The services provided by Canadian collection agencies are governed by the laws of the province in which your debtor resides. If your customer is a business, most provincial jurisdictions do not require a collection agency to be licensed; however, if your customer is a person then many Consumer Protection legislations come into play.
Each province (and territory) in Canada has legislation and regulations concerning collection agency services with several containing prohibitive fines that can be levied against creditors, agencies, and individual collectors.
Creditors Can Face Fines for Using Unlicensed Collection Agencies
In today's business environment, risk management is key to the protection of your company's brand reputation. Some creditors work internationally, where the debtor is in Canada and the creditor is in another country. These creditors can easily find themselves in breach of provincial legislation if they do not retain the services of Canadian collection agencies.
Many years ago, we concluded that to service growing domestic and foreign clientele it was necessary to be licensed in each Canadian province and territory. Commercial credit transactions can easily become personal debts of the business principal and subject to Canadian consumer protection legislation.
Rather than complicating the procurement of services by Canadian collection agencies, PCM Corp has made it simple by being licensed as a national provider of collection agency services. By hiring PCM as your Canadian collection agency you do not have to worry about compliance. In fact, some of our best customers are commercial collection agencies from other countries.
Canadian Collection Agency Services by Province
Collection agencies in BC are regulated by Consumer Protection BC. Commercial transactions (B2B) transactions are not covered by the Act. However, creditors should be aware if you are calling a customer for payment of personal debt or payment pursuant to a guarantee of commercial debt. The creditor and the creditor's employees both fall under the definition of a collector in British Columbia and subject to all legislation and potential fines and penalties.
Collection agencies in Alberta are governed by the Fair-Trading Act and the Collection and Debt Repayment Practices Regulation. Commercial transactions (B2B) are not covered by the Act and regulations. If the transaction is deemed personal and a creditor or agency acts in contravention, significant penalties may be imposed of up to $100,000.
Collection agencies in Saskatchewan are regulated by the Financial and Consumer Affairs Act (FCAA). Commercial transactions are not covered by the FCAA.
Collection agencies in Manitoba fall under the Manitoba Consumer Protection Act or CPA but does not cover commercial transactions.
Collection agencies in Ontario operate under the Collection and Debt Settlement Services Act, R.S.O 1990 and do not require commercial collection agents to be licensed.
Collection agencies in Quebec abide by the Act Respecting the Collection of Certain Debts as it relates to consumer transactions. However, commercial transactions are exempt unless the individual is a surety to the transaction.
Debt collectors in Nova Scotia are regulated by the Collection Agency Act. Both collection agency collectors and salespeople must be licensed if they are soliciting Nova Scotia businesses for their services. Penalties may be levied against creditors using unlicensed Canadian collection agencies. Further, the Act does not distinguish between commercial or consumer debtors, therefore the Act encompasses all transactions in Nova Scotia.
Newfoundland and Labrador
Collection agencies in Newfoundland and Labrador are bound by Chapter C-22 - an Act Respecting Collection Agencies and Collectors. This legislation does not distinguish between commercial and consumer transactions therefore it is advisable for creditors and their staff to be aware of its obligations under the Act.
Collection agencies in New Brunswick are governed by the Collection and Debt Settlement Services Act. This Act is enforced by the Financial and Consumer Services Commission. The Act does not define a debtor as a consumer. Therefore, Canadian collection agencies must be licensed in New Brunswick regardless if they only collect commercial claims or not.
Prince Edward Island
Collection agencies in PEI must abide by the Collection Agencies Act. In this Act, a “person” also includes a partnership and a corporation. Therefore, Canadian collection agencies must be licensed in PEI if your customer resides on the island.
Collection agencies in Yukon Territories are governed by the Consumer Protection Act. This Act defines the debtor to include “a borrower and any person who is responsible for the repayment of a debt because of guaranteeing the borrowers liability to pay the debt.” Therefore, commercial debts are covered under this legislation and Canadian collection agencies must be licensed.
The Northwest Territories has enacted a Consumer Protection Act, which covers consumer transactions only.
The Government of Nunavut maintains a Consumer Protection Act that deals with consumer debts only and does not cover commercial or B2B transactions.
In conclusion, foreign and domestic creditors with debts in Canada should seriously consider hiring a Canadian debt collection agency directly. Provincial legislation concerning the hiring and conduct of Canadian collection agencies is not yet harmonized, leaving creditors open to potential fines and penalties due to inconsistencies amongst the provinces and territories.
Our mandate is to make our client's lives easier and eliminate risk by being licensed wherever necessary. This provides creditors with a “one-stop-shop” for their Canadian collection agency needs.
We offer our creditors the support they need to responsibly manage debt collection, improve their cash flow, and ensure their ongoing financial business health.