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Delta Recovery Systems
Newsletter
February 2006 - Vol 1, Issue 1
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How much do you know about YOUR collection Agency? We'll suggest a way to avoid fraud.
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I don’t think it’s a big secret that there are as many “bad apples” in the collection industry as there are in any other industry. The “bad guys” are going to appear to be as honest as the next guy. They’ll visit your office. They will negotiate an agreement by which you will place accounts with them for collection. The collection agency will contact you debtors just as you would expect them to do. The actual FRAUD occurs after they collect your money. They simply do not send the money to their client!

You won’t even suspect that you have been defrauded until, in most cases, it’s too late. The only way you will find out that something is wrong is if the debtor tries to place an order and tells you that they paid the past due balance, or somehow you find out on your own. You will of course immediately get on the phone and contact your agency. Sometimes the debtor could be lying and just trying to get you to release another order. Other times you may find out that your agency has “disappeared”. The agency may of course still be in business and hand you some lame “clerical error” excuse and immediately send your money to you. When that happens, I would suggest that you check other accounts that the “excuse” agency has closed as uncollectible in the past. There are as many excuses as you can imagine, all suspicious. In most case, especially in larger companies, the credit managers will probably never even know that the rogue agency has collected their money and they were duped.

There is a way to prevent this from happening to you. You should seriously consider doing business only with Certified agencies, agencies that are members of well-known and established collection agency Associations. This will assure you that the agency is experienced, licensed, bonded, and deposits customer payments into a separate Trust account. Many of the better commercial collection agencies belong to either the International Association of Commercial Collectors or the Commercial Collection Agency Association, a section of the Commercial Law League of America.

Collection Effectiveness Index Collections Effective Index (CEI) is a metric many organizations are looking at to evaluate the effectiveness of their receivable management process. Here is a link to an on line calculator. Give it a try!

I'm going to answer this as if speaking to those of you who sell strictly business to business. As an "original" creditor, you are considered a "first party" in the transaction. Therefore the quick answer to your question would be that the F.D.C.P.A. does not affect you. The intent of the Fair Debt Collection Practices Act [the FDCPA] is to make sure that third party debt collectors use acceptable techniques when attempting to collect a debt from a consumer. The type of behavior that is prohibited by "The Act" are simple common sense things to avoid such as threatening a debtor with physical violence, or threatening the debtor with jail for failing to pay the debt owed Of course these are just two examples. Delta Recovery is almost exclusively commercial (B2B) collection. We follow the F.D.C.P.A. guidelines. You cannot go wrong by assuming and acting as though your company and your collectors are subject to the provisions of the FDCPA. It's simply a matter of respect.

With all the sadness and trauma going on in the world at the moment, it is worth reflecting on the death of a very important person, which almost went unnoticed last week. Larry LaPrise, the man that wrote "The Hokey Pokey" died peacefully at age of 93. The most traumatic part for his family was getting him into the coffin. They put his left leg in. And then the trouble started ......

C'mon, You know it's funny. Now send it on to someone else and make them smile

 

Sincerely,

 


David Ward
Delta Recovery Systems

phone: 908-876-9200