Which statement about collection agencies is true?

• A. Once an account is forwarded to collection agencies, the practice must discontinue attempts to collect the balance.
• B. Agencies must follow the guidelines of the Fair Debt Collection Practices Act.
• C. Collection agencies cannot sue customers.
• D. Collection agencies are always paid a flat fee regardless of collections.

Answer: (B)

Collection practices are governed by the Fair Debt Collection Practices Act, which sets the rules for how third‑party collectors may behave and interact with consumers. This federal law protects consumers from harassment, misrepresentation, and unfair tactics, while also requiring collectors to validate debts and disclose their identity and rights. Because of these protections, the statement that agencies must follow FDCPA guidelines is correct—it reflects the legal framework that governs how collection agencies must operate.

The other statements don’t fit the reality of how collection work is conducted. Forwarding an account to a collection agency does not end all attempts at collection; the agency continues efforts under the law. Collection agencies are not barred from suing debtors; they can pursue lawsuits to recover amounts owed. And payment arrangements with agencies are typically not a guaranteed flat fee; compensation is commonly contingent or based on a percentage of what is collected, not a fixed fee regardless of outcome.