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Standards for picking a good collection agency

by: Jeffery Hartman

· Debt Collection,ARM Industry

In recent years, a lot of public attention has been drawn to collection agencies which were heavily violating the law through various means. Problems persist within many agencies along the lines of bad actors popping up to work paper time and again under different agency names, and debt buyers and others who place debt with them are looking more at contingency rates and short-term profitability rather than high standards which promise more long-term success. Below are several suggestions for finding a good collection agency to work your portfolios.

1. Licensed and bonded. A collection agency needs to be licensed to collect in the states your debtors reside – at one point in the not-too-distant past, licensure was less of an issue but is becoming more and more critical to success. Also, any agency MUST be bonded. ALWAYS request and review the bonding paperwork, and contact the bonding company to ensure compliance. Any small business – particularly one which deals with so much paper and so much liability – needs to be bonded. An agency without insurance is immediately suspect.


2. Check their reputation online. A few complaints are likely – and a good agency is going to rile a few feathers here and there – but a habitual practice of noncompliance with laws and regulations is unacceptable and could put the debt owner in a compromising position.


3. Ask for references, and check the references. We are seeing too many collection groups who do not comply pop up after being shut down or run out of business, with debt owners continuing to hire them – which means they are not checking their references. If necessary, check the references of the references if they are not anyone you recognize.


4. Examine how long they have been in business. A short period does not necessarily mean incompetence, but a longstanding company that has survived a few hits may mean a good company with which to place your paper. If you find someone who has been running different collection agencies, find out why they were not staying with just one.


5. Get recommendations from people you trust. Rather than blindly seeking an agency or going with a cold call, check with other debt buyers as to what agencies they trust and have had success with.

In addendum, there are a few other notes that individual debt buyers may look into:

1. Call out bad agencies and bad agency owners on social media and elsewhere. With internet searches being the main tool to check reputation, bad reviews from dissatisfied buyers on review sites and social media would aid greatly in helping clean up the marketplace. We have seen this work in a few instances, where some violators have had to give false names instead because their reputation was otherwise ruined due to their violating behavior.


2. Promote good agencies in the same manner. Agencies which are successful, compliant and remit on time should be rewarded with positive reviews.


3. Give little room for error to new agencies. It is not a bad thing necessarily to give a new agency a chance, but be upfront with the understanding of expectations and follow through when they are not met quickly.

If debt buyers across the board cooperate in keeping bad agencies in line – and letting new and current agencies know what is expected of them – will go a long way to cleaning the industry of the obvious bad behavior and scams which pop up from time to time. Many legal issues we deal with come from governmental and public pushback against the extreme behavior of a few bad actors. The debt industry needs to weed them out before they become problems in a larger arena.

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