Regulation of debt collectors in Canada

In Canada any one of the following has the right to collect debts:

  • Creditors
  • Collection agencies
  • Debt buyers
  • Lawyers licensed to practice law in Canada

Any one of these is legally entitled to contact consumers by telephone and by mail, subject to certain limitations, to attempt to collect outstanding debts.

In Canada there are laws, regulations enacted pursuant to these laws, and rules of professional conduct governing the conduct of lawyers designed to protect consumers from overly aggressive debt collectors. As a practical matter these may not always be effective protecting unsophisticated consumers from an overzealous debt collector because the consumer is not aware that the collector’s conduct is illegal. In addition, even where a consumer makes a credible complaint to the provincial licensing administrator about a collection agency’s misconduct the consumer may not obtain any satisfaction.

Laws regulating debt collectors vary to some extent in each province and territory. They also vary depending upon who is attempting to collect a particular debt. As a general rule, the conduct of creditors collecting their own debts is not regulated nearly to the same extent as those involved in collecting debts on behalf of others. In Canada collection agencies are subject to more scrutiny from regulators than creditors, lawyers and debt buyers.

Creditors

A creditor is the company you have received goods, services or credit from. If you have a credit card from a major retailer and your account is overdue you will likely receive delinquency notices and collection calls from the retailer’s Collection Department. In most provinces collectors employed by a creditor are not regulated by the government. Typically, once your unpaid account is overdue six months, sometimes as little as three months, your creditor will place your overdue account with a collection agency for collection on a commission basis.

Collection agencies

Collection agencies specialize in the collection of overdue accounts of others. Each province and territory in Canada licenses collection agencies that collect debts from its residents. Furthermore, each province and territory prohibits certain conduct on the part of collection agencies and imposes certain obligations on collection agencies. Provincial laws regulating collection agencies are not uniform across Canada. Therefore, a collection agency’s actions that may be perfectly legal in Ontario may be illegal in British Columbia and vice versa.

The chart at the end of this paragraph identifies the specific law under which collection agencies are licensed to operate in a province or territory. These laws, and in some cases regulations enacted pursuant to these laws, typically contain provisions prohibiting certain conduct on the part of collection agencies.

Collection Agency Licensing Statutes by Province and Territory

Province or Territory
Name of Licensing Statute
Alberta Alberta Fair Trading Act
British Columbia British Columbia Business Practices and Consumer Protection Act
Manitoba Manitoba Consumer Protection Act
New Brunswick New Brunswick Collection Agencies Act
Newfoundland Newfoundland Collections Act
Northwest Territories Northwest Territories Consumer Protection Act
Nova Scotia Nova Scotia Collection Agencies Act
Nunavut Nunavut Consumer Protection Act
Ontario Ontario Collection Agencies Act
Prince Edward Island Prince Edward Island Collection Agencies Act
Quebec An Act respecting the Collection of Certain Debts
Saskatchewan Saskatchewan Collection Agents Act
Yukon Yukon Consumers Protection Act

In the event a collection agency has violated the licensing statute in your province you may want to make a complaint against the collection agency to the provincial licensing administrator in your province.

Debt buyers

A debt buyer or debt purchaser is a company that purchases the debts of others. There are two different categories of debt buyers. The first category is companies that specialize in the purchase of consumer debts. These companies buy large quantities of overdue accounts from a creditor for a few cents on the dollar. Debt buyers may attempt to collect these debts on their own or they may place them for collection with a collection agency on a commission basis. The second category of debt buyer is collection agencies. A collection agency may collect debts on behalf of its clients on a commission basis or the agency may purchase a block of delinquent accounts and attempt to collect these. When a collection agency collects a purchased debt which it owns it retains 100% of the debtor’s payment. In contrast, when a collection agency collects a debt on behalf of a client the debtor’s payment is split between the client and the collection agency depending upon the collection agency’s commission rate for a block of accounts.

Lawyers

As a general rule, lawyers licensed to practice law in Canada may collect monies on behalf of creditors or act on behalf of collection agencies. Lawyers engaged in collecting debts and their employees are subject to certain rules of professional conduct enacted by provincial law societies.

Provincial and territorial laws that require collection agencies to be licensed specifically exempt lawyers from these licensing statutes. This means that lawyers licensed to practice law in Canada typically are not regulated by those civil servants responsible for regulating collection agencies. However, the scope of this “lawyer’s exemption” varies from province to province. Some licensing administrators responsible for regulating the conduct of collection agencies attempt to prohibit or restrict lawyers from outside their province from collecting debts from the residents of their province.

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