Canadian Debt - American Collection Agencies and Their Clients Are About to Learn a Hard Lesson

When making business decisions one’s natural tendency is to assess risk and reward through our own experiences and frames of reference.  With the American and Canadian marketplaces being so intertwined, American collection agency owners often forget that Canada is a foreign country and unlike the U.S.; there is no distinction between consumer and commercial debt collection law. It is this “unconscious incompetence” that may expose American commercial collection agencies and their clients to unnecessary risk and investigation.  Canadian commercial agency, Priority Credit Recovery Inc., has developed a web site (www.collectdebtincanada.com) that will assist American collection agency owners and credit grantors to adhere to the Canadian legal system.

The association of North American Consumer Protection Investigators (www.nacpi.org) was formed to “…provide a medium through which the consumer protection investigators, civil and criminal, of the respective governments (federal, state, county, city, province, district, or territory) [can] receive educational training at annual conferences, network, exchange information, and cooperate in matters involving consumer protection investigations, education, and litigations, of mutual concern to all.”

Recently, during an industry association dinner with our Director of Fair Trading, I was informed that Service Alberta will be asking U.S. federal debt collection regulators to investigate complaints from Canadians concerning American collection agencies and vice versa. The problem I see for the American commercial debt collection industry is that most agency owners and their clients are not aware that Canadian consumer protection laws also cover commercial claims.

Canadian non-compliance penalties against foreign commercial debt collectors range from fines to criminal charges.  What is the best way to achieve compliance?  “That’s easy.  Get licensed.” says Darren Thomas, Director of Fair Trading – As Delegated, for the Province of Alberta.

However, licensing an American commercial agency in Canada is no simple task.  Agency owners must incorporate, license, and bond their company in every provincial jurisdiction where they intend to call commercial debtors and some provinces require that you maintain a client’s trust account at a financial institution within that jurisdiction.  Licensed collection agencies in Canada are also subject to annual financial audits by qualified chartered accounting professionals.  These annual financial audits determine the amount of the clients trust account bond for the following fiscal year.  All of these requirements cost money.  Information to obtain your Canadian licensing can be found at http://www.ic.gc.ca/eic/site/oca-bc.nsf/eng/h_ca02149.html.

American and Canadian commercial collection agencies can also achieve compliance and profitability by leveraging the benefits of a qualified in-country agent.  Qualified agents are compliant within their trading area and can legally collect on your behalf, allowing commercial debt collection agency owners to maintain a profitable foreign collection portfolio while mitigating risk.  Industry associations such as ACA International (www.acainternational.org) and the International Association of Commercial Collectors (www.commercialcollector.com) can assist in locating a qualified agency.

Brad J. Lohner is a 26 year veteran of the collection industry with offices located in Edmonton, Canada and Plymouth, Michigan. For more information, visit www.collectdebtsincanada.com.