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.
apartment cleaning near Highland Park ..One of the simplest ways to expand your marketing efforts... Read More
If a customer owes your local business money, it's hard... Read More
Many investors and business ethics professionals are calling for more... Read More
Time. As a small business owner, it's the commodity you... Read More
Data. Most people think it is a term relegated to... Read More
Why does a good business relationship rely on having some... Read More
It's Monday morning and Connie the Consultant sits in her... Read More
You need to be visible to attract customers, right? But... Read More
We hear a lot of talk about junk mail nowadays.... Read More
Great question!Freeing your time is an indisputably key element in... Read More
In general, all of us know how to accomplish the... Read More
If you have ever had your antique shop or mall... Read More
Now that you have invested your time, energy and money... Read More
Most small businesses incorporated in 2005 will fail by the... Read More
You can make your trade show experience much easier by... Read More
As a practitioner and student of Small Business Marketing, I... Read More
Looking for a place to add a Quick Lube away... Read More
Those who are in the pressure washer business should not... Read More
How a donation is different from a sponsorship and what... Read More
Everything starts with a business plan: If you don't have... Read More
Completion not Perfection Five Keys To Doubling Your Productivity and... Read More
There is much competition in the mobile auto detailing business.... Read More
IntroductionIt is widely recognised that Email and the Internet is... Read More
A cherished business doctrine is that growth must be a... Read More
Remember the cleaning business is all about time ratio to... Read More
cleaning lady near Arlington Heights ..Many mobile pressure-washing companies turn to government contacts to make... Read More
When the recent Games of the XXVIII Olympiad came to... Read More
Here are some useful tips on what to consider before... Read More
Do you have all the customers your business can use?The... Read More
Hew Hampshire car wash market. Well we have visited every... Read More
Many job applicants want a job but often do not... Read More
A solopreneur I know disappears from my radar screen for... Read More
Home based travel businesses are no longer the wave of... Read More
Many self employed professionals find themselves overwhelmed, frustrated, and confused... Read More
Franchising companies often use Business Broker to help attain sales... Read More
In this paper, I will:1. provide a framework for creating... Read More
If an organization lacks a mission statement, it is worthwhile... Read More
Many small businesses do quite well due to the blood,... Read More
Once you've decided to incorporate your small business the next... Read More
Achieving real success should be the goal of any good... Read More
Have you ever wondered what the difference is between a... Read More
For many small businesses, the "S" corporation is the business... Read More
In the Truck Washing Business every single type of vehicle... Read More
Some of the very qualities that attract people to the... Read More
Starting a business? For many people, the bravery to venture... Read More
Do you own a franchised business? Over 400,000 franchised businesses... Read More
How far can you go based on your relationship with... Read More
Continuing from the second article:6. About the aground mathematical model,... Read More
If you own a mobile truck washing, pressure washing or... Read More
If you really want to earn more money with your... Read More
Small Business |