What’s the Number 1 Question to Ask When Seeking a Collection Agency?
“Are You Licensed?”
Licensing is critical when shopping for a Collection Agency. There are a number of reasons why this is true. Let’s start with the most important one:
It’s the law.
Laws were designed to eliminate abusive practices in the collecting of debt as well as to protect the money that the agency collects on your behalf. The laws ensure that agencies operate in a professional and ethical manner with both you and your customer.
While each state may have different laws, some requirements may include: registration and testing of agency personnel, audit of collection procedures and letters, agency bonds, and most importantly trust procedures and audits to make sure that your money is safe.
Your reputation is affected.
The Collection Agency you partner with becomes a reflection of your business. You operate your business professionally and honestly – You should expect your Collection Agency to do the same, conducting itself with respect and courtesy in the course of collecting on a debt on your behalf.
You may be liable.
Agencies that don’t adhere to the laws become a major liability to you and your business. If a legal issue should arise with your debtor, he or she can sue you both based on the actions of your Collection Agency. And without licensing, there’s no one making sure the agency ‘plays by the rules’.
Over 20 states require commercial collection agencies to be licensed to do business in their state. Surprisingly, very few agencies pay attention to these laws. To find out if an agency is licensed, ask for a copy of their state issued certificate. States with licensing requirements issue them to compliant companies, so producing it shouldn’t be a problem. If they are unable to do so, request that they TELL you the requirements for the state in which you are doing business. If the person on the other end of the line is stumped by that question, they probably aren’t in compliance and it’s time for you to move on.
Partnering with a licensed agency is one important way you can protect your business.