Collector (collection agency)
is a company that collects overdue debts, usually it occurs in the credit sphere. To do this, a set of measures to collect debt in a compulsory manner is applied, usually the goal of pre-trial settlement is set.
Attraction of collectors’ services allows solving problems with the most hardened debtors, without spending significant funds. Collectors in the eyes of the townsfolk are associated with something terrible, with threats and almost torture.
The image of these people is spoiled by many myths, some of which, for one reason or another, are born by some heads of collection agencies. Let us consider rumors about the work of collectors.
Collectors are redeeming their debts.
In the press, lately there have been reports that collection agencies are buying from credit institutions their bad debts. Allegedly, there were even bank tenders, according to which collectors recruited debt packages. Proposals were also made for work in these areas. In fact, tenders for which collector agencies received debt packages, in fact, were shifting debts from one pocket to another. That is, banks have cooperated with their “pocket” collectors, in order to reduce their own tension due to reservations. As such, there was no tender, collectors usually received a loan in the same bank, the size of which was equal to the value of the debt package. Working on the debts, the agency repaid debts, settling for the loan. Collector attempts to work honestly in this market and buy a package, usually did not succeed. In general, experts are skeptical of this practice, as everyone must do their own thing. Usually large debt packages are bought up by investment funds that some programs can finance or can transfer to work several collection agencies, which usually do not have free funds for investment. It is clearly pronounced specialization and allowed the collectors to occupy their successful niche in the market.
Foreign agencies come to the Russian market.
The press began to appear reports that Western companies are buying shares of collection agencies. In fact, such events did occur, but companies that received Western investment did not receive any qualitative impetus in their development – the volume of their client base was preserved, the volumes of processed debts also remained unchanged. Analysts are skeptical about the prospect of buying some agencies, since they did not have clear development prospects, it is possible that investors were not Western collection funds, but specific people who set themselves certain political goals. By the way, Western agencies also operate on the Russian market, for example the German “Oyler Hermes Credit Management” or the well-known company “Coface”, serving individual clients. However, the presence of these companies on the market is not accompanied by pomp and advertising, promises to seize the market. All this shows that the western collectors are only just eyeing the Russian market, studying its prospects. The situation resembles the legal sphere, in which there are a huge number of Western serious firms, but in reality only a few work in Russia, serving the largest companies, without engaging in conquering the market. So, Russian collectors should not be afraid of competition from foreign agencies.
Collectors work in social networks and blogs.
Recently, the blog sphere was shocked by the news that collector agencies went out in search of debtors to social networks “Odnoklassniki” and “Vkontakte”. This news was quickly caught up by journalists and television. In fact, collectors do not need to collect information about debtors in social networks.The main clients of the agencies are telecom operators, utilities, credit institutions, which already have the fullest information about the borrower – after all, when receiving, for example, a loan, he fills in a detailed questionnaire, provides his photo. And the essence of the collection itself lies in the smoothness and processing of processes, their pattern and formalization. For such a conveyor, there is simply no place for a unique work with the client, since this is fraught with unnecessary loss of time. In the states of agencies there are analysts who are looking for information about debtors, including on the Internet, but no emphasis is placed on social networks. The sites of courts are checked, reviews are investigated, contacts (phone, e-mail) are sought. But such work is individual, rather expensive, as it requires high qualification and is applied only for a small number of clients. The costs of the investigation fall on the shoulders of the agency itself, so it is unprofitable to use such methods to recover the debt of five to ten thousand. Myth was born by pulling from the interview one of the directors of collection agencies the phrase that the search is conducted on Odnoklassniki. After that, the rumor was replicated and altered by the media, which for the sake of cheap sensation did not delve into the essence of the problem.
Collectors, in fact, are the same lawyers.
It seems to many that the essence of the work of legal and collection firms is not different – both those who negotiate with debtors, if no result ensues, then the case is referred to the court. This myth is fueled by the fact that initially collection agencies were built on the basis of legal organizations, the core staff included trained lawyers. In fact, there are significant differences between lawyers and collectors. Lawyers do in their work the emphasis on debt collection in court. Pre-trial work consists in drawing up written claims, perhaps there will be one or two meetings with the debtor. The purpose of the legal company is to win the court and obtain from it an executive document. Usually such organizations require advance payment for work and a certain fee in case of winning the case, and it is not always important for them whether the actual collection of debts will take place. Collector agencies, however, work quite differently. The main thing they rely on is negotiations with the client, creating psychological discomfort. Collectors are trying to resolve issues through pre-trial recovery. At the same time, their actions are standardized, they already use proven approaches and achievements. Thus, the agencies are a large conveyor for collecting debts. The usual practice for collectors is to work without prepayment, expenses are incurred and no compensation is received in case of a failed result, in case of a win, 15-30% of the recovered amount is due to him. Analogy to power systems, you can compare law firms with a chic restaurant, where the service is individual and you can order your chef something special. Collector agencies in this light will be represented by a fast food system, where everything is adjusted, the service and the result are as quick as possible.
Collectors compete with the customer’s security service.
For a long time, collectors really faced negative attitudes from the security services of customers. Moreover, the conversation is not only about skepticism, but also about negative actions that damage the company itself. Reasons actually lie on the surface – security officials believe that, firstly, collectors select their earnings, and secondly, if successful, demonstrate the inefficiency of internal services. This, in turn, may entail the cleaning of the ranks or the reorganization. Thirdly, the reputation of security personnel will suffer, which could not solve the task. Therefore collectors are perceived as direct competitors, and to combat them, unscrupulous methods are used.However, it is necessary to understand that the security service has its own tasks, collecting debts is usually not their direct duty. And the management usually clearly understands that some of the debts are returned after the first communication, which means that the own service, which does not have to pay interest from the returned amount, is able to cope with it. In this way, the collectors are given a truly problematic part of the arrears, which can not be recovered by the own security service. Do not worry about the reputation, because collectors specialize in their work, having a wealth of experience. But the security services have no such experience, what’s so surprising? The attraction and success of the collectors speaks not of a bad security service, but of the fact that collectors have more leverage over debtors. Therefore, it is worthwhile to perceive collectors not as competitors, but as assistants for security services, who solve tasks that they can not do or are not worth doing.
коллек To collect debts, collectors use irons, bits and other bandit attributes.
The first thing that appears in the head at the mention of the collector is a skinhead, as if from the 90s, a retrained racketeer. It is even believed that the collectors themselves work on the edge of the law. Although these stereotypes are erroneous, they, nevertheless, even help the agencies in their work. It seems to people that collectors intimidate debtors, and even apply physical influence to them. Therefore, many people try to pay off their debts when they mention collectors. In fact, agencies collect debts solely on the basis of laws, since their violation will immediately put an end to the activities of the enterprise. To recover the debt of an individual to banks, providers, etc. technologies of credit collection are used:
• soft-collection. At this stage, collection services call debtors and offer to pay the debt in a pre-trial order, while the debtor is told all the possible consequences of his evasion of his debts – fines, restrictions on movement, seizure of property. Also, SMS and e-mail are used.
• hard-collection. At this stage there is a personal interaction between the collectors and the debtor. The Agency does its utmost to ensure that a full-time meeting is held, as well as visits to those who could not be found by phone.
• legal collection. But at this stage collectors are already beginning to enforce debt collection, by including purely legal work. Claims are being filed, there is interaction with the courts. In cases of corporate debt collection, the technologies of business and financial collection are also launched. At the same time, the debtor’s business activity, his connections, contracts are carefully studied, “painful” points are groped for. In case of refusal to cooperate, the following measures are applied:
• information and reputation impact. In the media and on the Internet, information appears about the debtor’s dishonest behavior in matters relating to finance, about the purposeful violation of laws. This action aims to show the seriousness of collectors’ intentions, but the “victim” is given time to stop the process until his reputation is irreparably damaged. Materials for the media are coordinated with the customer and are submitted on behalf of the agency, which carries reputational risks.
• Impact on key debtor contacts. At this stage, the debtor’s counterparties are informed of its financial problems, threats of further cooperation with it, and failure to fulfill its obligations. Usually, having learned about this, counterparties are in every way trying to break contracts and contacts, since no one wants possible litigation with an unreliable partner. And then the debtor has time to stop the mechanisms of impact, if he starts paying the debt.
• use of financial collection. There are cases when a person is willing to pay, but does not have sufficient funds to do so.In this case, the collection agency can, by analyzing the debtor’s business, help find sources of financing. It is possible to use return leasing, factoring schemes, brand sale. As you can see, there is nothing in common with bandit methods in the work of collectors. They are competent specialists and good negotiators.
When working with collectors, the debtor is deprived of the support of the law “On Protection of Consumer Rights”.
Many believe that agencies in violation of laws infringe on the rights of debtors, since those who allegedly can no longer be considered consumers of services. The law defines the relations that arise between sellers and consumers, the possibility of obtaining rights, information about them is regulated. At the time of transfer of debt to collectors, the bank fulfilled its obligations to the borrower, but he “consumed” it, but did not pay it. Until the appearance of the collectors, nothing prevented the client from appealing violations of his rights. By the time of default, the borrower automatically becomes the violator of the contract and the legislation in force in this field, the credit relations, in fact, terminate, legal relations arise for the return of the debt. The bank has the right to this (demand for debt) and transfers it to the appropriate agency, leaving to itself other rights and obligations. There is a logical question – how does the bank’s demand to repay the debt correlate with the “Law on the Protection of Consumer Rights”? It’s not about services or goods, the quality of which can arise claims, the conversation is about the restoration of the bank’s rights, violated by the debtor. If the bank has performed its duties improperly, the borrower may well sue, despite the fate of debt collection. Therefore, the transfer of debts to collection agencies does not deprive borrowers of the right to use the “Consumer Protection Law”. By the way, the effect of this law does not apply to collectors, since they do not render any services to borrowers, a bunch of consumer-executor simply does not form.
Collector agencies are unprofitable.
You can often hear how the heads of collection agencies complain about the unprofitability of their business, high costs. The meaning of such speeches boils down to the fact that the beginning agency needs powerful financial support, otherwise the newcomer to the market of these services simply can not survive. However, such statements can be justified either by the incompetence of the leadership, or by the desire to hide the true picture, frightening away potential competitors. Collectorism is a kind of consulting activity, agencies do not produce any goods themselves, but produce services. Similarly, there are legal, audit, marketing organizations. As in any similar business, the main items of expenses are the salary and rent of the premises. Also, funds are spent for the purchase of programs, office, utilities and taxes. But consulting business is traditionally highly paid – usually a year from the moment of the beginning of activity. In the collection environment, there are advantages over other organizations of the same kind, since high-level specialists are not required, and with high salaries, like lawyers or auditors. Most of the work is done by specially trained employees who are engaged in phone calls and trips to meetings with debtors. Indeed, highly paid employees in the collection are few – they are analysts, department heads, top management. With the normal setting of the case, skilfully planning the expenses, the collection agency will switch to self-sufficiency after just nine months. Of course, for the establishment of an enterprise you need a clear business plan, do not start renting an expensive office from the very beginning, you should take care of the client base in advance, without grabbing everything. Failure to comply with these requirements may lead to bankruptcy of the agency, and customers are wary of those who regularly show losses. This is because it says either about bad management, or about concealment of incomes.Today, collectors have mastered only 70% of the potential Russian market. The corporate debt market has not been developed at all. So for beginners there is a niche in which they can prove themselves without taking away the bread from competitors. Talking about the non-profitability of this type of business is ridiculous.
Collector activity corresponds to international standards.
Representatives of Russian agencies like to mention that their approach to business corresponds to the highest international standards that describe this activity. Thus, it is hinted that their competitors do not comply with these standards. In fact, there are simply no standards describing collection activities! In the United States there is a law that regulates the work of collection agencies “Law on Fair Practice of Debt Collection”, but it is only of a national nature, that is, its operation is limited to one state. There are no international agreements and declarations on the activities of collectors. There are international organizations that unite reservoirs from several countries, accordingly, members are subject to certain requirements on the size of capital, technology, methods, have their own standards and codes. But in this case it is inappropriate to talk about international standards, since these are, nevertheless, the standards of an individual association. Russian collection agencies, consisting of serious associations, just do not boast of their superiority. By the way, not all domestic collection organizations meet their own internal standards. Thus, there is no single high criterion, it is appropriate to talk about the standards of some country or association.
Collectors work only with citizens who do not pay debts on loans.
It is considered that corporate debts are not an occupation for collectors, since the basic principles of the work of collection services are not connected with them. Recall that the collection is the most formalized collection of a large amount of debts, preferably massive, indisputable and of the same type. For some reason, it is believed that such an approach is unacceptable in relation to legal entities, although the world tendencies in the development of collection agencies indicate otherwise. First of all, legal entities may well have typical debts – for rent, communication service or the Internet. Actually they say that only the name, amount and contract number change in the debtor’s data. The same applies to companies that provide a standard set of services (advertising, delivery of meals, information services). Is it possible to consider such long indisputable? Experts believe that yes. It is possible to find a dispute in lending to individuals, since they can always state that they have not signed the contract, or they are not happy with the interest rate, and so on. But in this case it is up to them to prove their case and in case of failure the issue is automatically closed. Similarly, with debt collection for communication services. Billing records the use of services and the subscriber himself must prove that he did not consume them, otherwise he loses the case. In other cases, acts of rendering services, applications and other documents that confirm the delivery of the goods or the consumption of the service are usually used. In corporate debt, it is often difficult to talk about mass, but you can try to formalize the process of repaying debts by applying certain programs, standard tools, step-by-step actions. Of course, it will take more time than collecting loans to individuals, but this can well be performed by collectors. This approach has successfully proved itself in the West, having received the name of a commercial collection. Even a large IACC association was created, which brings together representatives from more than 20 countries. Thus, foreign collection companies look much wider in terms of their capabilities than domestic companies.Categorical in defending this myth by some collectors is due to the fact that in the pre-crisis period they received a fairly large amount of work on the debts of individuals. Now, the purchasing power of the population has fallen, the collection of loans has fallen sharply. Therefore, the most enterprising agencies will begin to absorb corporate debts, and the weak ones will simply leave the market.
Collectors need to undergo licensing for the protection of personal data.
Some agencies loudly announced that they received licenses for the protection of personal data (ZAP license). Accordingly, customers were inspired with the idea that it is worth working with these collectors, since others do not have such a necessary license. In this issue, not everything is so straightforward. First of all, it should be noted that collector activity in itself does not need licensing at all. There is also no license for ZAP as such, the activity on technical protection of information is licensed, for this, incidentally, simple compliance with the requirements of the law is necessary. By the way, it is for reservoirs that the ZPD license is not needed, since one of the requirements for the protection of information in this license is the automation of systems that process data. In a collector’s agency, such information is processed not automatically, but with the help of employees of the call-center, lawyers, exit services. Therefore, the availability of a ZAP license does not at all guarantee the preservation of confidential information. It should be noted that there were no leaks of information from the agencies on the young collectors market. It’s not a matter of licenses, but of the proper organization of work, control over employees, the use of encrypted data transmission lines, and the application of information security policies. So all the hype about obtaining licenses is PR nature, only misleading potential customers. For customers who are concerned about the security of their information, you can advise yourself to visually inspect the agency and pay attention to the following factors:
• own server that can not be accessed through the Internet;
• availability of the server for the agency employees, delineation of the rights of physical access to it;
• the procedure for archiving files and their accessibility to ordinary employees;
• the procedure for obtaining information from customers (media type, encryption);
• staff access to the Internet and the possibility of transferring information to or from external media;
• availability of specialized software products reflecting work with the debtor, isolating them from external influences;
• availability of internal workflow regulations.
The use of these procedures would not be superfluous to know and to some heads of collection agencies. Compliance with these procedures to ensure the safety of personal data is much better than any license. Leaders should take into account that the gabble of their own employees can nullify any modern technical means of protection, so it is necessary to build an appropriate system of work with personnel. Caring about the safety of your own information in the collection agency, you should trust your personal feelings about his work, the feedback of other clients, and not trust confusing documents.