Collection Boot Camp: How to Respond to Collection Disputes

In the first Collection Boot Camp webinar, the panel, Kelly Parsons-O’Brien, June Coleman, Shawn Suhr, and Courtney Reynaud, addressed the topics of collection messages, collection telephone communications, and compliant collection letters. These subjects are the basis of running a compliant, well-functioning agency.

But what happens if the debtor you speak to doesn’t agree that they owe a debt? What if a consumer leaves your company a bad review on the Internet? What processes does your agency have in place to ensure compliance? In their second webinar, the boot camp panel discussed best practices on the complexities of collection disputes.

How to Address Complaints and Collection Disputes

Disputes, stalls, and objections can all originate similarly, but have much different results as a debtor’s case unfolds. Agencies must budget time to handle consumer complaints, provide in-depth training on office practices of dispute resolution, and create a compliant policy for all objections.

It is best to decide within your agency how to categorize the differences between these issues and decide how best to handle each. Below are a few issues your agency should expect to encounter and address:

• Specific dispute, oral complaint, or general denial without specific information –Parsons-O’Brien says her agency treats all collection disputes equally, even those that come with little to no information. Reynaud, CEO of Fresno Credit Bureau, Inc. also advises agencies to err on the side of caution and treat all possible objections as a dispute. She asks her agents to put themselves in the shoes of the debtor. “I always tell them to think about it: if you wrote that letter, or you spoke to the agency, would you think your statement was a dispute?”
  
  June Coleman also cautions collectors to realize the FDCPA does not differentiate between types of collection disputes (written, verbal, etc.). To avoid the chance of legal issues, it is best to identify all types of debtor objections as disputes so they can be handled properly from the beginning.

• E-Oscar credit report disputes – For those using the e-Oscar system, (the automated system that allows collection agencies to manage and respond to credit disputes), there are a few special considerations to keep in mind. Has your agency designated a full-time employee to handle e-Oscars? If you are like many other agencies, you may receive more than 100 e-Oscar complaints per day. If this is more than the dispute department agents can handle, you may want to consider one full-time or a few part-time employees dedicated to these issues.
  
  You must also consider how credit report disputes will impact client relations. Newer creditor clients may not be aware of the work it takes to address e-Oscars. The high amount of contact is likely to be more than some clients expect. “We really have had to increase our education piece with our clients regarding the e-Oscar battle,” says Parsons-O’Brien. “We have to let them know that this is to keep us compliant, and limit risk for their office.”
  
  Although many calls to clients are necessary to address collection disputes, the amount of contact can quickly get out of hand. Your agency must decide how frequently you find it appropriate to contact clients. Work to keep the number low. Excessive calls can cause confusion and annoyance, which might cost you the client later on.
  
  Credit Bureau Associates has experienced the difficulty of excessive calls to creditor clients while still getting necessary documentation for all debt disputes. To avoid calling clients too frequently, they have begun batching calls to obtain information from all necessary accounts at once.
  
  For example, if Parsons-O’Brien needed dispute information from ABC Hospital, she would check her agency’s list of all debtor accounts from the hospital that require documentation, and ask for everything in a single call. Afterward, she would update the agency list, noting the accounts she spoke to ABC Hospital about. By obtaining everything for all the creditor client accounts in one phone call, a collection agency can avoid annoying their clients by calling multiple times per day.
  
  Be sure to remember that collection compliance may be foreign to those outside the industry. If your clients don’t understand your obligations, take the opportunity to educate them. They may have feedback on how communication between your offices can be improved. Listening to and reasonably addressing questions and concerns can help you build this relationship, helping you to maintain a loyal client for years to come.

• Better Business Bureau complaints – All information provided to the BBB is public. This means if a consumer makes a claim about your agency and you provide a rebuttal with specifics about the debtor’s case, your response will be made public, violating confidentiality with your debtor. Suhr of Continental Credit Control provides the BBB a generic response stating that they will not acknowledge accounts in order to maintain confidentiality in accordance with FDCPA regulations. It is advised that if your agency chooses this method of response, you should also offer contact information should the consumer want to contact you directly about their complaint.

• Yelp/social media reviews – Social media and internet reviews can prove a challenge for collection agencies. By nature, these businesses are not going to provide the level of satisfaction from a consumer a restaurant or a shop might. “You’re generally not going to be getting a very positive review,” says Reynaud.Because most comments are reviews are likely to be negative, it is sometimes best to respond sparingly or not at all to this type of consumer feedback. If you can determine which account the commenter is speaking about, however, you should ensure all proper steps have been taken within your agency to avoid legal backlash. Create a generic statement providing agency contact information may be a good way to show you still care about how debtors are treated by your collectors. Aside from this, little action is needed from your office.

• Bulk mail letters – The image shown is of a bulk mail stamp that has recently been showing up on many dispute letters to agencies. Because a dispute is supposed to be a single letter to a single agency about a specific debt, some collectors have been unsure of why they have a bulk mail stamp. Parsons-O’Brien’s agency has continued to process these letters as general disputes. Although the delivery method is suspicious, it is always best to play it safe.

Who Handles Your Agency’s Collection Disputes?

The agent or manager chosen to handle collection disputes at your office depends on a few factors. Disputes are sometimes broken up between those raised during the validation period vs. those raised after the validation period, and disputes that are verbal vs. written. Decide which individual or department it makes sense to pass these issues to, and make sure all parties are aware of the measures you have in place.

At Credit Bureau Associates, Parsons-O’Brien says all of types of issues raised by a debtor “will be handled exactly the same way and be isolated to the dispute department.” Her agency employs a lead collector trained in defusing disputes who receives extensive training in this area. The collector is educated on which agency clients may be willing to settle, which are not, and the types of documentation each obtains and can provide in the event of a dispute.

This is an effective approach for cautious agencies that wish to avoid missteps during collection that could lead to an FDCPA lawsuit.

Best Practices after Classifying the Objection as a Collection Dispute

A good starting point during a collection dispute is to verify whether the debtor received their validation notice. It’s common that the address an agency has on file for a debtor may no longer be current. This can explain confusion a debtor may have about their bill, or why a dispute is raised after the 30-day validation period.

Be aware that many who dispute a debt may not have received a validation. If they claim this is the case, give the consumer the benefit of the doubt. Good faith can help ease a debtor’s mind and make them more willing to resolve the issue amicably.

Because each dispute situation is different, it may be time-consuming to respond when an objection is made. The boot camp panel suggested a possible way for collections agencies to respond quicker to collection disputes through letter templates while still maintaining dispute compliance.

Your agency’s attorney might be able to help you to draft several letter sections, phrases or bullet points that you are likely to use while addressing a dispute. Once these have been created, drafting a response might become easier, as you can piece together future letters from the pre-created draft statements and supplement them with information specific to each case.

Another step to take after a collection dispute is raised is getting proper debt documentation from your creditor client. The extra knowledge this documentation provides can arm an agent during ‘second talk-offs’ with a debtor, and help to identify whether they are stalling, objecting to the debt, or legitimately raising a dispute (a classification that is difficult to discern during the original communication). A collector who is well-trained in disputes can use this call to identify the motivations behind the debtor’s initial concerns, and show that the debt owed is legitimate.

Being able to review a bill or the proof of debt together on the phone also provides the chance to clear up any confusion a consumer may have. If they can see the documents for themselves, this helps them understand why they are being billed. Simply providing this proof often helps to resolve a debt. “I find that with many people who truly are confused about the account, providing them proof of the debt will have them resolve it,” says Parsons-O’Brien.

The time and resources a second talk-off takes can be a frustration. But, doing the work early in a debt can raise your resolution rate, and save your business from the massive expenses associated with defending a lawsuit.

Creating the Policy and Procedure of Handling Collection Disputes

There is not one clear policy or procedure agencies should put in place to handle collection disputes. What you decide for your company depends on what will fit best with current processes and keep lawsuits to a minimum. Those new to collection agency management, or anyone needing to polish their company’s procedures can read PDCflow’s recap of policies, procedures and work instructions, as explained in the first Collection Boot Camp webinar.

When reviewing your company’s policies and procedures surrounding disputes, there are several items to should consider:

• How does your company currently handle collection disputes? What is the policy and procedure you have in place? Are you experiencing problems with handling disputes as a result of the rules you have set? Parsons-O’Brien and Reynaud advise that identifying holes in your system is easiest as individual situations arise. After you have resolved a problem, review what could have been done differently. Writing policies and procedures as you go along allows you to fix, update and maintain your system piece by piece, cutting down on wasted time guessing on best practices. This approach will also save you from becoming overwhelmed with the magnitude of such a project.

• Who manages the disputes? The person is in charge of disputes at your office is a matter of deciding what is best for your agency. As mentioned, many collection agencies treat all complaints as possible disputes, passing all contact with debtors to a single department. If your agency is comfortable keeping some disputes in the hands of agents, be sure they are properly trained. Understanding your obligations in handling disputes is essential. Ensure all policies and procedures fulfill these obligations.

• What is a FIRE or “hot mail”? Attorney letters or cease and desist letters are often referred to as fire, or hot mail. These are addressed differently than any other dispute issue at an agency, as they have the potential to cause legal ramifications if mishandled. These letters should go straight to agency management, to be dealt with in the appropriate manner.

• How do you involve the original creditor? Speaking to the original creditor as disputes arise is often helpful. Some clients have detailed proofs of the debt which can help you in settling a dispute and collecting on an account. Some clients, however, have mishandled accounts or not kept as much detailed information on the debt as you might like. Informing them of a dispute as it is happening can be used as a teachable moment. If you share what you are going through and tell them how it can be avoided, collecting on future accounts will become easier.  

New Debtor Dispute Tactics

Along with the traditional tactics debtors use to dispute what they owe, there are new trends in how consumers are beginning to raise objections. These new trends, if not properly addressed, can cause legal trouble for collection agencies.

• Faxed Disputes –Receiving faxed collection disputes has become a problem for some agencies. There have been cases of debtors alleging the sending of a fax, while the agency claims the fax was never received. This can become a problem when responding to disputes, and even lead to court cases. Many agencies have determined that their office fax machine was no longer a necessity, and turned off or discontinued noting their fax number publicly to avoid the likelihood of such claims.

• Not reporting collection disputes in a timely manner – Attorneys and their debtors are utilizing credit reporting of disputes as a weapon now more than ever. Credit reporting agencies have recently made changes requiring collectors to update credit reports every 30 days. In addition, disputed debts must be marked on credit reports as disputed.
  
  Many attorneys and debtors are conducting frequent monitoring of their credit reports to catch collection agencies in any possible wrongdoing. Don’t fall into this trap. Make sure all disputed debts are reported quickly, and all credit files are updated every 30 days. This is the easiest way to avoid getting tripped up by a lawsuit.

Handling debt objections is a difficult part of running a collection agency. Knowing these best practices can arm you against lawsuits, and prepare you for when inevitable complaints arise. To Download a quick-glance guide on how to respond to disputes and complaints, Click Here.

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