If you’re considering partnering with a debt collection agency to recover your revenue from a delinquent account, then do your research. While most agencies are honorable businesses, some use improper methods to intimidate people. Most of the following tactics have been deemed illegal by the Federal Trade Commission’s Fair Debt Collection Practices Act (FDCPA) and are frowned upon by ethical commercial collection agencies:
1. Violent Threats
Unethical debt collectors may threaten a customer with bodily harm to get paid, while a minority of them have even been known to carry out physical violence.
A debt collector isn’t allowed to swear at your customer. This doesn’t stop the shady ones from using this intimidation tactic to shame people.
An unethical collector may pretend to be a law enforcement officer or lawyer to intimidate delinquent customers into getting paid. Others may lie about the scope of what’s owed to create pressure. These tactics are illegal.
4. Sleep Deprivation
According to the FDCPA, a debtor may only be called between 8 a.m. and 9 p.m. for collection purposes. Unscrupulous collectors ignore this rule and target people through all hours of the night in the hopes that customers will pay to avoid sleep deprivation.
5. Unethical Pressure Tactics
Debt collectors may visit a customer’s last known address or place of employment for legitimate reasons. However, some unethical ones will contact a nonpayer’s friends, family, and employer to unfairly pressure the person.
Such agencies can get sued by the customer and banned by the FTC. What’s more, partnering with them can hurt your reputation. This is an age where a single negative Yelp review can damage a business. Your establishment could face a PR battle if it’s associated with the harassment of customers.
However, it’s your right to pursue payment from a nonpayer. Click here to learn about an experienced, professional, and reputable commercial collection agency that can recover your revenue without damaging your reputation.
Here are a few ways an ethical commercial collection agency can recover revenue from a delinquent account:
1. Demand Letters
Your customer may ignore your emails, phone calls, and letters. However, many people pay their dues at the first sign of a demand letter from an official debt collection agency to avoid escalation.
2. Credit Bureau Reporting
Your in-house collection department may not have the ability to report someone to a credit agency. However, a licensed agency can report a delinquent customer to the three major credit bureaus provided that they meet the Fair Credit Reporting Act (FCRA) compliance. This is a powerful tool because most people value their credit reports. Even stubborn customers will pay their debts when they realize that their credit score is on the line.
3. Legal Action
An ethical commercial collection agency will try everything in its power to recover payments. But, if a debtor still refuses to pay their dues, the agency may pursue legal action. Usually, this option is considered the last resort due to the time and resources required.
These tools give good debt collection agencies better recovery rates than the minority of unethical ones. That’s why it’s in your business’s best interests to partner with an ethical collection agency.