Jul 25, 2013 Philip Burgess
The federal government has become especially interested in the identification and eradication of either fraudulent or abusive debt collection agencies in recent years, especially as such a high number of complaints have come in from businesses and consumers. Many of the most high profile cases related to shoddy debt collection practices can give good agencies a better idea of what to avoid, and which aspects to capitalize on in the process.
Law enforcement officials and regulators have vowed to aggressively investigate collectors that do not comply with standing legislation. Debt collection agencies should consider taking their practices a step beyond simple compliance, though, and working to achieve exceptional customer service for better profit margins and increased client loyalty.
FTC's latest fine
USA Today recently reported that the U.S. Federal Trade Commission has fined one of the world's largest debt collection agencies a high dollar amount for simple violations of standing laws. According to the news provider, the agency allegedly tried to contact businesses and consumers multiple times each day at their workplaces and other areas.
While it might seem like a less-powerful violation of the Fair Debt Collection Practices Act, this can be considered and often is viewed as an abusive practice within the sector. And, to illustrate how dangerous this type of behavior is, the source added that the FTC fined the agency $3.2 million for these allegedly shoddy and illegal practices, which is enough to put many firms out of business.
USA Today noted some of the finer points of the FDCPA that directly relate to the communications that collection agencies are allowed to partake in with debtors. For example, agencies cannot make any false claims during conversations about the debt or the actions that might be taken, call consumers' workplace, harass the debtor or contact third parties regarding the account.
Additionally, the news provider stated that collectors must record three-quarters of all communications with each debtor starting one year after the account's opening date, and should always stop trying to communicate with the party if they have requested such action.
The source added that the FTC has fined collection agencies in roughly 15 pursuits in the past three years, and has obtained more than $52 million from the judgments in that time period.
Being a leader commands progressive policies
Debt collection agencies that want to take the next step toward more successful operations and financial performances need to hone in on practices that are both legal and exceptional in the eyes of the consumer or business. The Star Press recently reported that while harassment is illegal during the collection process, agencies do not necessarily need to be cordial or nice to the debtors.
However, this type of approach will only further intensify the stigma facing the industry, and drive debtors away from ever wanting to communicate with agencies. Implementing policies that push employees to build strong relationships with debtors and communicate in a cordial fashion can boost profits. Should these types of practices become more widespread in the sector, agencies might begin to experience fewer difficulties when reaching out to debtors.