§ 29. Debt collectors must provide security

§ 29 says that certain debt collectors must provide security. Security here means a financial guarantee arrangement. It must be able to cover liability the debt collector incurs if something goes wrong.

The rule applies to debt collectors who carry on commercial and regular collection of overdue monetary claims on behalf of others. That means professional debt collection business for others. An ordinary debt collection agency (inkassobyrå) that collects claims for clients is covered.

“Commercial” means that the business is run as a trade or for payment. “Regular” means that it happens on a regular basis, not just once by chance. “On behalf of others” means that the debt collector collects claims that belong to a creditor, for example a bank, a shop, an electricity supplier or a tradesperson.

The security covers liability the debt collector incurs towards both creditors and debtors. This is important. The law does not only protect the debt collection agency's client. It also protects you as the person being asked to pay.

The creditor can suffer a loss if the debt collector handles incoming payments incorrectly, does not pass money on, makes procedural errors or breaches the assignment. The debtor can suffer a loss if the debt collector demands unlawful amounts, handles the case in a seriously wrong way or breaches the duty of confidentiality (taushetsplikt).

The security is meant to be a financial backstop. If the debt collector incurs liability through the debt collection business, the security can cover this within the rules.

Why must a debt collector provide security?

Because debt collection involves power and money. The debt collector sends claims, receives payments, handles personal data and can contribute to collection through the courts (rettslig inndriving). Mistakes can have serious consequences.

If the debt collector receives money from debtors, the money must be handled correctly. Under § 16, collected funds must be passed on as soon as possible and kept separate from the firm's own funds. If the debt collector nevertheless loses track of money or does not pass it on, the creditor may suffer a loss.

If the debt collector breaks the rules towards the debtor, the debtor can also be harmed. This may involve financial loss, incorrect costs, wrongful legal follow-up or other damage.

Without the provision of security, an injured party could be left with a claim against a debt collection firm that cannot pay. § 29 reduces that risk.

You can think of it as a liability guarantee. It means that the debt collector cannot simply run a business with a major impact on people's finances without financial security behind it.

Does the security apply to all types of debt collection?

§ 29 applies to debt collectors who carry on a debt collection business in the form of commercial and regular collection of overdue monetary claims on behalf of others.

This means that the provision mainly applies to traditional debt collection agencies that collect claims on behalf of clients. If a firm buys up claims and collects them on its own account, other rules may be relevant. § 29 is worded for collection on behalf of others.

This fits with § 5, where security is a condition for a debt collection licence (inkassobevilling) for firms that regularly and commercially collect overdue monetary claims on behalf of others. § 29 explains the security obligation itself in more detail.

As a debtor, you do not always need to know exactly what type of licence (bevilling) the debt collector has. But if you believe you have suffered a loss because of the debt collector's mistakes, it may be important that security exists.

Who can be covered by the security?

The law mentions both creditors and debtors.

The creditor is the one who owns the claim. This may be a business or a private individual who has sent the case to debt collection (inkasso). If the debt collector collects money but does not pass it on, the creditor may have a claim.

The debtor is the person being asked to pay. If the debt collector does something that causes the debtor a loss and becomes liable for it, the security may be relevant.

It is not enough that you are annoyed or disagree. The security covers liability the debt collector “incurs”. This means there must be a basis for liability. The debt collector must have done something that creates financial liability under the rules.

What does “in the course of carrying on the debt collection business” mean?

It means that the liability must be connected to the debt collection business. The security does not cover everything a debt collection firm might do.

If the mistake happens as part of the debt collection case, the connection is clearer. Examples may be incorrect handling of incoming payments, breaches of duties under the Debt Collection Act (inkassoloven), incorrect case handling or unlawful handling of client funds (klientmidler).

If the mistake concerns something completely different, for example a private agreement with no connection to the debt collection business, § 29 is not the point.

This limits the security. It is designed for the risk involved in running debt collection, not for every possible claim against the company.

What does the regulation say?

The second paragraph says that the King in Council issues further regulations on the provision of security. This means that the details are not in § 29.

The regulation may deal with the size of the security, how it must be provided, who can provide it, which claims are covered and how the arrangement is monitored.

This is practical because such details may need adjusting over time. The size of a security may have to be adapted to the industry, the risk and the value of money. It is easier to adjust in a regulation than to amend the law itself every time.

For you as a reader of the law, the main point is this: Professional debt collectors who collect claims on behalf of others must have security. There are more detailed rules in the regulation.

What happens if a debt collector has not provided security?

Security is a central obligation for debt collectors covered by the rule. Missing security can have consequences for the licence and for supervision (tilsyn). Under § 5, security is a condition for a debt collection licence for firms that collect claims on behalf of others. Under § 30, the Financial Supervisory Authority of Norway (Finanstilsynet) carries out supervision.

For you as a debtor, this is a warning sign. A reputable debt collection firm must operate within its licence, conditions and legal requirements. If you are unsure whether the firm is legitimate, you should check who sent the claim, the organisation number, the contact information and whether the firm is entitled to carry on debt collection.

Do not pay an unclear claim to a party you cannot identify. Ask for documentation.

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If you are a creditor and plan to use a debt collection agency, you should check that the firm has the necessary licence and security. Ask how client funds are handled. Ask how settlement takes place.

If you are a debtor, you should check that the debt collection claim comes from a genuine debt collector. Check the name, organisation number and payment information. Be especially careful if the account number, language or form of contact seems unusual.

If you believe the debt collector has caused you a loss, document everything. Keep claim letters, receipts, emails, replies and any consequences. Write down specifically what the mistake is and what loss you believe it has caused.

If the case concerns money the debt collector has received, ask for a written settlement statement. For creditors, this is closely connected to § 15 and § 16.