What can be done about the bad rap that debt collectors get?
Let’s play a game.
Think about the two words ‘debt collection’ and the images that come to mind.
Are those mental images of harassing phone calls? Men in trench coats knocking on front doors at all hours? Possibly even blackmail?
Let’s not beat around the bush, debt collection has a bit of a bad rap. The industry has the reputation of the veritable ‘wolves at the door’ – menacing looking blokes going around and turning out the pockets of people who are in times of economic distress. It’s nothing new, it seems that at least once a month we’ll hear horror stories just like those of Sarah, a single mother being harassed for a debt that, in actual fact, wasn’t hers.
The industry has reached this reputation because of the actions of a few bad apples tarring the image of sound industry operators with the same brush.
What does this mean for you?
In reality, the majority of debt collectors are simply small to medium business owners that are operating on behalf of business owners themselves. They’re trying to make a dollar just like the people employing them.
All debt collectors are required to play by a set of rules set by organisations like the ACCC and ASIC. In reality, some of them just don’t. And with the current debt levels of Australian households and low barriers to entry, debt collection businesses can find plenty of work. The only problem is that that work is often outside the letter of the law.
Hiring a dodgy debt collector can have a negative effect on your business. By hiring someone that works with less than desirable tactics, negative word of mouth and reviews of your business can spread, and some of the goodwill that you’ve built with your customer base can be lost.
Telling the good from the bad
MoneySmart is a great resource for dealing with debt collectors. They tell us that, amongst other things, debt collectors can only call you a maximum of three times a week. They also can’t call you during specific hours or contact debtors over social media if others may be able to see it (which can basically equate to blackmail). They are also not allowed to threaten, intimidate or harass or make false claims about their legitimacy.
Ensuring that you hire someone credible and trustworthy is of the utmost importance. A lot of the change currently going on in the industry is aimed at clearing up the mess that is regulation. A number of states and territories simply approach the process differently. Victoria’s legislation is different to NSW’s, whose is different to WA’s and so on. When we’re all singing from the same hymn sheet the current reputation of the industry will begin to change.
Also, debt collectors need a licence (except VIC, QLD and the ACT – see what we mean about regulations?) and they must be ‘of good character’. What that means is anyone’s guess.
With all that said, at Late Payer List, we believe that debt collectors must simply take it upon themselves to clean up their own act, rather than being told to. They need to have both the interests of the business employing them to collect the debt and the person from whom they need to collect it from at heart.
When they do, the current reputation will go some way to changing. And we can all agree that that’s a good thing.