Credit card debt seems to be susceptible to just about any kind of debt collection regulation given its prevalence in the economy. This puts a clear target on the back of every collection professional meaning compliance must be on its A game. This issue of Collection Advisor shines the Agency Spotlight on Sentry Credit. We talk to James L. Stewart about his credit card collection efforts, how they weathered economic downturn and just what the heck is a pickle ball.
How did you get involved in debt collection?
Just like most of us, when we were kids adults would ask us what we wanted to do when we grew up? There was always a kid that said, “I want to be a fireman,” or, “I want to be a policeman.” No one that I ever knew, including myself, said, “I want to be a bill collector.” I was going to college in the mid 80s and was looking for work to help pay for it. In October of 1988, I answered an ad in the newspaper from a local collection agency seeking to train bill collectors. I went to an interview at Continental Credit Services in Kirkland, Washington (now OSI). They had me sit with a collector for about a half hour and observe what they do. I was hooked; I knew this is what I wanted to do!
What are some challenges particular to credit card collections and how do you overcome them?
In today’s ever-changing collection environment, collecting for national bank clients and their financial products, especially credit card collections, can be very challenging. Keeping up to date with all the state laws that seem to be ever changing can be a difficult challenge. Having a competent compliance team is crucial when implementing new state laws to which our collectors must adhere. The days of just picking up the phone and calling a consumer and treating them all the same are long gone. We provide all the laws for each state and post them in our collection software. It is a constant reminder to the collector when they call on a consumer in a specific state what that specific state’s collection laws may be.
What do you do to maintain a healthy and productive atmosphere in the office?
A healthy and productive atmosphere is key to everyone giving us his or her maximum work effort each day at the office. We expect 100% work effort every day, but we realize that no one can deliver 100% every day. We recognize we are all human and have our ups and downs in our lives and leaving problems at the door is easier for some people than others. In an effort to keep everyone motivated and excited each day, we try to come up with fun and rewarding extra incentive plans for our collectors each month outside their normal generous commission structure and bonus programs. This may include company raffles and cash giveaways. We also may play our own version of favorite game shows as contest incentives as well. Some of our favorites are from the game show “The Price is Right.” We have created our own Sentry Credit Plinko board game as well as our own Money Cash Machine. One of the most popular game show versions we created has been the “Wheel of Fortune.” Collectors qualify each day to play our own version of the game where they can win cash and prizes. In April, in honor of the Masters Golf Tournament we have putting contests each day where collectors get to putt to win cash. In an effort to help keep everyone healthy at our office during the winter, we pay for every employee to have a flu shot if they would like one. We also subsidize a portion of our local Gold Gym’s membership for all employees. To help blow off steam during the day, we have provided a ping- pong table, foosball table, full size arcade games and a 60 inch LCD TV with an Xbox One game system in our employee break room.
What are some recent trends you have seen in credit card collection?
The trends I have noticed with our bank card clients are more small businesses than ever are now accepting credit cards. Many of the credit card payments are now being made from the consumer’s mobile device too. Isn’t technology wonderful? We are seeing more and more cashless and checkless transactions putting the dependency even more on credit card transactions. We are seeing a lot more innovative reward programs from our bank card clients helping add dependency on the use of the bank cards.
What was a particular obstacle you encountered and how was it overcome?
The greatest obstacle was definitely the consolidation of the financial space. Sentry Credit will be celebrating 24 years in business in June of this year. Nothing compares to the significant downturn we experienced, just like most collection agencies after 2010. We experienced incredible volume and growth in collections after the crash of the subprime mortgage market in 2008. We then paid the price when loan originations were at all-time lows. This meant much fewer loans were being made by the banks and even fewer loans were charging off. To add insult to injury, many of our contingency fee bank card clients sold their charge offs during this time, taking advantage of the extremely high price that most debt buyers were willing to pay for their paper.
What is a philosophy that will help an agency weather such downturns in the market?
That is an excellent question. I tell you what; it would have been great to have a crystal ball back then. I’ve been in this industry about 29 years and with the way collections used to be, it didn’t matter what was going on with the economy, collections was always good. When the economy is great, more people are paying their bills and they have the money to do it. When the economy is in a downturn, more people get turned over so you make it up in volume. As for the subprime market, it was a double edge sword that really hurt. Lots and lots of people turned over for collections but folks did not have the money to pay their accounts in full. No matter how much we motivated them to borrow money to get settlement they could not come up with it. Back in the old days our motto use to be, “one call does it all.”
Back in the good ol’ days before the crash of the subprime market a lot of these folks would have equity in their home. The next year they would have more and more. It was a nice credit line for folks who could borrow against their home and make big, full payments. We had balances of $10-$20-$30-$40-$50,000 that people had the ability to borrow the money and pay us. Just about overnight, all of that went away.
We seemed to be working about twice as hard to collect about half as much money. Our payroll cost shot through the roof and profit margin dropped dramatically. It was a tough time; I’ve never seen anything like it before. There had to be light of the end of the tunnel but that light seemed to be a train coming at us. We’re just starting to recover. In 2015 we had a profitable year and 2016 is doing well for us.
I would advise diversification. We had made such a great name for ourselves in the financial industry serving all aspects of the financial space. All the banks wanted to do business with us for the most part. We had large volume from them so we didn’t get a chance to grow out other divisions of the company such as commercial, insurance subrogation and property management. Those are areas, if I had to do it over again, I would have branched out and diversified the company no matter how much business was coming in. That’s one thing our company has done since.
Besides collecting on accounts, what advice would you offer to boost client retention?
Compliance, compliance, compliance. Did I mention compliance? This is the key to the success of any agency that plans on continuing to service bank financial clients. As most of us know now, compliance is number one and collection performance is number two these days. You can be the top performer for a client but lose that same client if you cannot provide the in-depth compliance they require and deserve.
What is a lesser-known pitfall that could cripple credit card collection efforts and how can it be avoided?
There can be many pitfalls in credit card collections that could cripple collection efforts. Not doing things the right way and not treating your consumer with respect and dignity will most certainly cripple your collection efforts. Just about everyone has heard the old adage, “You will catch more flies with honey than you do with vinegar.” This is most certainly true in collection efforts. All people deserve to be treated with respect and dignity. At Sentry Credit, our mission is to help our consumer resolve the debt that they have with our client. Our corporate philosophy is, “Connecting people with solutions.” We truly want to make our consumers’ collection experience with us one that is positive and productive. This of course can be challenging at times, but we strive to explain to the consumer that we are here to help them resolve their debt. We encourage our consumers to contact our office and share their feedback regarding their experience with our staff. We have, in fact, certain clients that require us to leave our client's customer service phone number on each and every call in case the consumer would like to contact our client directly about their experience with us. Our market share can be increased if we get enough customers calling our clients and sharing a positive experience.
It can also work the other way too. Market share can be reduced to any agency that doesn’t get enough calls praising the efforts of the collector assigned to the consumers account.
What is a key component every credit card collection agency should have as part of its data security infrastructure?
An effective communication policy and training program is essential for turning any data security policy into reality. It is essential to effectively communicate changes in the ever-evolving realm of data security in order to insure consumer data is vigilantly protected in all layers of the organization, from IT to every end user.
What is a piece of advice you would offer an agency looking to get into credit card collection?
The biggest piece of advice that I could give would be to make sure they invest in a quality, robust, compliance program if they haven’t already done so. Compliance is so crucial to retaining and protecting your clients and your agency. It seems like it was not too long ago when most accounts receivable management companies did not have a compliance department. Now, we have a chief compliance officer and staff, as well as a quality assurance department helping us adhere to all the new regulations and guidelines put forth by the CFPB and our clients. The second piece of advice that I would highly recommend is making the financial investment in purchasing call analytic software. This investment has paid for itself over and over again, saving us from having to pay out money to unscrupulous consumers and attorneys attempting to bring false legal claims against us and our clients.
How is Sentry Credit involved in the community?
Sentry Credit is very involved in our local community through various food drives to help our local food banks. Each year we hold a winter coat drive for children that do not have a winter coat. We also financially support our local Boys & Girls Club as well as our local veterans administration. We are currently working on our own re-training program to help returning wounded veterans learn a new and financially rewarding career in our own ARM industry.
What do you enjoy doing in your free time?
In my spare time, which I seem to never have enough of, I enjoy spending time with my wife and two boys. We enjoy playing pickle ball in our backyard court in the summer. I am the family pickle ball champion and have been now for many years. My 17-year-old teenage boy plans on taking that title from me this summer…or so he thinks!
Pickle ball was invented in Washington state on Bainbridge Island. They say there was a family whose kids were bored and wanted to come up with some kind of game to keep them occupied. They started off with pingpong paddles and they took a wiffle ball on a tennis court and started knocking the ball around. They say the family had a dog named Pickle that would chase the ball around. That’s where they got the name for pickle ball.
I use to play basketball so I had a short court. The guy who built the court said, “you need to have a pickle ball court.” I had never heard of pickle ball. He described it and said everyone loves it once they try it. He was right. That’s where pickle ball for me started.
I also enjoy playing chess and other games of strategy. Living in Washington state, I am a huge Seahawks fan and I am already looking forward to next football season.