A collection agency is a business that collects debts owed to someone else. Under the Fair Debt Collection Practices Act, a debt collector includes anyone whose principal business is collecting debts, or who regularly collects debts owed to another. A business collecting its own debts in its own name is generally not covered, but it is if it uses another name that suggests a third party. Regulation F, 12 CFR part 1006, sets the rules: no calls before 8 a.m. or after 9 p.m. local time, a call-frequency presumption, and a validation notice.
What is a collection agency?
It is a company you hire, or sell a debt to, to collect balances your customers haven't paid. You usually reach this point after reminders and calls have failed and the balance has sat in the over-90 bucket of your aging report.
Who counts as a debt collector under the FDCPA?
The Fair Debt Collection Practices Act defines a debt collector in 15 U.S.C. 1692a(6). It covers anyone who uses interstate commerce or the mails "in any business the principal purpose of which is the collection of any debts," or "who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another."
The law protects consumers. A "debt" is an obligation of a consumer arising from a transaction "primarily for personal, family, or household purposes." Business-to-business debts fall outside it.
Does the FDCPA apply to my own staff collecting?
Generally not. The definition excludes "any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor."
There is a catch. The definition includes a creditor who, collecting its own debts, "uses any name other than his own which would indicate that a third person is collecting." Sending letters under a made-up collections company name can bring you under the law.
What is Regulation F?
Regulation F, 12 CFR part 1006, is the CFPB's rule implementing the FDCPA. It applies to debt collectors as defined in 1006.2(i). A few of its core obligations:
| Rule | What it says | Section |
|---|---|---|
| Inconvenient times | Before 8:00 a.m. and after 9:00 p.m., consumer's local time, is inconvenient | 1006.6(b)(1)(i) |
| Represented consumer | No contact if the collector knows the consumer has an attorney for the debt | 1006.6(b)(2) |
| Stop contact | A written refusal to pay or request to stop ends most further contact | 1006.6(c)(1) |
| Call frequency | Presumed compliant if no more than seven calls in seven days, and none for seven days after a phone conversation | 1006.14(b)(2)(i) |
| Validation | Validation notice in the first contact or within five days after | 1006.34(a) |
What happens after the validation notice?
The validation period runs until 30 days after the consumer receives the validation information. The collector may assume receipt at least five business days after sending. If the consumer disputes the debt in writing during that period, the collector must stop collecting the disputed part until it sends verification or a copy of a judgment. The same pause applies if the consumer asks in writing for the original creditor's name and address.
What should you have ready before you hand off a debt?
- The signed payment plan agreement or contract.
- A ledger of every payment, missed installment and fee.
- Copies of the reminders you sent.
- The customer's last known contact details.
A clean file helps the agency answer a dispute during the validation period.
General information, not legal advice.
- Cornell LII: 15 U.S.C. 1692a, Definitions
- CFPB: Regulation F, 12 CFR 1006.1, Purpose and coverage
- CFPB: Regulation F, 12 CFR 1006.6, Communications in connection with debt collection
- CFPB: Regulation F, 12 CFR 1006.14, Harassing, oppressive, or abusive conduct
- CFPB: Regulation F, 12 CFR 1006.34, Notice for validation of debts
Every figure on this page was checked against these sources on Oct 6, 2026. General information, not legal or tax advice.