Can They Contact My Customers? 8 Standards on UCC Claim Notification

The collector may write to your customers. The statute decides what the letter can command.

An assignment of receivables lets a funder redirect payment, but only through a notice that meets stated conditions, and each condition gives the customer, and you, a distinct point of verification, eight standards in the order a careful reader tests them.

1. Payment to the Original Party Discharges Until Notice Arrives

The customer who pays you before receiving notice has paid the debt, and no later letter changes that fact.

Under the governing assignment rule, an account debtor on an account, chattel paper, or a payment intangible discharges the obligation by paying the assignor until, but not after, receiving signed notice that the amount due or to become due has been assigned with payment directed to the assignee. The New York enactment of the assignment notice statute states the rule before any discussion of tactics (counsel confirms the governing state version, since enactments differ by state and the customer obligation follows the applicable text).

2. After Notice, Only Payment to the Named Party Discharges

Receipt of a conforming notice flips the discharge, and payment to the original party after that point pays no one in the eyes of the law.

Until notice, the original party. After notice, the named party. The customer is never asked to pay both.

The redirection binds the customer without any consent from the customer, which is why collectors prize the notice and why its defects matter more than its letterhead. A notice that misnames the assignee, omits the direction to pay, or arrives unsigned redirects nothing, and the customer who keeps paying you under a defective notice still discharges the obligation.

The discipline here is documentary; rhetoric decides nothing. Counsel tests the paper against each subsection in turn, and the paper either passes or it does not.

3. The Notice Must Identify the Rights Assigned

A vague letter is ineffective to the extent it fails to identify what was assigned.

Notification fails where it leaves the rights assigned unclear, so invoice ranges, account names, and dates must let the customer match the demand to a real obligation. The customer matches the demand to an invoice before paying anyone.

4. Partial Payment Directions Remain Optional

A notice that tells the customer to split an installment sends an invitation, not a command.

At the customer option, notification is ineffective to the extent it directs less than the full amount of any installment or periodic payment to the assignee, even where only a portion was assigned or portions went to others, and the customer may not waive or vary that option in advance. The split payment demand works the way a usher rope works at a crowded counter: suggestive, orderly, and without force against anyone who declines to stand behind it.

Collectors who write as though the split binds misunderstand the subsection or hope the reader does.

5. Proof Follows a Request, Seasonably

The customer may demand reasonable proof of the assignment, and the assignee must furnish it within a reasonable time.

Unless the assignee complies, the customer may keep paying the original party even after receiving notice. The proof of assignment subsection of the same enactment thus converts every notice into a two step exchange, and the funder who cannot produce the chain has written a letter without legal effect. Demand the chain, in writing, with *dates*.

6. Contract Bans on Assignment Fail as Stated

Clauses that purport to forbid assignment of receivables are ineffective to that extent.

Terms between customer and seller that prohibit or restrict assignment, require customer consent, or declare default on account of the transfer do not block the creation, attachment, perfection, or enforcement of the interest, with a narrow inapplicability for sales of payment intangibles and stated lease provisions set apart. Your contracts cannot prevent what the statute permits, though they can still govern the commercial relationship around it.

7. Individuals, Health Receivables, and Controllable Accounts Sit Outside

The statute is, to be exact, a commercial rule with consumer edges, with no claim to universality.

Account debtors who are individuals with obligations incurred for personal, family, or household purposes remain subject to other law that may establish a different rule. Health care insurance receivables face their own conflict and written agreement limits, while injury compensation claims and special needs trust benefits stand apart, and controllable accounts and controllable payment intangibles fall outside several subsections entirely. I am less certain than this paragraph sounds about how any court will classify a mixed purpose obligation on disputed facts.

8. Leases Follow a Narrower Section, and Liens Survive Sale

Leasehold interests answer to a companion provision of limited scope, while sold collateral carries its lien to the buyer.

The companion section on leasehold restrictions addresses lessor and residual interests, not general account assignments, so collectors who cite it for receivables overread it. A security interest, with stated exceptions, continues in collateral despite disposition and attaches to identifiable proceeds unless the secured party authorized a free and clear transfer, as the enactment on lien survival in sold collateral provides, which is why one enforcement record showed a daily sweep of pledged accounts with bank statements due by the 18th, mechanics the agreement set, with the notice silent on operations.

Questions Counsel Resolves First

You tell the customer to keep paying you until counsel has read the notice. That instruction holds the line while verification runs.

Commercial collection stands outside consumer validation and cease contact rights, as the federal explainer on collector limits confirms for business debts, so the defense runs on the assignment statute and the contracts, with consumer procedure left aside. The notice shifts *where* the money goes, not whether it is owed, and the balance itself still wants independent proof.

The Delancey Street description of its confidential review process offers assessment of assignment notices and stacked obligations through a settlement company rather than a law firm, with independently licensed counsel engaged where the matter requires legal work. We ensure each notice is tested before any customer is redirected. Consultation is where that testing begins.