Licensed To Bill... Is Your Collection Agency Licensed?
Written by David Trout, Senior Vice President – Insurance hottest celebrities
Programs, Brown & Joseph, Ltd. January 24, 2014.
Despite any creditors due diligence, a small percentage of customer debts may be forwarded to collection agencies for recovery. Unfortunately, an overwhelming number of commercial collection agencies are NOT licensed to pursue debtors in every State. Lack of sufficient licensure not only severely impedes collection, but more importantly, exposes business creditors to potential nuisance litigation and financial liability.
Even if debtors are located in States not requiring collection agencies to be licensed, debtors are notoriously transient and frequently relocate in attempts to avoid financial obligations. According to the American Collectors Association, there are 24 States that require intra-state licensure. In these States, it is against the law for non-compliant collection agencies to contact your debtors for payment in any manner. If a debtor or their attorney discovers that a collection agency is not licensed, a grievance complaint with the creditor, Better Business Bureaus, Trade Associations and other State or Federal governing bodies could be lodged. Debtors who are represented by counsel may simultaneously file a lawsuit. In addition to the collection agency being named as defendant, the company who hired the collection firm is typically named as co-defendant. Attorneys especially are going to pursue the perceived “deepest pockets.” Creditors are regrettably always perceived as having the “deepest pockets.”
Not only is being subpoenaed an embarrassing and time consuming nuisance, but there is the potential for enormous financial loss. The litigation arena is a creditor unfriendly environment. Collection agency violations are normally adjudicated under the prevailing laws where the debtor is located. Unlicensed collection agencies are being sued every day in every state.
Regardless of a collection agency’s certifications, references and trade association memberships, confirming their licensure is paramount. If proper licensing and bonding is required when even hiring a plumber, vendors who are entrusted with your financial interests and reputation on a national level should be held to the highest licensing standards.
So why aren’t all commercial collection agencies fully licensed you might ask? Answer…it is too costly. At minimum, proper licensing cost over $100,000.00. For the overwhelming majority of the collection agency community, national licensure compliance is cost prohibitive. For us, and our valued clients, compliance is cost imperative! Brown & Joseph, Ltd. is fully compliant.
You may be further assured in knowing that Brown & Joseph is the nation’s only SSAE certified collection agency affirmed by A.M. Best as “Expert Service Provider”. Our published U.S. General Services Administration (GSA) contract also confirms that our systems meet rigorous Federal Privacy Act security standards.
For additional information or a complete list of those States requiring licensure, feel free to call upon us at any time. Toll Free 888-829-9997.