Collection agencies are divided into two types, the first party agencies and the third party agencies. However, in the US, only the third party agencies are subjected to the FDCPA or Fair Debt Collection Practices Act.
Collection agencies are a type of business that pursues the payment of debtors, whether it’s an individual, a corporation, a business or an office. These agencies are employed as agents of creditors, collecting payments for debts either for a fee or for a percentage of the entire amount owed. However, there are agencies called “debt buyers” that already purchases the debts from the creditors for only a fraction of the value of the entire debt. Then, they pursue its debtors for their whole balance.
The reason why creditors send their list of debts to collection agencies is to take them off their “accounts receivable” records, accounting the amount they were able to collect from the debt’s full value as their loss. Some countries have laws against these collection agencies. This is implemented in order to prevent abusive practices. Failure to comply can lead to lawsuits or regulatory actions by the government.
There are different types of collection agencies. This would include first party agencies and third party agencies. First party agencies pertain to the subsidiary or department of any given company that possesses the original debt. However, since they can be linked to the original creditor, these agencies are not subjected to the so-called Fair Debt Collection Practices Act. The usual ritual is for creditors to retain the bad accounts to these first party agencies for 6 months and then they pass it to third party agencies.
Third party agencies, on the other hand, would literally pertain to the idea of a collection agency because they are not part of the original deal. Once the creditor assigns these bad accounts to third party agencies, the agreement is on a contingency-fee basis. This means that it will not cost anything to the creditor but only charges for the communication with the debtors.
Hence, this can vary if there is an SLA or Service Level Agreement, where in, the agency can take off a percentage from the successfully collected debt. This is also called the “pot fee”. It is these third party collection agencies that become subjected to the FDCPA or Fair Debt Collection Practices Act, which was administered by the FTC or Federal Trade Commission.
This act actually limits the time and hours that a third party agency can call the debtors. It also refers to the prohibition of abusive practices like deceptive, false and misleading representations as well as making threats to the individual. Thus, in the UK, where in there is no FDCPA, they have a Consumer Credit Act which indicates that all third party agencies are required to have a consumer credit license.
Here are some of the best collection agencies in the US:
Regency Credit LLC
This agency is located at 1403 West 10th Place Suite B-110 Tempe, AZ 85281. This is a family managed and owned receivable management. It is also a collections organization that has been existent for more than 47 years. It has a total of 1,500 employees and upholds the reputation of a highly ethical and cost effective collection agency that can be attributed to factors like collection trainings, philosophy and computer resources.
They are a proud member of the CCAAA or Commercial Collection Agency Association. They cater to receivables management, commercial accounts, check recovery, judgment accounts and billing either internationally or locally.
This agency is located in Rapid City South Dakota. This agency takes pride in being measured by the results they can provide. They take into consideration that every time they do business, their reputation is at stake. They treat each client as if it was their only client. Their experience in this field is already more than a quarter of a century, combining work ethics with old time values in the cutting edge technology of the present time. They cater to a wide range of services like pre-collection, outsourcing, free demand and regular collections.
Johnson, Morgan & White
This agency is located at 6800 Broken Sound Parkway Boca Raton, FL 33487. With the ongoing education as well as the certification requirement for their account-specific representatives and debt recovery agents, you are guaranteed that their agents are equipped with thorough knowledge on the fluctuating state, local and federal regulations.
They specialize in background profiles, customized corporate debt recovery options, state-of-the-art research and techniques in investigation as well as personalized services, credit report rating services and online account services.
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