Hiring a debt collection agency is a microcosm of making personal decisions. Sometimes there are too many choices complicating the selection process — like trying to decide what to order at a restaurant with a lengthy menu. Other times, there are several options of equal weight, making it difficult to choose which one to act upon — like trying to determine which bill to pay first. Taken to the extreme, the inability to make a decision after a long evaluation is sometimes called “analysis paralysis.”
Debt collection agencies come in all shapes and sizes, but best-in-class agencies offer a number of critical items providing clients with a favorable return on investment and sound brand protection. Consulting a shortlist of qualifying factors can simplify the screening process.
Organizations interested in hiring a debt collection agency for the first time or those looking to switch providers will appreciate the following checklist. Factors to consider include compliance and certification, data security and technology, affiliations and references, fees and results.
Compliance and Certification
As expected, debt collections is one of the most regulated industries in the nation. There are state laws to consider, but federal regulations carry the most weight in protecting consumers:
- Gramm Leach Bliley Act (GLBA)
- Health Insurance Portability and Accountability Act (HIPAA)
- Fair Debt Collection Practices Act (FDCPA)
- Fair Credit Reporting Act (FCRA)
- Telephone Consumer Protection Act (TCPA)
- Servicemembers Civil Relief Act (SCRA)
- Red Flags Rule — identity theft protection
Adherence with numbers 3 and 5 alone requires full-time compliance officers with the proper education, specialized training and certification. The FDCPA establishes the framework for “fair debt collecting” while the TCPA defines the ground rules for compliant collection calls.
The ACA International is the juggernaut organization for training, testing and certifying designated compliance professionals.
Data Security and Technology
Best-in-class debt collection agencies heavily invest in human and financial resources to maintain tight data security, both internally and externally.
Internal measures include closed-circuit security cameras as well as employee background checks and drug screenings. Furthermore, phone centers are restricted to only authorized personnel who have limitations on the type of personal items allowed in their possession (e.g. smart phones, cameras or recording devices).
On the external front, best-in-class agencies protect against data breaches with the Payment Card Industry 
Data Security Standard PCI DSS 3.2 (PCI DSS 3.2). These measures (adopted in April 2016) combat traditional vulnerabilities and new channels of exploitation while improving the procedures for implementing and maintaining security.
Agencies also comply with the Statement on Standards for Attestation Engagements (SSAE 16 SOC 2), a detailed system of financial auditing and reporting that focuses on a service organization’s control and availability of security systems as well as the safe processing, confidentiality and privacy of consumer data.
Debt collection agencies also employ industry-related technology such as:
- Advanced platforms that optimize business-rule automations by managing how and when to make effective, compliant contact with consumers
- Hosted dialer technologies
- Interactive voice response technology (IVR)
- Disaster recovery plans that ensure business activities continue without disruption or compromise
Affiliations and References
Best-in-class agencies also have strong connections to the business community. At the very least, they should belong to ACA International (Association of Credit and Collection Professionals), state and local financial services groups (e.g. California Association of Collectors), and the Better Business Bureau.
Before hiring a debt collection agency, organizations should request the names of existing clients that are more than satisfied with their return on investment and brand protection.
Debt Collection Fees
Agencies recover debt for their clients via flat-fee or contingency payment structures. With flat fee, clients pay a fixed rate for packages that include first- or third-party collection services utilizing a combination of strategy one (letter writing campaigns) and/or strategy two (phone calls).
With contingency based programs, clients only pay when agencies produce successful results. Current industry rates are 25 – 50 percent of the total amount of debt collected per account. See our article, “How Much Does a Debt Collection Agency Charge?”
Examine Results Before Hiring a Debt Collection Agency
Hiring a debt collection agency entails reviewing of all above factors in conjunction with a proven record of results. For example, best-in-class agencies should be able to demonstrate successful programs for other clients that have received excellent return on investment and the finest brand protection.
Clients should anticipate improved cash flow, better customer retention, and around-the-clock access to secure account information.
Optio Solutions fulfills all of the above criteria while its Consumer Surveys program provides even greater value to clients. Contact us today to discuss an individualized collections program for your organization.
