in 1978 when the Fair Debt Collection Practices Act (FDCPA) was made law. The purpose of this document is to protect consumers from unethical collections practice. It brought about a major overhaul in the entire debt collection process and the strategy of some agencies.
Consumer Financial Protection Bureau (CFPB)
The subsequent monumental development in debt collections occurred in 2010 with the establishment of the Consumer Financial Protection Bureau (CFPB). This government organization controls rule-making and enforcement of the regulations that debt collectors must follow.
New Developments Since Covid-19
While there have been substantial changes to the regulations regarding debt collection since the beginning of the COVID-19 pandemic, not all of these changes came about as a response to the public health crisis. The most significant change was a long overdue update to the 1977 FDCPA regarding communications in the digital age, especially concerning social media and text messaging.
Further Legal Changes
Major updates to the Fair Debt Collection Practices Act occurred at the end of 2021 in an amendment (Regulation F) to the Consumer Credit Protection Act (CCPA). The main goal of these changes is to ensure the continued protection of consumers intended by the 1977 FDCPA by addressing contemporary communications methods. Due to these changes, debt collections agencies can now attempt to contact debtors via modern communications technologies like
- Mobile Phones
- Instant Messaging
- Social Media Software
However, the manner and frequency through which these communications can occur are highly regulated to protect the consumer from harassment.
As evinced by these updates, the regulations concerning debt collection continue to be subject to changes and updates. Today, debt collections can be specialized between being a commercial debt collection agency and working in consumer debt collections. As such, collections are taken up against individuals and businesses as well.
Since its inception, perhaps the most significant change to debt collection has been the changing attitudes regarding the treatment of those holding delinquent accounts. As was made apparent by our summary of the history of debt collection, the means that collectors used to reclaim money were not often happy ones.
Fortunately, today the reason that most debt collectors avoid unethical tactics is not merely because collection laws now exist to help stop them from taking place. Instead, collectors understand that unethical tactics in debt resolution are often counter-productive rather than practical.
Rather than harassment and threats, collectors today seek to engage in supportive dialogue with the people holding the delinquent account in an attempt to find a resolution that will prove satisfactory to everyone involved. In this way, today’s debt collection specialist is often able to resolve the issue while maintaining positive relations between the creditor and debtor so they can continue to do business in the future.
This is the reason that we maintain a P.H.D. (Preserve Human Dignity) Philosophy at Summit A•R. Today, those who work at collection agencies like ours pride themselves on the ability to track down lost income while maintaining respect and dignity for the parties involved.
If you’d like to learn more about the history of debt collection and how it relates to our current debt collection process, please get in touch with us for further information. Otherwise, be sure to call anytime that you’re facing delinquent accounts.