Navigating U.S. Debt Collection: State Laws and the FDCPA

Managing international debt collection in the United States is unlike anywhere else. The U.S. operates under a dual legal framework that governs debt recovery: the federal Fair Debt Collection Practices Act (FDCPA) and a complex web of state-specific regulations.

For any non-U.S. Credit Manager, understanding this system isn’t optional—it’s essential to avoid compliance risks, financial penalties, and reputational damage.

1. The Foundation: The Fair Debt Collection Practices Act (FDCPA)

The FDCPA is the cornerstone of U.S. federal law governing debt collection practices. Its purpose is to protect consumers from harassment, deception, and unfair treatment during debt recovery.

Who Does the FDCPA Apply To?

The FDCPA primarily covers third-party collectors—that is, collection agencies or law firms collecting debts on behalf of others.

It generally does not apply to:

• Original creditors collecting their own debts (though many voluntarily comply).
• Commercial debts (B2B) — unless a state extends consumer-like protections to small businesses.

Core Restrictions Under the FDCPA

When engaging U.S. partners (agencies or attorneys), Credit Managers must ensure full compliance with the following prohibitions:

⚠️ Risk Alert: Violations can lead to $1,000 per infraction in statutory damages, plus actual damages, legal fees, and class-action exposure.

2. The Complexity Layer: State-Level Regulations

While the FDCPA sets a federal baseline, each U.S. state can—and often does—go further. This “patchwork” of laws is where international Credit Managers often face compliance pitfalls.

Broader Scope: Consumer vs. Commercial Debt

Many states have enacted their own “mini-FDCPAs,” expanding coverage or adding stricter standards:

• California (Rosenthal Act): Extends FDCPA protections to original creditors collecting their own consumer debts.
• New York: Applies rules to both collectors and creditors, with mandatory licensing.
• Texas: Adds specific licensing and consumer protection provisions.

Licensing and Registration Requirements

In most states, collection agencies—and sometimes even the original creditor—must hold a valid state license to pursue collections.

Example: A Massachusetts debtor requires your U.S. collection partner to hold a Massachusetts Collection Agency License, even if the agency is based elsewhere.

Enhanced State Protections

State laws frequently go beyond federal rules in key areas:

• Interest and Fees: Caps on late charges and accrued interest.
• Statutes of Limitations (SOL): The timeframe to file a lawsuit ranges from 3 to 10 years. Attempting to collect a “time-barred” debt can trigger legal action.
• Digital Communication: Rules differ on the use of email, SMS, and social media, making compliance with digital outreach complex.

3. Sekundi’s Advantage: Local Expertise, Global Confidence

Succeeding in U.S. debt recovery requires federal and state-level compliance—and that’s where Sekundi makes the difference.

Through our vetted U.S. partner network, we deliver:

✅ Guaranteed Compliance: Every partner is fully licensed and versed in both FDCPA and state-specific laws.
✅ Strategic Recovery: We match your case with a local expert who knows the debtor’s jurisdiction, courts, and enforcement nuances.
✅ Risk Mitigation: Avoid FDCPA penalties and costly legal exposure with a compliant, transparent approach.

Don’t let America’s complex regulatory landscape stall your recovery efforts. With Sekundi, turn compliance into a competitive advantage.

Contact Sekundi today to connect with a licensed, FDCPA-compliant U.S. collection specialist and recover your international debts—safely and effectively.