Collections. Do you or don’t you? As a dental practitioner, you went to school to do one thing and that is to take care of people. You provide them with a service that improves the quality of their life in one way or another. In turn they pay you for this service. In a perfect world, this all works out nicely and with little issue. However, if you have been in business for any period of time you know that it isn’t always so smooth – sometimes payment just doesn’t come easily. If you haven’t already experienced this problem, know that you will. It is inevitable. Continue reading
Traditionally, “customer service” meant paying more attention to the consumer. However, in some cases it may actually mean paying less attention – at least from a human to human perspective. A different form of service is increasingly being requested – self-service.
At one time, customer service representatives were the primary provider of information and consumers needed to contact them as a key source for that information. Now that same information is often just a click away. Additionally, a company representative was almost always needed to complete a transaction.
On July 28, our own Rodney Meeks, CEO of Credit Consulting Services, attended a Consumer Financial Protection Bureau (CFPB) debt collection field hearing in Sacramento in an effort to humanize the collection industry and put a face on companies like CCS. He talked about our employees, our relationships with our clients, and our involvement in the community, in an effort to enlighten the CFPB on the true nature of legitimate collection agencies. The CFPB is expected to release an outline of proposals under consideration for debt collection rulemaking.
After another successful year of studying (with a pinch of parties) at the University of San Diego, Credit Consulting Services welcomed its favorite intern back for another summer! My role at CCS this summer has been similar to last summer, but I have taken on additional tasks.
Last summer I was pumping out more blogs and working with the social media side of CCS. This summer I have continued working in marketing, and also helped implement the company’s Client Relationship Management (CRM) database. CRM allows CCS to identify and manage creditors who need help with their accounts receivable. As a social butterfly with a creative mindset I enjoy working with the marketing aspect. Unfortunately not all of my work is fun and games.
There is one particular task I find tedious yet eye-opening: consumer’s disputes on accounts. This is my first hands-on experience with disputes. Some consumer’s disputes are valid and the debt is not their responsibility. More often than not, though, consumer’s disputes are not valid and the consumer knows full well the debt is his/her responsibility. In my experience in the debt collection industry I have concluded that some people simply don’t want to pay their bills. For instance, I have come across consumers with various accounts that they dispute multiple times. A consumer with various accounts clearly has no desire to pay their bills.
I returned to CCS at the end of May, immersing myself into the not-so-wonderful world of e-OSCAR. E-OSCAR is a program developed as an online solution for processing Automated Credit Dispute Verifications (ACDVs). It helps CCS process disputes and also helps consumer’s dispute accounts.
Using e-OSCAR and our system in place at CCS, I verify that the information between the two is correct. Sounds exciting, right? Although it is less than riveting it is extremely important to CCS. If a dispute is ignored by the collection agency, the account is deleted from the consumer’s credit and the bill is never paid to the creditor. Agencies are also at a constant risk of lawsuit if they do not comply with the Fair Credit Reporting Act (FCRA). Just in the past year FCRA cases increased 22.7% according to ACA International.
Just how important is e-OSCAR? Well, I and another individual spend at least some, if not all, of our work day responding to these disputes. Between the two of us, we found that at least 95% of the disputes are unfounded. Even though nearly all disputes are erroneous, the FCRA requires ALL disputes be responded to within a 30 day window. If not responded to, the credit account will be deleted. Consumers hope a collection agency is neglectful so their account will fall through the cracks and be forgotten. At CCS, no dispute is ever forgotten! In fact, we respond to disputes well before the end of the 30 days.
I must reiterate my final point from Collection Disputes: Good Faith or Bad Faith?: if you have a legitimate dispute, respond within 30 days of receiving the statement from the creditor or the first demand letter from the collection agency. Do not dispute the bill simply because you did not pay and want it removed from your credit report to get a better credit rating, which falsely misleads the lender into believing you pay your bills on time.
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Inaccurate or inadequate information costs creditors and collection agencies thousands of dollars at the local level. Thousands of dollars are being lost because creditors lose contact with their customer, or because they do not have accurate or adequate information. They need to locate them in order to contact them and collect money that is owed.
When it comes to tracking consumers, the more information available the better. That’s why collecting a phone number, address, date of birth, zip code, employment information, and social security number are important when working with consumers. Each of these pieces of information is a valuable part of the puzzle.
Once the creditor identifies the consumer who is not complying with the terms of their agreement, they send the account to collections in order to better their chances of collection and minimize their losses. For the collection industry, EVERY piece of information is important. The totality of information can help build a demographic profile.
A person’s address and zip code are crucial in finding where this person lives so a bill can be sent. Address and zip code also play a factor in determining a consumer’s ability to pay. Based on demographics, a consumer living in Beverley Hills is probably more likely to pay than someone living in a less upscale or working class neighborhood.
If the mail is being returned because the person no longer lives there or there have been no responses, it is time to contact the consumer by phone. Calling the right phone number is important in order to make right party contact and communicate the urgency of payment.
Employment is also important. An employed person has income, and at their place of work there should be a phone by which they can be contacted. If the original phone number is disconnected or not the right number, a work phone is the next best option.
Like our fingerprints, a social security number is one thing that individualizes us as a person. It can be used to find a credit report, which hopefully has updated contact information. That is a last resort, though, and consumer information should be gathered before an account reaches collections.
Why isn’t all information always provided? There’s a variety of ways information can be left out. Creditors might not require their customers to fill out certain information, leaving themselves vulnerable. Human error can occur when clerical staff of a creditor or collection agency is working too fast or simply not paying attention when inputting data. A consumer could intentionally mislead in an attempt to defraud. Handwriting can be sloppy and illegible, so a clerical staff member may just make their best guess on what a letter or number is.
This can be mitigated. Interactive online forms are a solution. For example, a patient fills out a form before they even enter the office for their appointment. The information is legible and the patient is no longer filling out forms while waiting. Customer service is improved because the process as a whole speeds up. The patient and the medical provider both benefit.
If you need assistance in updating and gathering accurate customer information, Credit Consulting Services (CCS) can help with customer intake forms. These forms make it easier for the consumer while also gathering necessary and accurate information. CCS can create many different forms, including credit application and patient registration. For more information on improving your intake forms contact CCS at 800-679-6888.
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People often confuse debt buyers and collection agencies. The average person does not know the difference between the two and has very little knowledge of the debt collection industry. The three major differences between debt buyers and collection agencies are ownership of the debt, age of the account, and difficulty to collect on the account.
1) Ownership of the Debt
Debt buying is exactly what it sounds like. Debt buyers buy accounts from a creditor for pennies on the dollar. Creditors do this because there is a point at which they need to cut their losses and get whatever money they can. The debt is completely owned by the debt buyer and it is their responsibility to collect on this debt if they want to make a profit.
Debt is owned by the creditor or the debt buyer. When the creditor sells the debt to the debt buyer, the debt buyer may elect to hire a third party collection agency rather than trying to collect the debt themselves. The same goes for a creditor, an agency can be hired as a third-party collector. The creditor and collection agency work out an agreement that gives the collection agency a percentage of the debt collected. Both debt buyers and creditors count on the collection agency to collect the debt.
2) Age of the Account
Age may just be a number to some, but in the collection industry it is very important. Debt that agencies generally collect on is only a few months old and rarely older than six months. Debt bought from a creditor, on the other hand, is “old” relative to other debt. This debt is usually about 3 years old. Chances are in those three years, an attempt to collect that debt has already filtered through up to 3 collection agencies.
It is also important that a company has a good Days Sales Outstanding (DSO). The average DSO for healthcare providers is 60 days. For other businesses, it is under 30 days. Healthcare providers tend to work more with collection agencies than they do with debt buyers. To keep the DSO under 60 days, a healthcare provider needs adequate in-office collectors. To better the chances of keeping DSO under 60 days, a provider can hire a collection agency with veteran collectors.
3) Difficulty Collecting the Account
The older an account, the harder it is collecting. It can be difficult to determine which consumers will pay. There are some accounts that are so old that creditors deem them noncollectable. These types of accounts tend to fall in the hands of a debt buyer.
Some accounts are collectable, but the creditor may not have time or resources to collect the debt. There are ways to value accounts receivable. Once the creditor determines that this account needs some third-party attention, that is when a collection agency will step in.
Statute of Limitations
Debt buyers tend to receive much older accounts compared to collection agencies. Because of the statute of limitations, debt buyers have a much smaller time window before they need to take legal action (the statute of limitations varies from state to state).
As a result, debt buyers are much more aggressive in the collection process. If they cannot collect the debt, then the debt buyer may sue the consumer. Debt buyers sue consumers much more often than collection agencies do. One of the advantages of owning the debt is the debt buyers can take the case to small claims court.
Collection Agencies: Cultivating Customer Service
Debt buyers own the debt, so they are trying to get the consumer to pay for that debt in order to cover their cost of investment and make a profit. Debt buyers may offer a settlement with the consumer of up to 50 percent under the right circumstances. On the flip side, collection agencies do not own the debt. The debt is owned by the creditor who wants to be paid in full because they are paying the collection agency a portion of the money collected. They are trying to work with a consumer to get that debt paid to the creditor in full.
Debt buyers have one goal: get a return on their investment. Anyone who makes a large capital investment is going to want some kind of profit. Debt buyers’ collection efforts are usually more aggressive because the accounts are much more difficult to collect as the account has been worked by the creditor and other agencies before the debt was sold to the debt buyer. Collection agencies are relying on a forward flow of business from the creditor and are focused on helping the creditor maintain a good image in the eyes of the consumer. That’s why it is in their interest to treat the consumer with respect as detailed in The Collector’s Pledge.
For example, let’s imagine a patient who has an overdue medical bill that has made its way to collections. If the person collecting this debt is focused on best practices and on patient financial communications, it is very likely that this will be a happy customer. Happy customers return to the same creditor because they were satisfied with how their debt situation was handled. This keeps a steady flow of business to the creditor which, in turn, maintains a flow of business for the collection agency.
When a debt is bought, the relationship between a debt buyer and creditor is very brief. There is also a relationship between the collection agency and the creditor. When an agency is working for the creditor, the relationship is maintained and also grows. Both businesses mutually benefit from each other.
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Less than 5% of disputes are valid. Disputing debt to a collection agency is a lot like pleading not guilty to a murder trial when the victim has come back from the grave as a witness. Both are a waste of time and resources for all parties involved.
What is a dispute? Under the Fair Debt Collection Practices Act (FDCPA), a consumer has the right to dispute the validity of their debt due. A dispute can be verbal or written. A written dispute is the more common of the two because it is a non-confrontational form of dispute.
The internet is a beautiful thing. The amount of information one can find online is astounding. On the flip side, that information can be misleading, especially when it comes to disputing debts. For instance, consumers often find that a collection agency needs to validate the debt. This is true only within the 30 day window after the consumer has received the first demand letter from the collection agency.The consumers do their own research knowing that they do, in fact, owe the debt. They find that they can write a letter to the collection agency hoping the debt will be dismissed and the account will vanish into thin air. A reputable collection agency will not just dismiss the debt, but do their due diligence and make sure that the debt is in fact in need of repayment. At Credit Consulting Services, we pride ourselves in reviewing documents thoroughly.
Invalid disputes are a hassle not only for a collection agency, but also for the consumer. The consumer knows they owe the debt. They try to dispute it in an attempt to get it removed from their credit even though disputes can negatively impact credit. The consumer goes through the trouble of composing a letter themselves, or more likely they find some general form letter to use while surfing the web. That letter can then be sent as “registered mail” which costs the consumer about $6. That money could’ve been used to repay part of the debt!
Disputing debt does nothing to improve a consumer’s credit score. Also, bad debt affects the economy as a whole. When a consumer does not alleviate their debt with a creditor, the creditor has to raise prices in order to pick up the slack the consumer created through their debt. So this individual’s debt hurts other consumers as well. Disputing not only affects an individual, but it has a domino effect and hinders other consumers.
We live in the 21st century, and if a debt is truly not valid wouldn’t you pick up the phone and call the agency or creditor to try and get things figured out? A true dispute happens immediately after the first bill is received by the responsible consumer who pays their bills on time. Invalid disputes can occur months or even years after the bill is received. Consumers with wrong intentions do not dispute the debt until it affects their ability to borrow money. It is quite simple, the debt is either owed or it isn’t.
At the end of the day, if you have a legitimate dispute, respond within 30 days of receiving a statement from the creditor or the first demand letter from the collection agency. Do not dispute the bill simply because you did not pay and want it removed from your credit report to get a better credit rating, which falsely misleads the lender into believing you pay your bills on time. https://www.youtube.com/watch?v=II8RX8-zr-I
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A college education is a huge financial commitment parents make in order to optimize their child’s chances at a better future. If possible, parents would like for their child to contribute some money to ease the burden. One way for a student to help out is by earning a scholarship.
Scholarships come in a variety of forms, including essay contests. The California Association of Collectors (CAC) gives high school seniors in California a chance to compete for a scholarship. The California Association of Collectors Educational Scholarship Fund (CACESF) is an annual scholarship awarded to the top three students who submitted the best essays about topics that include finance and credit. This year’s prompt was to write an essay on the “Importance of Establishing and Maintaining Good Financial Credit During Your College Years”.
This year’s competition had nearly 800 applicants that were eventually narrowed down to the three finalists: Ethan Turner (2nd place), Katie Clark (3rd place), and Kasania Khachadourian(1st place). The CAC awarded all three students scholarships, but Kasania walked away with the first place prize of $2,500. The CAC has already awarded $54,000 to California high school seniors since the foundation started in 2005.
The scholarships given to the students are funded by participating CAC members. One of the top contributors to the scholarship is Credit Consulting Services (CCS). As an intern at CCS, I am glad to be a part of a company that not only funds this scholarship, but also supports financial literacy. Much like a doctor teaches you how to maintain your body to avoid a health crisis, a goal of the CACESF and CCS is to teach young people how to be financially literate to avoid a future debt crisis.
The scholarship is not simply a monetary award. It teaches participants how to be financially literate while also encouraging eventual financial independence. The years spent in college go beyond the education one receives in the classroom.
For myself, this past year as a freshman at USD was the first time I was independent of my parents. I learned how to be responsible of my own finances, but it was through a trial and error process. For instance, I knew how to budget time but I didn’t know how to budget my funds. This program teaches students to be financially responsible in order to avoid credit debt. If I had known about CACESF I could’ve entered college more financially literate and maybe even earned a scholarship.
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As my freshman year at the University of San Diego was coming to a close, I needed to find a summer activity. I decided working would probably be a better way to spend my summer than sleeping in until noon every day and watching the various shows on ESPN. And surprisingly my parents agreed with me.
I started brainstorming ideas and began applying for different jobs in my area. Being “unskilled” I was very limited in my job search. Many of my friends come home for summer and work in the produce industry, which is essentially the bread and butter of the Salinas Valley. I wanted to do something besides working in the produce industry, so I reached out to a friend’s father, Rodney Meeks, who is the Vice President at a collection agency in Salinas.
After an exchange of several emails and phone calls, he offered me a marketing/social media internship position at Credit Consulting Services(CCS). I thought my internship would be like most of my friends where my job basically entailed clerical work that no one else in an office wants to do. That was not the case.
Week 1: Social Networking Bootcamp
I have spent my first week learning as much as I can about the collection business and the business world in general. I’ve watched hours of videos in order to educate myself, and learned a lot simply from talking with Mr. Meeks who is an expert in the field and is an endless source for business tips.
Growing up in the digital age, I had no idea the impact social networking has in the business world. Facebook was always a way to stay connected with friends, but I learned that it is also a marketing component for businesses, including CCS. He introduced me to LinkedIn and the importance it has in connecting and influencing clients and being introduced to prospective clients. From there I created my own profile that will help me in the future. LinkedIn allows me to build my credentials and begin to create a network of business colleagues.
Youtube is a great educational tool if you watch the right videos. Watching videos on youtube goes beyond cute clips of puppies playing in the snow. I learned about the benefits of hiring a collection agency and how debt collectors overcome payment objections.
CCS: A Great Place to Work
There are about 30 employees at CCS. Some new employees can find a new business environment intimidating, but this was not the case for me. It turns out these employees may be the nicest, most genuine group of people I have encountered in my young life. After I saw the unwavering smiles these employees have on their face throughout the work day I was put at ease. Seeing such happy employees, I was not surprised CCS was voted “Best Places to Work in Monterey Bay” by the Monterey County Business Council.
The plan was to return to San Diego for my sophomore year of college with just enough money to spend on “extracurricular” activities. These next three months will be a valuable experience that will not only allow me to fund my college expenses, but also build my resume and network system.
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What is debt? Simply put, debt is a financial obligation that is owed or due. People believe that debt is what keeps collection agencies in business, but their real job is to protect the rights of their clients/creditors. Debt collectors are often viewed as conniving, money-hungry scoundrels who are trying to squeeze every penny out of you. As a college intern at Credit Consulting Services (CCS), I have learned that this could not be further from the truth.
After logging about 8 hours of training videos in addition to listening in on collection calls, I like to think I can help my fellow man learn exactly what CCS does. First, debt collectors are not some boogeyman-like person you tell your children about so they don’t misbehave. Instead, I found that debt collectors can range from the young mother of four trying to support her kids to the sweet old lady who has been doing this for nearly 40 years.
Despite popular belief, receiving a call from a debt collector is actually a good thing. Their job is to help not to harass. Even if they wanted to be “evil” debt collectors, the Federal Debt Collections Practice Act (FDCPA) protects the consumer from harassment of any sort.
CCS is a third-party agency that is contracted by a company to collect their debts. In other words, if a consumer is provided a service through credit and has not paid the business or firm for that service then CCS has the ability to step in. CCS can only act upon this debt if contracted by the business and if the debt is “delinquent”. Delinquent debt is debt that has not been repaid for 30 days or more.
I found that a common form of debt comes as an overdue medical bill. Unfortunately, many people do not understand what insurance covers and does not cover. Patients often do not know that they have to pay for part of their bill. Fortunately for the consumer and the hospital, a CCS collector will call the patient letting them know that the bill is overdue and advise them on the best way to pay back this debt before it gets out of hand. The consumer has one less worry and the hospital gets its money. The icing on the cake is that the hospital does not need to raise prices in order to make up for the unpaid bill. This saves future consumers money and helps to combat against debt accumulation. So in a way collection agencies provide an important service to society. Some may even say we are heroes. You’re welcome America.
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