When the Federal Trade Commission decided to pay more attention to the practices of collection agencies, it really meant it. A recent news item in Consumer Affairs is all the evidence needed.
Apparently, a company called American Municipal Services Corporation, a debt collection agency in Texas that services more than 500 municipalities and collects utility bills, court fines and parking tickets, was recently fined $350,000 for making false threats and misrepresenting itself as a government agency.
Translated, an independent company that represents more than 500 U.S. states, cities, boroughs and towns has drawn the wrath of a government agency: The FTC.
Is any further proof needed to validate the FTC is serious about practices of collection agencies?
What is the rap against collection agencies?
Back in September, our Sales Manager, Wendy Jacques, was asked if she felt there were industries for which solutions were getting increasingly difficult to find. Debt collection was her immediate answer, and it was consistent with what we had been reading.
So what is the rap on collections?
Over the last 15-20 years, collection agencies have drawn the most ire among consumers, mainly for two reasons:
- Inflated interest rates and fees: Collection agencies were purchasing old debt for pennies on the dollar and, unjustifiably, jacking up interest rates on consumers.
- Contact bordering on harassment: If jacking up interest rates wasn’t enough, many collection merchants – not all – resorted to repeated phone calls and baseless threats to force consumers to make good on debts, whether they were legitimate or not.
These reasons alone spurred the movement toward reform.
What merchants need to get a collection agency merchant account
Acquiring banks remain skittish when it comes to debt collection agencies. Therefore, Instabill offers approvals for debt collection businesses on a case-by-case basis. Preferably, acquiring banks like to see at least six months processing history with no purchased debt and $100,000 revenue per month. Currently, Instabill offers an aggregate, offshore merchant account solution.
Our merchant account managers are always up for a conversation. Speak with one directly at 1-800-530-2444.