Collection Agency with Nationwide License: Need one?

There are thousands of collection agencies in America, but most consumer collection agencies do not provide nationwide service. Licenses are required in almost 33 states for consumer collections, and some cities like New York City even have their own licensing standards for agencies operating within the city limits. Each state has its own licensing requirements and procedure. Some states require a physical office or a key employee in their state to be registered.

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Broadly speaking, when this article was written, these states did not require consumer debt collectors to be licensed – Kansas, Louisiana, New Hampshire, Ohio, Pennsylvania, Texas, California, Georgia, Kentucky, Mississippi, Missouri, Montana, New York, Oklahoma, South Carolina, Vermont and Virginia.

Since the license requirements vary significantly, debt collectors need to carefully understand the laws in the state in which they are attempting to collect.

Several collection agencies take licenses in 49 states except for Massachusetts, because Massachusetts’ compliance system is complex and costly, and they partner with a local collection to still provide nationwide coverage.

A nationwide collection agency must

• Have a thorough understanding of the Statute of Limitations for each state. Once a debt becomes older than that time frame, they may lose the right to pursue the collection activity on the debtor (consumer).
• Should ideally perform collection activities in both English and Spanish.
• Should have a secure client portal to handle debtors online.
•  Be fully aware of the local time zone where a debtor is located and call accordingly, or else they risk violating the FDCPA guidelines.
• Not all states allow recording the call without informing the debtor first.

A nationwide collection agency will be familiar with all the laws and ensure that all collection activities are compliant, reducing the risk of legal complications. Agencies with a nationwide license often have a larger network and more resources, which can make them more effective at collecting debts. Reputable nationwide collection agencies will handle debt recovery professionally, which can help maintain the business’s reputation and relationship with customers.