The Questions to Ask When Evaluating A Collection Agency
“Kicking the tires” is an old saying that nobody really knows the origins of, but it is meant to convey an image of evaluating a car’s tires when considering whether or not to purchase the automobile to which those tires were attached. The usage has expanded through the years to now represent the process through which any decision is evaluated and analyzed. It’s meant to indicate that someone is doing his or her due diligence before moving forward with a purchase. Kicking the tires just sounds a lot better, doesn’t it? When considering whether to place accounts with a collection agency, you should make sure to kick its tires to see that it meets your standards and will represent you to your customers in a professional and courteous fashion. Since collection agencies don’t normally come with tires that can be kicked, here are some questions that should be asked during the due diligence process.
Will it report the unpaid debts to a credit reporting agency? This can be an effective collections strategy, but comes with more compliance and legal risks than not reporting.
Is the agency legit? Does it have the proper licenses in order to operate? Nearly three dozen states now require collection agencies to have licenses in order to collect from residents of those states. Does the agency you are reviewing have the proper licenses?
Do people like to complain about the agency? Check the Consumer Financial Protection Bureau’s complaint database, the Better Business Bureau, and your state’s Attorney General’s office. A lot of complaints may be a sign to look elsewhere. And ask the agency how proactive it is with complaints. Many agencies give consumers the chance to complain directly to them, so they can solve the problem before it becomes a bigger one. To that end, does the agency get sued a lot? Has it ever been the subject of an enforcement action?
What types of debt does the agency have experience collecting? You don’t go to a pharmacy to buy your meat, so don’t go to a collection agency that specializes in telecom collections if you are looking to place your healthcare accounts with them.
How will the collection agency attempt to collect your debt? Does it file lawsuits? Does it offer settlements and payment plans? What are you comfortable with?
How well-trained and experienced are the collectors? The more the experience, the more stable the company. Will the company share its training and continuing education process with you? There are a lot more questions that should be asked, but this should give you an idea of the types of information you should be seeking when kicking the tires of a collection agency.