Fair Debt Collection Practices Act Held Not to Apply to Business Debt

fdcpa and business debtA recent Massachusetts decision reaffirms the important distinction between business debt and consumer debt when dealing with the Fair Debt Collection Practices Act (FDCPA) and the Massachusetts debt collection law, Mass. Gen. Laws chapter 93, section 49.

The protections of these laws do not apply to business debts, only to debts for consumer purposes, also known as “personal, family, or household purposes.”

In this case, a debt collection company filed a lawsuit against a business alleging that a revolving line of credit had not been paid. In response, the business argued that various violations of the FDCPA and Massachusetts debt collection law had been violated.

Consumer Debt and Business Debt

The court held that whether a debt is a consumer debt or a business debt is determined by what it was at the time of its origination. In this case, it was taken out for business purposes. Furthermore, it was taken out in the name of a business. Because of this, the debt was a business debt not subject to the collection laws. The business’s counterclaim was dismissed.

Many people mistakenly assume that all debts are subject to the FDCPA, but this case explains the necessity of reviewing each and every account from the time it was taken out to see whether the protections actually apply.

The case is here: Amos Financial LLC v. Law Office of Charles P. Kazarian, P.C.

If you have a business or personal account that is being collected, our office has handled many of these cases. Give us a call to see if we can help.

Josef Culik

Josef Culik

Attorney Joe Culik has built his reputation on helping people and has dedicated his practice in Boston, Massachusetts to consumer protection, employee rights, and small business and franchise law.