Credit Policy for businesses and how to extend credit and manage credit risk

Questionable Collection Ethics Back In The News

There's been a lot of bad press lately pertaining to the ethics of debt collectors. As the owner of a collection agency, I'd like to take this opportunity to respond to such allegations. As a general rule, businesses contract with collection agencies in an effort to resolve recovery issues due to extended lines of credit that have failed to be honored.

When not pursued diligently, past due accounts are among the leading contributors to serious cash flow issues that prevent businesses from paying their own bills, or forcing them to go out of business altogether. Businesses depend on earned revenue to thrive, it's essential to the life of the business.

As a business owner, I understand the urgency of recovering past due revenue. As a collector, it is imperative that we abide by the Fair Debt Collection Practices Act (FDCPA) standards. The role of a collector is to fulfill our obligation to the creditor and assist them in recovering earned revenue.

It is my opinion that collectors also have an obligation to the debtor to assist them in resolving issues they face with their creditors. In all fairness, most debtors do not intentionally dishonor their financial commitments. Debtors are entitled to be treated with respect as opposed to being treated as second class citizens, unfortunately, this isn't always the case.

Debtors have the opportunity to register a complaint with the Federal Trade Commission (FTC) if they feel their rights have been violated. For more information on the Federal Trade Commission go to http://www.ftc.gov.

Any business, or individual may stop a debt collector from making contact with them by submitting their request in writing. Once a collection agency receives such a request, they must cease all communication with the debtor, except to acknowledge the request and ensure there will be no further contact, or to notify the debtor that the original creditor intends to take legal action. Please understand however, that making such a request does not make the debt go away if the debt is indeed valid. The original creditor still has the option to sue the debtor for the balance due.

If a business contracts with a collections agency to pursue collections, their customers have rights mandated by the FDCPA. The FDCPA requires that all 3rd party debt collectors treat debtors fairly, and prohibits certain methods of debt collection. FDCPA rules and regulations do not apply to creditors collecting their own debts.

There are precautionary measures a creditor may take to avoid the need for third party intervention. As in all aspects of business, it is important that accounts are regularly monitored and updated. At the first signs of delinquency, the accounts receivable department should make contact with the account to discuss payment issues. The longer accounts are allowed to fall behind, the longer it will take to resolve the issue and bring the account current.

In the event a business, or individual anticipates being late with a payment, they too may avoid having their account placed with a collection agency. In such cases, the debtor should contact the creditor and discuss alternate payment arrangements. Contacting the creditor displays good faith, and alleviates any concerns the account will default on payment commitments, thus the creditor will likely be more willing to work out an alternate plan to bring the account current in the most timely manner possible.

Communication is the key to conquering uncountable obstacles. In the collections industry the word "communication" may very well be the single most important function in our job description.

Donna Vestre
South Coast Revenue

Where do you go if you want to sue a collection agency that has violated the Fair Debt Collection Practices Act (FDCPA) standards? By means of harrassements, threats, and other wild maners. Please help?

Where do you go if you want to sue a collection agency that has violated the Fair Debt Collection Practices Act (FDCPA) standards? By means of harrassements, threats, and other wild maners. Please help?

My email is denalo@hotmail.com

If you want to sue a debt collector, you will need to hire an attorney. Check in your phone book or online for a lawyer who specializes in this type of lawsuit and also check with consumer credit counselors in your area. If you want to file a complaint against a collection agency visit the FTC (Federal Trade Commission Bureau of Consumer Protection) https://rn.ftc.gov/pls/dod/wsolcq$.startup?Z_ORG_CODE=PU01 online and you can submit a complaint electronically. You can also call the Better Business Burea and your Attorney Generals Office. You can also file a complaint by calling toll-free: 1-877-FTC-HELP

I was in shock after watching this report. If these people worked for my collection department, I would immediately fire them. No one should ever be subjected to such harrassment and any respectable collection firm would not allow such behavior.

Adam,
I totally agree! This is what some collectors and business owners do when they want to get paid, they have one goal in mind, getting paid and they don't care how they get paid. They have definately given debt collection a very bad name and the general public sees these few and far between instances and think EVERY bill collector uses those tacticts. It is to bad the press doesn't tell both sides of the story.

As usual, the media hypes up this style of bad news to its maximum and totally leaves behind in the dust how 98% of the industry operates fully within the law and strict debtor harassment guidelines. Brian Ross and his colleques should fully expose the identity of those individuals and the companies that they represent as they totally deserve to be run out of the business. He and his peers should also talk to the collectors who fully abide by the law, and who fully appreciate the importance of communication and reasonable discussion with past due debtors.

These collectors and the companies that they represent are fine representatives of how good and important that the collection industry is and the service that it does for the business community.
In Australia, we have very strict guidelines within Privacy and Debtor Harassment legislation that have to be contantly re-visited to ensure that all our industry participants are vigilent and aware of the importance of compliance.

Training is a vital component of this mix and without a focus of delivering such training, cracks do appear and abuses do occur. the Institute of Mercantile Agents in Australia fully endorses this important training and insists on its members abiding by a rigid Code Of Ethics.

Greed, in the form of collector commissions that push collectors to the edge in taking risks can only be controlled by a committment to ongoing training and compliance programs. I for one do not like commissions, but I am in a minority. Thus, industry participants in Australia and elsewhere must contantly be on guard against complacency.

So, be diligent and keep guard as otherwise, Ross and his media peers in all all areas of our fine industry will be waiting for that sensational story again and again, What can i say? if you leave yourself open to attack, then you surely deserve it..

Mike Howard
Bridgement Smith Collections, Brisbane Australia. President IMA Queensland Division.