The collection business is much more complicated than most people know, and it is getting more complex all the time. And that is not necessarily all bad! With government regulation often comes changes to the marketplace for that industry, and the Accounts Receivables Management (ARM) sector is currently undergoing significant scrutiny from government regulators, politicians, and consumer groups alike.
What does this mean at Southern, and what does this mean to our clients? In many cases, you won’t see any changes in the way we work for you. Our compliance policies and procedures and high ethical standards for respecting people do not need updated or changed because the federal Consumer Financial Protection Bureau (CFPB) has direct oversight of debt collectors.
An area you may see a difference is in the number of requests for documents we are sending out. One of the most difficult aspects of our job is, and has always been, trying to determine a true dispute from a stall. Someone might say, “I paid that last week to their office” and we would ask for proof of the payment. If they didn’t send it in, we might call your office and ask if you received a payment, and almost every time no payment had been made! It is now imperative that debt collectors side with consumers and verify their story, but also we are having to treat this stall tactic as a dispute and send out more documentation.
It doesn’t matter if you sent them 17 statements and tried to help them at every turn. The federal law requires debt collectors to “validate the debt” and the CFPB is indicating this extends well beyond what the courts have historically ruled. In order to be in compliance with our new federal regulator, we are simply requesting and mailing more documents to people who are simply trying to avoid paying their bills.
The good news in all this compliance is; there will be fewer debt collectors who may not have had the best ethical standards who are unable to contend with these rules. Consumers will have better collectors to deal with, creditors will have fewer choices in agencies but those agencies will have higher standards for compliance, and agencies like Southern will have competitors that simply don’t “underbid” business and then pay little or no attention to these important laws. Over the years, we have seen creditors choose to hire agencies and come to regret the “low rates” they were promised. One creditor wanted to hire us to collect their $27,000 the collection agency absconded with!
The debt collection business has always had a very low entry threshold to get into, so it was easy for players like these to get a phone, a computer, and sell creditors on their expertise. It is a great reminder to all creditors needing assistance with their collections to look at more than just the rate a company promises. As with most service companies, and as with most things in life, you get what you are willing to pay for!