Unfortunately, closing that sale is only half the battle in commerce. Ensuring payment afterward can be another thing entirely, as the rest of this magazine will attest. Having creditors and collectors communicating before the transaction takes place is one of the most proactive ways to ensure payment for both parties. Here are recommendations from industry-leading compliance attorneys that will benefit creditors and collectors alike.
What can an organization do before a transaction to ensure possible future collection efforts are successful?
Dennis J. Barton III
Managing Attorney
The Barton Law Group, LLC
Organizations (i.e., creditors) should have a collection firm review written contracts intended to be signed by consumers before using them. The goal of the firm is two-fold. First, the firm will conduct a compliance review to ensure all terms and conditions are enforceable and all language required by the law is included. Second, the firm will identify revenue opportunities such as inclusion of interest and/or attorney’s fees not otherwise available absent a contractual provision.
John H. Bedard, Jr.
Owner
Bedard Law Group, P.C.
The point in time at which creditors and collectors can anticipate, address, and avoid future collection risk is at origination. The best risk-reducing behavior creditors and collectors can engage in is to memorialize the consumer’s relationship in the form of a written contract containing provisions which address consent, revocation, communication authorization (with the consumer and with third parties), arbitration, obligations to update consumer contact information, representations about the accuracy of information provided by consumers, information sharing, and a host of other items which serve to set (and clarify) enforceable expectations between the parties.
June Coleman
Of Counsel
Carlson & Messer LLP
Before you are referred matters from your client, you should become familiar with how your client does business. Review the contract with the debtor. What has the client done to collect the debt? Has there been a waiver of some of the debt by your client? Doing this will help build good evidence in case you need to argue bona fide error and could even prevent some issues before they happen.
Harvey Moore
President
The Moore Law Group, APC
Obtain as much information as possible about the consumer before entering into the transaction or credit relationship and keep the information as current as possible over the life of the relationship.
Joann Needleman
Member and Leader of the Financial Services and Regulatory and Compliance Group
Clark Hill PLC
Creditors never consider the consequences of default at the time a loan is issued or when goods are sold. It’s understandable, but a lack of foresight is ultimately what makes getting paid so difficult. It is imperative that clients take the time to understand a consumer’s financial background and to capture that information as well. Credit applications, whether online or on paper, consistently lack relevant and useful information to assist the collector in resolving the debt.
Rick Perr
Partner and Chair of Firm’s Consumer Financial Services Practices Group
Fineman Krekstein & Harris, P.C.
Understand the creditor’s business practices. Whether collection efforts will be successful depend on how the creditor maintained its records during the period of time the account in question was not in default, as well as efforts made post-default. Shoddy paperwork, incomplete media and lack of organized content will make post-default collection efforts more difficult.