According to the Federal Reserve, consumer debt went past $4 trillion for the first time recently, with total credit card debt standing at over $1 trillion. And figures from Experian suggest that the average American owes $4,293 on their credit card.
Unfortunately, many Americans are behind on their payments. An Urban Institute study found that one in three Americans, which is nearly 80 million people, have accounts “in collections”. In this environment, it’s likely that your business will need to partner with a debt collection agency to recover revenue.
Certainly, you’re spoilt for choice. It’s estimated that there are thousands of debt collection agencies in the United States, with hundreds of thousands of employees. Many boast high recovery rates and offer attractive service plans. However, not every agency commits to ethical collection practices.
When shopping for a collection agency, there are many reasons why it’s vital to find one that has an ethical debt recovery philosophy:
1. It’s Good for Morale
A minority of collection agencies use shady tactics to pressure delinquent customers. They may threaten, harass or abuse a delinquent customer. Rarely, they may even resort to aggression. Others will visit a customer’s home, employer, friends, or family to pressure them.
Others still may resort to sleep deprivation by calling your customer in the middle of the night or by using robocalls. Being associated with such agencies is bad for your kismet and bad for your company’s morale. You don’t want your company’s name on the news or going viral for the wrong reasons. This can also hurt your standing in the business community. It’s easier to sleep at night when partnering with an ethical collection agency.
2. It’s Good for Business
Many people falsely assume that aggressive tactics that bend the rules are more effective at recovering revenue from debtors. On the contrary, it usually has the opposite effect. People who are abused by creditors grow more stubborn and refuse to pay.
Such agencies will return your account after a customer has failed to respond to their tactics. Unfortunately, this can worsen the situation. Data suggests that debt grows harder to recover with time. That’s why it’s important to partner with the right agency the first time.
Click here for more info about an experienced collection agency that uses ethical practices to its advantage. Although they treat customers with dignity, kindness, and respect, they boast a recovery rate that’s twice the national average. They do so by taking a respectful yet stern approach to revenue collection.
3. Some Collection Practices Are Illegal
Although most collectors operate on the right side of the law, enough have bent the rules for the Federal Trade Commission (FTC) to be forced into action. Dozens of agencies have been blacklisted and forced to pay penalties.
Debt collectors violating the Fair Debt Collection Practices Act (FDCPA) can also be sued by customers. Businesses that partner with such agencies have had their reputations damaged. Big law firms have been sued after being accused of violating federal law.
These are some of the reasons why it’s important to partner with an ethical collection agency. Remember, it’s your right to recover revenue from delinquent customers. By partnering with an ethical collection agency, you can do so effectively while preserving your customer’s dignity and your reputation.