This is the question on my mind. During the summer of 2011 I had a random visit from a Ministry of Consumer Services Inspector. These types of inspections are fairly common in my line of work, and the inspector was very kind and helpful.
In Ontario, the business of arranging a payment between a creditor and debtor is captured under the collection agencies act. The definition is found under section 1. (1) of the act:
“collection agency” means a person other than a collector who obtains or arranges for payment of money owing to another person, or who holds out to the public as providing such a service or any person who sells or offers to sell forms or letters represented to be a collection system or scheme; (“agence de recouvrement”)
So because Total Debt Freedom arranges a (lump sum settlement) payment between a creditor and a debtor, the regulators consider us a collection agency.
When the regulators come in to inspect your business, they just want to make sure that the business in compliance with the collection agencies act, your books are in order and you have all the appropriate people licensed. I think it’s good for the company and its clients.
Now, since my last inspection I have added some staff to negotiate settlements for new clients. But I didn’t license them as collectors at the time. See the definition of a collector below per the act:
“collector” means a person employed, appointed or authorized by a collection agency to collect debts for the agency or to deal with or trace debtors for the agency; (“agent de recouvrement”)
On August 19th 2011, I received a letter from the inspector that said I needed to license my additional negotiators as “collectors” per the act. I’m not a fan of having negotiators licensed as bill collectors, but the definition in the act captures the activity so I comply with the request because it’s the right thing to do, and the fees benefit the Canadian tax system. It really isn’t that big of a deal.
Now here’s what bothers me. American based companies are selling the exact same service we offer to Canadians, but are negotiating the settlements in the United States with American residents and employee’s. Let me be clear, I am not opposed to competition, I am opposed to competitors that operate in a shady fashion. Forgive me for being transparent.
Section 12.2.a of the Collection Agency Regulations says:
(2) No person shall be registered as a collector unless the person,
(a) is an individual who is a Canadian citizen or has been lawfully admitted to Canada for permanent residence and who is ordinarily resident in Canada.
No big deal for me because my office is in Markham, Ontario, Canada and all my staff live in the Greater Toronto Area, so they are all residents and citizens of Canada.
Here is a recorded conversation of a US based debt settlement company that purports to Canadians that they are properly licensed to do business here. You can listen to the call here of a California based debt settlement company.
Specifically here are the issues.
- At around :28 on the counter we ask them where their negotiations team is and the “debt consultant” states they are in “Irvine California”.
- At around 1:05 on the counter we ask them if these people in Invine California are specialized in arranging payment between a debtor and a creditor and the debt consultant responds with “Yeah, absolutely”
The question I would like to raise is this: How can American Debt Settlement Companies legally be doing business in Canada if the people that are arranging settlements between a debtor and creditor are living and working in the US?
Based on what I went through above, it doesn’t seem possible. These people should be Canadian residents and Citizens according to the act. It raises the question then, how is this happening, and why aren’t regulators doing anything to enforce the same rules on American’s as they are on my company?
Brian Pitkin, the prior Registrar of the Collection Agencies Act has retired effective December 2011. I have raised these issues to Mr. Pitkin this past fall, however for whatever reason, it was never investigated as far as I am aware. The acting Registrar who replaces him is Gary DeMers and I’ll be reaching out to him to follow up where I left off with Mr. Pitkin.
I’ll be asking the Ontario government these questions trying to get to the bottom of how a different sets of rules seem to exist for US companies. If you have any experiences with US based debt relief companies, I would encourage you to share your story with me at email@example.com.
If you are looking for help in settling your credit card debt, I encourage you to do some digging on the company you are talking to. Watch out for slick American sales people that just want to close the deal and get your money. From what I have experienced, it seems that in order to license negotiators they need to be Canadian, and residents. My company has met that requirement. to get a free quote or learn more about your debt relief options, ask for a free quote here.
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