The ABC’s of Collections It’s your money…just ask for it! (But follow the law) BUS 204 Credit & Collections Spring 2006, sjh Three Easy Steps to In- House Collection Have a Written Credit Policy Know Your Responsibility as a Collector Customize and implement an effective collection system The end result is increased cash flow AND customer retention! Choose your Methods If you are charging a finance charge on the unpaid balance notification should be printed on your invoice/or statement Cash Check Money Order/ Cashiers Check C.O.D Credit-card Terms (in-house credit) Unfair Practices  You MAY Not add any fees unless agreed upon from the beginning of the debt  You may accept a post date check up to five days in advance (if longer, you must notify the debtor3-10 days before cashing the check)  You may not initiate collect calls or telegram fees Fair Debt Collection Practices Act  Know your rights and the consumer’s rights  The Act is intended to prohibit abusive practices by debt collectors  The Act has specific details regarding communications with the consumer and what is considered harassment www.ftc.gov www.lawdog.com Fair Debt Collection Practices Act Prohibited Practices: • Early morning or late night calls] • Failure to cease communication upon request • Causing a telephone to ring continuously • Communicating with consumers at their place of employment Fair Debt Collection Practices Act Prohibited Practices: • Contacting consumer known to be represented by an attorney[6] • Communicating with consumer after request for validation • Misrepresentation or deceit • Publishing the consumer's name or address Fair Debt Collection Practices Act Prohibited Practices: • Seeking unjustified amounts • Threatening arrest or legal action • Abusive language • Communication with third parties • Contact by embarrassing media • Reporting false information on a consumer’s credit report Fair Debt Collection Practices Act Required Conduct: • Identify themselves and notify the consumer • Give the name and address of the original creditor • Notify the consumer of their right to dispute the debt • Provide verification of the debt • File a lawsuit in the proper venue When Collecting Your Money Follow the Four P’s I be Professional II Patient (it is a virtue, after all!) III Polite and courteous IV Persistent (within the law) When & Why to Use a Collection Agency?  Collection agencies know the laws and methods  They normally will take 50% of the total collected  You don’t have to be the “bad guy”  Statistically at months past due you will lose 65 cents on the dollar  It often makes sense and cents  ... notify the consumer • Give the name and address of the original creditor • Notify the consumer of their right to dispute the debt • Provide verification of the debt • File a lawsuit in the proper... before cashing the check)  You may not initiate collect calls or telegram fees Fair Debt Collection Practices Act  Know your rights and the consumer’s rights  The Act is intended to prohibit... Collecting Your Money Follow the Four P’s I be Professional II Patient (it is a virtue, after all!) III Polite and courteous IV Persistent (within the law) When & Why to Use a Collection Agency?  Collection