GREEN: Ability to Collect in these States
KNOW THE RISKS – USING AN UNLICENSED AGENCY HAS CONSEQUENCES
For the average company, a $10,000 uncollected invoice means that roughly an additional $100,000 in sales must be created to make up for this lost revenue.
Getting paid can be especially problematic for businesses that depend on consistent cash flow. With every dollar counting in these turbulent financial times, businesses often need the help of a collection agency to get their seriously past due customers to pay.
Unfortunately, the odds are against you if you’re giving these debtors an easy out of paying when placing them with an unlicensed collection agency. When searching for a debt collection agency, using a fully licensed collection agency is critical.
The Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect debt, was created so that the Federal Government could regulate the actions of “consumer” collection agencies.
While it’s costly for an agency to be legally compliant, the consequences to your company of using an unlicensed agency are numerous.
- Your customer can use a lack of licensing to avoid paying.
- Unlicensed agencies cannot be as aggressive when collecting your accounts for fear of being reported to state regulators.
- Unlicensed activity by a collection agency is open it to devastating law suits filed by either the state or the consumer.
- Your customer can file complaints with the Attorney General in your state and theirs, the Better Business Bureau, and also the owners and officers of your company if the agency you hired is not licensed in their state.
A licensed agency is up to date with all laws, regulations and licensing requirements, which often include bonds to protect the creditor. After all, having an agency collect your money is only half the battle; collecting your money from the agency is the other half. It’s better to be safe than sorry.
While agencies that collect debts from consumers without a license face severe penalties and legal issues, these negative ramifications could affect your professional reputation and hurt your bottom line.
Is hiring an unlicensed collection agency really worth the risk?