Mar 19, 2013 Philip Burgess
The debt collection industry continues to expand at a rapid pace, as businesses and individuals hold a large volume of outstanding loans and credit resulting from the economic downturn a few years ago. Because of the high number of organizations in the sector, debt collections have come under increasingly damaging scrutiny in recent years.
For example, the recent Federal Trade Commission report regarding the most complained-about topics in the United States last year revealed that debt collection was the second most prevalent source of issues. However, many advocates in the industry have challenged this notion that the sector is broken or abusive by nature, as it is also a crucial component of business health.
Debt collection agencies should ensure that their internal practices are aligned with the statutes under the Fair Debt Collection Practices Act, as well as industry-recognized best practices. The latter is especially important when approaching new technologies and methods of reaching debtors, such as email and social media.
ACA International, or the Association of Collection and Credit Professionals, recently released a statement regarding the strength of the debt collection industry when facing consumer complaints. According to the non-profit advocacy organization, a 2012 Better Business Bureau report revealed that collection agencies in the United States resolved 86 percent of all complaints last year.
The firm explained that this was substantially higher than the average rate achieved by all other industries - 77 percent - last year. The BBB report logged 1.5 million inquiries regarding debt collection agencies in 2012, while 24,500, or 1.6 percent, were considered complaints. This federal agency also logged more consumer complaints in 2012 than 2011, with 950,000 and 895,000, respectively.
However, certain industries have been more successful and consistent in resolving consumer complaints than others, and the debt collection sector has shined brightly in the past decade.
"While the goal is to avoid complaints, this year's rate of resolution tops 2011's 83 percent showing how serious debt collectors take consumer complaints and how committed they are at working with consumers to find solutions," explained ACA International CEO Pat Morris. "Since 2002, collection agencies have consistently been above the national average in resolving more than 80 percent of the consumer complaints filed with the BBB."
ACA International added that it provides services to federal and state regulators to ensure that new legislation is in line with best practices and market trends, while educating debt collection agencies in standing laws and compliance requirements.
"We will continue to provide educational resources to help our members, and their employees, prevent, manage and resolve consumer complaints," Morris added. "It's imperative that consumers not avoid debt collectors because, in many cases, the matter at hand can be effectively resolved through communication with the collector making contact."
Finally, the organization asserted that the debt collection sector is crucial to the national economy, as agencies recover outstanding loans to ensure a speedy return on monies owed to businesses.
InsideARM recently reported that more than half of all debt collection complaints logged in the Federal Trade Commission's Consumer Sentinel Network Book are not easy to verify. According to the news provider, officials in the FTC and Consumer Financial Protection Bureau are working to establish a set of processes related to the fielding and resolution of complaints similar to that of the BBB.
Currently, a high percentage of the complaints made cannot be verified through the processes the FTC uses, and as such it is difficult to measure real issues against fraudulent ones.
By maintaining strong internal policies and following the guidelines of the FDCPA, debt collection agencies can break the stigma associated with the industry and ensure the strongest customer relations.