Debt Recovery Agencies in Trouble With the Law
Debt recovery agencies are supposed to help their clients recover the money that they’re owed. Sometimes this happens as a first party practice. This means that the company acts as an extension of the company. Other times, they are third party collectors. They might buy the debt from the creditor or they might just take a percentage of what is recovered. Regardless of the type of debt collection efforts, debt recovery agencies are supposed to comply with the law.
If you’re researching debt recovery agencies, it’s important that you double check their references and look for any instance of being punished by the government for noncompliance with the Fair Debt Collections Practices Act. In today’s Client’s A.R.M. blog, we are going to tell you some of the recent horror stories found in the news and how it could harm your business.
Illegal Debt Recovery Agencies
Recently, CNN Money reported on how the Federal Trade Commission is cracking down on illegal debt recovery agencies. The FTC, in addition with other government agencies, govern how debt recovery agencies can collect. Part of that includes being properly licensed. It also includes illegal operations such as abusive behavior toward debtors. Then, there are the illegal debt recovery agencies that are actually frauds. They call people and claim that they’re in debt and try to get people to provide their bank account information.
In relation to your business, a debt recovery agency that abuses or harasses debtors can get you in trouble. If they’re working on your behalf as a first party collector, you could find yourself with a civil suit on your hands. Make sure that the debt collectors you choose understand and obey the required laws that involve collections.
To see a list of some of the illegal debt recovery agencies that the government cracked down on during Operation Collection Protection, click here.
JP Morgan Chase’s High Dollar Judgment…Against Them
Think you’re safe if you decide to handle your own collections instead of hiring a debt recovery agency? Think again. JP Morgan Chase will have to pay more than $100 million in California because of their debt collection practices. They were trying to collect on debts that were incorrect and also on “zombie debts” that had been previously discharged in bankruptcy.
So, how could this affect your business? If your company continues to call people that say they don’t owe a debt, and doesn’t follow up with the right methods to verify, you could get hit with a lawsuit. As a creditor, it is your responsibility to prove that someone does, indeed, owe you money.
Protect Your Business
You can protect your business by thoroughly researching debt recovery agencies. Find out about their methods. Ask how they follow-up. Make sure that you can provide documentation of debt.
Client’s A.R.M. is currently providing free process reviews for all service based businesses that are researching debt recovery agencies. We will walk through your processes with you from start to finish and help you develop a game plan to collect on past due accounts. We are a licensed debt recovery agency in multiple states. Put our old fashioned customer service and innovative collection methods to the test. Book your free process review now.