As we discussed last week, collecting the debt of a corporation is significantly different than collecting the debt of an individual. Over the course of this blog, we’ve discussed at length the authority and regulations of the Fair Debt Collection Practices Act (FDCPA), and this might be the most considerable difference between consumer and corporate debt collection.
A lower degree of compliance is required when dealing with corporate debt. The regulations put in place by the FDCPA do not apply to commercial debts, and even the West Virginia Consumer Protection Act excludes commercial transactions.
As a result, collectors are able to pursue commercial clients more persistently, without fear of violating FDCPA standards or even fear of the nuisance lawsuits that are rampant throughout the industry today. Collectors should still use good business sense when pursuing these interests; however, they are allowed more leeway and flexibility in engaging corporations.
Commercial debtors are also typically held to higher standards in court. Contracts are more strictly interpreted and enforced in terms of interest rates, payment due dates, attorney fees, equipment levees, creditor bills, receiverships, liabilities and other clauses. Any of these may be enforceable and valid but are much less likely to be imposed against an individual consumer.
Lawyers often cite the hypothetical least sophisticated consumer standard when representing individual debtors. This standard was created to protect all consumers (no matter their education level or understanding of their debt or contract) by suggesting that even the least sophisticated consumer would have been deceived or misled by the terminology and true meaning of a given contract. However, it is assumed that corporations would be much savvier in understanding the agreement into which they were entering.
What do you think? Should corporations be held to a higher standard of contractual obligation than individual consumers? Tell us your thoughts in our comment section, and check in next week for the final installation of our series on collecting corporate debt.