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 collection laws for the latest information on debt collection laws and collection agency regulation.
Alto Pass chicago limos ..While I was hard at work last week, an everyday... Read More
Fuel prices these days are quite high and they take... Read More
Owning a business is a challenging endeavor. If you're like... Read More
Do you like animals? Would you like to work for... Read More
Costs of over regulation and over disclosure end up hurting... Read More
$elling $elling $ellingWhat makes a great sales person? Well, the... Read More
Just when the entire state was kissing Wichita goodbye, economically... Read More
Is your business making money? Would you know?Figuring out whether... Read More
When a regulator finds a target to go after to... Read More
There have been many great points raised on both sides... Read More
1. TargetYou are not all things to all people. Decide... Read More
Q: I have outgrown my home office and need to... Read More
Many businesses offer small business franchise opportunities. There are many... Read More
When you feel like you're always busy working on your... Read More
You'd like to go into business for yourself, and believe... Read More
First, we need to define the different kinds of skip... Read More
Purchasing a franchise has become one of the most popular... Read More
The Service-Disabled Veteran-Owned Small Businesses (SDVOSB) is a program that... Read More
Last year, trillions of dollars transferred hands on the internet... Read More
If you plan to do business online, then your website... Read More
Perhaps you are building a new home office or you... Read More
For many small businesses, the "S" corporation is the business... Read More
Experts urge small business owners to "brand" their business ?... Read More
Many new ventures are preoccupied with all the money they... Read More
A recent survey indicated that clean Taxi Cabs Fleets have... Read More
Alto Pass cool limo ..Experts urge small business owners to "brand" their business ?... Read More
In the Truck Washing Business every single type of vehicle... Read More
This is the tale of two business plans with very... Read More
Washing the exterior of a truck. Sounds easy right? Well,... Read More
What does it take to grow a business and run... Read More
How much is your time really worth? Is it worth... Read More
When does your ego get in the way?Let's go back... Read More
The Federal Trade Commission is upgrading the franchise law and... Read More
Does your small business have a banking and credit card... Read More
Many experienced auto detailing professionals who have started out using... Read More
Many businesses offer small business franchise opportunities. There are many... Read More
You'd like to go into business for yourself, and believe... Read More
Here are some of the questions that you need to... Read More
First, we need to define the different kinds of skip... Read More
Passion. Passion alone can make your business successful. As an... Read More
Before you read any further in this article, I'd like... Read More
Becoming a contractor or sub-contractor for the U.S. government can... Read More
The resume writing service serves an important role in the... Read More
Many government department heads are on the take. Oh they'll... Read More
You only have so much time in a day right?So... Read More
At first glance, this topic may seem a little repetitive,... Read More
Business Process Automation or BPA for short. This was a... Read More
Commonly folks have asked me what the technical difference is... Read More
Don't you find that there are so many decisions you... Read More
A tongue-in-cheek look at the skills required to operate a... Read More
Small Business |