CBS Compliance Corner – March

This article is the fourth in an on-going series on the life of an account as it makes its way through the collection process at Collection Bureau Services, Inc.

So far our series has examined: disclosure and validation requirements imposed on third-party collection agencies (such as CBS) under the Fair Debt Collection Practices Act (FDCPA), and: actions such as phone calls and letters in the first 30 days on accounts with valid addresses and phone numbers, and “skip-tracing” or finding information about consumers.

To this point our “life of an account” series has been all about preliminaries…getting out the appropriate legal disclaimers and finding information on the consumer. Ultimately of course, the goal is to make actual telephone contact with the consumer and come to arrangements on how to get your account resolved. Whether contact is made from a CBS representative calling out or the consumer is calling in in response to a collection letter or voice mail, our immediate goal is the same; to ask for full payment on your account. If that happens, so much the better! But the reality is that most of the time there is a discussion as to payment terms. In our context that usually comes down to these parameters:

  1. Amount of payment
  2. Frequency of payment
  3. Consequences of failure

Item #1 is by far the most crucial in the consumers mind. This stage of the negotiation interplay is also the most critical from our collectors perspective if they are to going do an appropriate job for you. With that in mind we have a specific training session for all employees about the two hard and fast rules of negotiation: 1. Never go first, and, 2: Never accept the first offer.

That may sound trite but it’s far too easy to let the consumer take over the conversation with a question like: What’s the absolute minimum I can pay?”, or, “What’s your office minimum?” By answering this type of question the collector falls into the trap of “going first” and establishes a baseline for the negotiation that is almost certainly too low. One thing we know from experience: it’s almost impossible to negotiate up!

Instead, CBS collectors will deflect the question back to the consumer: “Well, Mr. Smith, what did you have in mind?”. This forces the issue back onto the consumer. Once the consumer throws out a number, CBS collectors move on to rule 2. There is a technique here as well. Not accepting the offer isn’t the same as refusing it. We never slam doors! Rather it’s more of a counter-offer: “Generally Mr. Smith, on an account of this size we would need (fill in your number).” Once both parties have stated their respective starting points the back and forth can proceed, ultimately coming to an agreement on an amount both sides can live with. Item #2 can also be useful. One approach is to reduce the payment amount, but by increasing frequency actually increase the overall recovery for you.

Say the consumer is paid weekly and feels that it would be difficult to make a single $100 per month payment. We might suggest instead that $30 a week might be more convenient. Item #3 is the result if the consumer fails the arrangement. This could be an escalation to legal action, but it can also be credit reporting, ability to visit your facility, or something else important to the consumer. Each case is unique.