4 Rights You Have When an MCA Collection Agency Calls Your Business

The call is a tactic. Your rights are a constraint the caller prefers you do not exercise.

When the MCA funder transfers your account to a collection agency (or assigns collection duties to a third-party firm), the nature of the contact changes. The agency operates on commission or on a purchased debt model. Its incentive is to collect the maximum amount in the minimum time. The methods it employs are calibrated for speed, not accuracy, and the legal boundaries it observes depend, in uncomfortable measure, on whether the debtor is aware of those boundaries.

You have rights. The caller does not intend to recite them.

The Right to Demand Written Verification of the Debt

Under applicable debt collection statutes, you have the right to demand written verification of the amount claimed, the identity of the original creditor, and the contractual basis for the obligation. The demand must be made in writing, and the collector must cease collection activity until verification is provided.

If the amount the collector claims exceeds the amount your agreement supports (after accounting for payments made, the correct factor rate, and any reconciliation adjustments), the discrepancy is a defense.

The Right to Communicate Only Through Counsel

Once you inform the collector that you are represented by an attorney and provide the attorney's contact information, the collector must direct all further communications to your attorney. This is not a request. It is a legal requirement. Calls to your business after this notification may constitute a violation of applicable collection statutes.

The Right to Be Free from Harassment

Collection calls that are abusive, threatening, or designed to humiliate constitute harassment. Calls to your personal phone outside of business hours, calls to your family members, calls to your employees about the debt: each of these may violate state and federal collection standards.

The caller's tone is designed to make you forget that you have rights. The rights do not disappear because the tone is aggressive.

The Right to Dispute the Debt

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If the underlying MCA agreement is challengeable (on usury grounds, based on illusory reconciliation, due to a defective confession of judgment), you have the right to dispute the debt in its entirety. A disputed debt cannot be collected without resolution of the dispute.

An attorney can send a formal dispute letter that halts collection activity, asserts the legal defenses applicable to the agreement, and positions the matter for settlement or litigation. The attorney's letter transforms the collection call from a one-sided demand into a two-party negotiation.

Retain counsel before the next call.