Not all collection agencies are created equal. Before choosing a commercial collections agency, please review the benchmarking checklist below. This list is also a great tool when performing your annual review of your current agency.
1. Meets all states’ licensing requirements.
It is imperative that the agency you choose carry a license in all states required and that those licenses are current. This requires a close relationship with each state and many necessitate testing in the certification process and participation in annual audits.
Many agencies claim to be licensed, but you should ask for written proof or contact the individual state to validate the certification claim. The cost of maintaining certifications will often prevent agencies from going through the process. Doing business with an agency that is not properly licensed exposes you to unnecessary risk.
2. Certified by the CLLA and/or IACC.
An agency certified by the Commercial Law League of America (CLLA) will provide you with the bond coverage, oversight and dispute resolution services that most credit grantors desire.
If an agency is certified by the International Association of Commercial Collectors (IACC), you can be assured that their collectors are in compliance with state laws and regulations. Collectors and managers must individually pass examinations and participate in continuing education and training. Membership indicates professionalism and demonstrates that the agency adheres to a strict code of conduct.
3. PCI DSS Compliant
It’s important the agency you are working with is in compliance with the PCI Data Security Standard (PCI DSS) to keep your customer’s payment card data secure. PCI DSS compliant organizations adhere to a framework of specifications, tools, measurements and support resources to ensure the safe handling of cardholder information at every step. An agency that is PCI DSS compliant is committed to the highest identity and security standards, which protects you and your customers.
4. SSAE 16 Type II Audit and Certification.
The SSAE 16 audit examines an agency’s controls, processes policies, procedures, personnel and operational activities. If the agency or provider meets the quality, security, confidentiality, compliance and safety-related requirements, it will receive the American Institute of Certified Public Accountants’ Statement on Standards for Attestation Engagements (SSAE) 16. This certification distinguishes an agency within the collections industry and represents a significant achievement.
5. Ability to collect international debt.
When choosing an agency, it is wise to choose one that has the global reach to collect in all 50 states and abroad. Understanding the laws governing collections around the globe requires expertise and an international presence. An agency with a physical presence in the countries in which you do business is an added incentive.
6. Professionally insured.
An agency should maintain a minimum of $1 million in professional liability insurance. Altus carries $3 million as an additional safeguard for its clients. If your agency does not have liability insurance and they do something wrong, it is possible your debtor could sue you for damages.
7. Proper bonding.
An agency should maintain a minimum security bond of $300,000 for the protection of the creditors it serves. Ask the agency to provide proof of bonding prior to agreeing to do business with them.
8. Verifiable references.
A prospective agency should provide an extensive list of references. Always contact the references and ask direct questions about the agency’s successes, failures, reporting, payment remittance, professionalism and responsiveness to inquiries from the creditor. Altus considers a recommendation from a satisfied client as one of the highest professional achievements possible.
9. Adheres to the FDCPA polices.
The agency should follow the guidelines of the Fair Debt Collection Practices Act as well as all other applicable federal and state regulations. The FDCPA was enacted to protect consumers from unscrupulous consumer collection agencies and the requirements are set forth as it applies to consumer collections. Commercial Collection Agencies should follow the basic guidelines but are not required to follow the rules for consumer collections in collecting commercial debt. Knowledge and understanding of the differences, as well as a commitment to maintaining the highest ethical behavior in the collection process, is critical.
10. Remits more than once a month.
Remittance practices can vary greatly, so it is essential to understand the procedures for the prospective agency. Choose an agency that will remit based on when funds are actually received from debtors. The agency should maintain separate trust funds and those funds should not be intermingled with operational funds.
11. Relevant experience and tenure.
Choosing an agency that specializes in commercial collections and has a proven track record of at least five years is an important step in the selection process. Experienced agencies are often more successful in recovering your past due funds.
Don’t take risks with your business
Working with an agency that cannot meet these basic requirements exposes companies to great risk. Managers that fail to properly vet their collection agencies can expose their companies to litigation and compromise sensitive and private data. Exercising due diligence is imperative when engaging the services of a collection agency.
As always, Altus stands readyto assist you in the selection process. If you need help navigating through all of the considerations involved with choosing a collection agency, contact us.
To help you compare, we’ve created a checklist to help you compare agencies and choose the one that is right for you.