In a recent article on accountsrecovery.net, it was revealed that many states' attorneys general are looking positively toward the DBA certification process for debt buyers. While both government and the industry, in general, is favorable for the certification process, good businesses will be unable to participate in the debt buyers market because they cannot qualify not because of standards, or security, or reputation – but because of cost issues with the DBA certification process.
As it stands, certification and oversight within the bounds of the DBA are both cost and time-prohibitive. Many smaller debt buyers simply cannot afford the time nor the expense to seek out DBA certification. They may be able to meet easily many of the standards the DBA has set up – which are good standards – but it is far too cumbersome to attach the DBA-approved label to their business. Small businesses already have large costs to start up – equipment, personnel, license and bonding, etc. - and the extra burden of a certification stamp comes a distant second to all the other necessities of doing business.
The certification is favorable toward the companies which drive the current market – large corporations which have direct, no-resale deals with originators – and the process is limiting the market and the recovery potential of the outstanding debt. State-specific buyers have practically gone away, and most available portfolios have been traded multiple times, increasing the problem at hand within the debt buyer market.
If the DBA were truly concerned about smaller debt buyers operating under established industry guidelines, they would provide an inexpensive path for members to be able to obtain certification. It is even possible that some parts of the certification process – as well as membership within the DBA to some degree – could be far less expensive, if not free. If the DBA and the debt buying and collection community as a whole were genuinely concerned about companies following the rules and being certified, then it would seek to make sure any certification process was as inexpensive and easy as possible for good companies to obtain. I suggest a open online "debt buying 101" library with basic courses on ethics and standard due diligence. The more advance courses can have a minimal cost to further the goal of becoming completely DBA certified.
The DBA also needs to consider its role in exacerbating the problem which we are now experiencing. Failure of foresight to understand the need for the debt buying industry to truly regulate itself is a result of the DBA's negligence, and the group needs to look forward and rebuild the industry it claims to represent.
A good certification program with a “Certified” seal can only help any business that acquires it and supports the debt purchasing market as a whole be more productive and lucrative, as well as increase a poor reputation. However, the limitations of the excessive cost will restrict the ability of companies that want to play by the rules to be competitive in a market that has shown productivity in the past and is still so badly needed.
Conclusion: At the end of the day, this is a good thing for consumers and bad for debt buyers. Debt buyers will have to spend more money on certification fees in order to compete with other companies that already hold DBA certifications. If you are looking into becoming a debt buyer or need help sorting through your options as an existing business, contact us today! We can help get you started down the right path by helping you find out what type of DBA certificate might be best suited for your company's needs and goals. With so many states' attorneys general approving these new standards, it's time to buckle up and start preparing yourself (or updating) if necessary!