A collection agency is a business that specializes in recovering unpaid debts on behalf of creditors. When individuals or companies fail to pay their bills, the original creditor may hire a collection agency to pursue the outstanding amount. These agencies use various methods to contact debtors and encourage payment, often charging a fee or taking a percentage of the collected amount. Collection agencies operate under specific laws and regulations to ensure fair practices. They must follow guidelines set by the Fair Debt Collection Practices Act (FDCPA) in the United States, which protects consumers from abusive or misleading collection tactics.