I struggle to find a metaphor that would appropriately explain just how closely monitored a collection agency is that is collecting for the government. Let’s just say that such an agency is observed under a microscope, through a magnifying glass that is immediately preceding the Hubble telescope. In the event of a compliance misstep leading to a lawsuit, not only would the agency’s reputation be on the line but also the governing body that hired said agency.
Such high stakes means it is important to find an agency that can flourish under this pressure and follow the example. This will not only benefit your agency but the collection industry’s reputation in general. To do as such, Collection Advisor shines the Agency Spotlight on The Stark Collection Agency. We spoke with The Stark Collection Agency’s president, Pauline Kussart about key strategies and how to find success in government collections.
Tell us about when The Stark Collection Agency opened its doors.
The Stark Agency began in 1948 when Howard Stark and Hilding Haag formed Wisconsin State Auditors. Their partnership dissolved in 1949 and Mr. Haag sold his share of the business to Mr. Stark who changed the name of the business to the H.E. Stark Agency, Inc. (In 2013, the name was changed again to The Stark Collection Agency to better define who we are and what we do for clients.) The early core of the agency’s client base was in the telecommunications and financial services industries.
The Stark Agency has been partnering with government agencies since 1982 when we began working with the City of Madison EMS division. In 1993, we added the City of Madison Municipal Court to our portfolio of clients and in 1998 we began to shift our focus toward increasing our government client base. Today, 45% of our business is generated by contracts with government entities and agencies. In addition to our government client base, we have a sizeable portfolio of telecommunications clients accounting for 25% of our revenue. We began building a financial services client base two years ago that now accounts for 10% of revenues and growing. We also generate revenue from rental clients, a scattering of health care and check recovery. I have, so far, limited my government collections to counties, municipalities, and state agencies located in the state of Wisconsin. Unfortunately, the State of Wisconsin itself has quietly entered the collection markets after the legislature empowered the Wisconsin Department of Revenue [DOR] to collect on behalf of these same counties, municipalities, and state agencies. The DOR is entitled to use a broad range of tools and practices that are otherwise forbidden or financially prohibitive if done by private collection agencies. For instance, the DOR can add a collection fee to cover its costs on any account; if a private agency took the same action, on the same account, it would find itself the subject of a private lawsuit and regulatory action.
How did you become involved in The Stark Collection Agency and collections?
So, let me explain why I had photos taken in front of the State Capitol with my Suburban bearing COLLECT license plates.
For as long as I can remember I have been active in some way politically. My earliest memories come from listening to my Dad explain the electoral voting process to me while we listened to the election night results on our barn radio while doing chores. He was one of a handful of farmers who understood that if you wanted to make a difference you had to get involved.
I’ve volunteered on more campaigns than I can remember—from walking parade routes to going door-to-door, to making get-out-the-vote calls, to stuffing and sealing mass mailings, to hosting fundraisers, painting farm signs and putting up yard signs and anything else that needed to be done as a volunteer to get the candidate elected. That led to other opportunities and I found myself being offered jobs on campaigns—in particular, that of Finance Director. I very much enjoyed masterminding and implementing an intricate and successful finance plan for candidates. I enjoyed being the “mechanic behind the candidate” and never longed to be the candidate. I also enjoyed working as a legislative assistant, but something was missing. While elected officials get to make the laws that can help steer the economy I wanted to be part of the driveshaft within the economy.
So, 16 years ago I bought a collection agency, not because that was the industry I zeroed in on but instead because it met the simple criteria I set as I looked for a business to buy. One criterion was, “can I help make an impact if I buy this business?” That is where my political and government experience comes into play and what better photo to tell that story than the state capitol, where I have testified at hearings, lobbied and participated in other meetings.
I met my husband on a campaign. For most of his adult life he worked in government. His last job in government was his role as Chief of Staff to former Governor Scott McCallum of Wisconsin. His office was in the Wisconsin state capitol. I was fortunate to get behind the scene access!
Having a Bachelors of Science degree in nursing sure didn’t prepare me for the business world. My naivety overshadowed any qualms I had about running a business. Paying attention to detail, staying true to a business plan, making smart hires and having a strong work ethic have kept me on the path to success!
So, why the COLLECT license plate? Unlike a floral business or some other business that can advertise their product on vehicles, a collection agency would get nowhere by advertising on a vehicle!
So when it came time to order plates for a new car in 1998 I found out the word COLLECT was available and allowable. I get asked at least two times a month, usually when I am getting in or out of the car at a gas station, at a grocer or other retailer or even in front of the state capitol, what the word COLLECT stands for. Instead of my saying I am a debt collector, I ask them to guess. In 16 years, no one has guessed correctly. This one simple word on my car has led to lots of fun conversations and several new clients. For example, years ago a man employed as a credit/collection manager of a large regional chiropractic practice asked me that question and a month later they signed a contract! It is a great client!
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| Staff of The Stark Collection Agency. |
As a collector of government accounts, is The Stark Collection Agency audited? If so, what do you do to make sure the audits go smoothly and do not hinder the collection process?
The audits from government clients consist mainly of reconciliations to be sure balances match. In addition they do require being named as an additional insured on my errors and omissions policy. Some government clients have specific forms that must be filled out yearly such as Affirmative Action Plans.
What I am finding though is that, for the past six years, an increasing number of non-government clients are doing very thorough quarterly and yearly audits, and this quite frankly should be a priority item of discussion. This change is the result of the regulations coming out of the CFPB in Washington. Our agency has always focused on compliance and we have consistently adapted to new laws, but the CFPB has created a great deal of uncertainty across so many facets of the industry. The trouble is, in its efforts to protect consumers, the CFPB has made it extremely difficult for smaller agencies to comply with all the laws and still turn a profit. Client audits are just one manifestation of this problem, but I am sure it will not be the last.
What are some of the key strategies for working with government clients?
Perhaps the most important aspect to a successful working relationship with a government client is to understand and respect the mindset of the government agency. Government agencies view themselves as service providers to their constituents. Although they want collection agencies to collect their unpaid debt, they want it done in such a way that is respectful to the debtors. Government agencies do not want heavy-handed techniques used in the collection of their debt.
Another success factor for working with government clients is to provide customization. Don’t simply view all government clients as the same; rather, recognize that each agency or municipality has individual preferences and needs and create customized solutions for them.
What does your management team do to keep things efficient?
I meet with my management team weekly to look at ways we can create efficiencies. In today’s environment, we deal with lower and lower contingency fees and higher regulatory costs, general operating costs and other mandates such as the Affordable Care Act. A small business can make a profit only by continuing to advance technology within the company and also by instituting a certification program such as ACA’s Professional Practices Management System (PPMS). PPMS is a management system for collection agencies which serves to guide us in developing, implementing and adhering to professional practices and policies, all of which help create efficiencies.
We now have two full-time employees on our IT team. These two men are our driveshaft. We go to them with ideas and they make it happen. Not only do they handle all programming and anything related to IT and phone systems, they also keep our infrastructure running smoothly so our entire team can be efficient and productive at all times.
I would be remiss if I did not mention my involvement in WOMPOM, a benchmark group. Our group of nine meets two times a year in person and we communicate almost daily via email. We share everything and push each other to get better. What better way to create efficiencies than to have a WOMPOM member come right out and tell you that what you are doing is crazy?! It has driven me to run a more efficient operation.
What is something an agency might do that would guarantee failure in government collections?
Well, there could be many reasons for failure but there are two that come to the surface all the time. First of all, if you do not know what collection tools are allowed to be used for each type of government debt, you are setting yourself up for failure. For instance, some debts qualify for state income tax offset, some qualify for a commitment order and still others qualify for a driver’s license suspension or special garnishment action. Secondly, you also need to know the regulations and laws governing each type of government debt. For instance, certain debts from a county health department are subject to a different statute of limitations than other consumer debt. Some debts are not dischargeable in bankruptcy and others have specific regulations regarding an interest rate.
With compliance on the forefront, what are some special compliance considerations for government collections?
Collecting for government entities creates compliance challenges because each entity has different powers, different levels of authority, and different jurisdictional limitations, all of which are enshrined in statutes, regulations, and ordinances. A government client may desire certain outcomes or processes, but may be constrained by the limits of their authority. It is our job to understand these limits and work within specific parameters while maintaining a high rate of return for our clients. As you might imagine, expanding these parameters is not easy; governing bodies are hesitant to empower the debt collection industry despite the benefits to municipalities, state agencies, and the like.
Tell us how you are affected by the TCPA and the CFPB in your day-to-day operations.
With federal regulators, specifically the CFPB, increasing their oversight of the debt collecting industry, we have instituted and engendered a culture of compliance in our office. Every member of our staff understands the importance of our compliance program and we are constantly maintaining awareness. We cannot merely assert “we are compliant” and be satisfied. We document all of our policies and procedures and modify them when we need to adapt to a new regulation or new case law. While these efforts are burdensome, we feel it is best for our clients and advantageous for the consumers we contact.
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| Employees play bean bag toss game. |
Are there any games or morale boosting practices that the agency uses to keep collectors happy and productive?
We have rotating monthly incentive programs with themes generally tied to current events. We’ve held incentives based on the NCAA tournament, the Super Bowl, the NASCAR season and holiday seasons, for example. We have done dart tosses, bean bag tosses, golf swings, scrabble games, poker and miniature car races where collectors earn attempts for each phone payment taken, promises to pay and the like. We offer special programs such as breakfast, lunch and summertime cookouts made and served by the management team when staff achieve specific goals or targets. The company does occasional surprise treat days; one of the favorites is having an ice-cream sundae break. During this past bitterly cold winter here in Wisconsin, we made and served homemade hot cocoa to all team members. Also, management presents record breaker awards at each monthly staff meeting to publicly acknowledge individual performance. Our philosophy is one of respect and flexibility in all we do. That includes the way in which we deal with consumers, clients and each other. Our team members know that family comes first and our scheduling flexibility proves that point.
How is The Stark Collection Agency involved in the community?
We at the Stark Agency are deeply committed to the Madison community and surrounding areas. We regularly participate in annual charitable fund raising events for a variety of worthy causes including the March of Dimes, Madison Area Down Syndrome Society, Middleton Outreach Ministry, Rainbow Project, The Exchange Center for the Prevention of Child Abuse, The American Cancer Society, The Alzheimer’s Association, Literacy Network, Relay for Life, and UW Athletics (Crazylegs Classic).
Members of our management team either have or still serve on hospital boards and on the boards of the Financial Crimes Investigators Group of Wisconsin, and Wisconsin Collectors Association, as well as other local church committees and service organization boards and committees. We also have team members serving on national-level committee assignments for ACA International. In addition, our team members donate their time to several other area groups including the Veterans of Foreign Wars, Dane County Humane Society, Toys for Teens, local sports teams and several programs for the arts. Middleton Outreach Ministry (MOM) is one charitable group that has been especially important to us. Our association with MOM began in 2005 when our staff sponsored a family through MOM for the Christmas season, providing gifts to a family in financial need. This tradition has continued in our office as we have sponsored larger families in more recent years. Our staff also regularly holds non-perishable food drives to help stock MOM’s food pantry, including a food drive to benefit MOM held in conjunction with our company’s 60th anniversary celebration in 2008. We also annually raise money for Thanksgiving baskets for MOM families.
In addition, we have participated in events designed to help the ACA Education Foundation initiative of increasing and improving financial literacy.
What do you enjoy doing in your free time?
I very much enjoy gardening, both flower gardens and vegetable gardens. When I am not gardening I am in my kitchen experimenting. I love to cook. I enjoy mind challenge games and am an avid reader of fiction. In the winter, my husband and I enjoy snowshoeing. And, if my grown children and two grandchildren would live nearby I would be spending a great deal of time with them—unfortunately they are spread out across the nation. However, that allows for some great trips!