Consumer V.S. Commercial Debt

You’re in debt. But what kind of debt? – wait, there’s different kinds of debt?

That’s right. The debt collection industry is composed of two different areas of expertise. One being consumer debt collection, the other being commercial debt collection. These debt recovery services share a multitude of similarities as well as drastic differences. Knowing the difference between the two can help you decide how to approach past due receivables and decide which agency to call. 

Consumer Debt


Consumer debt collection services focus on debt that has occurred between a business and an individual consumer. These can include things such as personal credit card debts, medical debt, unpaid mortgage bill, or forgone loan payments.

Consumer debt collection agencies are held to stricter laws than commercial collection agencies. Consumer collection agencies are governed by a few different federal laws such as the Fair Debt Collections Practice Act (FDCPA), Health Insurance Portability and Accountability Act (HIPAA), Fair Credit Reporting Acting (FCRA), and the Telephone Consumer Protection Act (TCPA). These acts all ensure fair and legal practices are being maintained.

Commercial Collections

Commercial collections is similar to consumer collections with the fact that they both work to resolve debt. However, commercial collection agency’s specialty is business-to-business debt. This typically occurs when a business purchases goods or services from a supplier and walks away without paying. 

Compared to consumer collections, commercial collection agencies are not regulated at the federal level. This is because the government believes that businesses are less likely to take part in unethical or illegal practices. With no federal regulation, commercial collection agencies are left to be regulated by the state and industry associations. This means that commercial collection agencies are not subject to the FDCPA, or any other federal act.

Despite this, some commercial collection companies are certified by international associations such as the International Association of Commercial Collectors (IACC), Commercial Law League of America (CLLA), and can also be recognized by organizations like the Association of Credit and Collection Professionals (ACA) and the Better Business Bureau (BBB). These certifications serve as substitutes to the federal acts that must be obeyed by consumer collection companies. Each associations ensures that commercial collection agencies are using fair, ethical, and respectable practices. 

Overall, each area of debt collection can be extremely useful for many different reasons. Using capital to formulate a collections department within your company can be more expensive than the account you’re attempting to collect. Additionally, these industries specialize in debt collection, just like other businesses specializes in a good or service. Agencies are typically efficient at what they do and can help free up time and resources. While these two sectors fall under the same umbrella of debt collection, their rules, practices and regulations drastically separate the two.