It’s happened a number of times over the years … you call a consumer about an outstanding debt, and you find out that power has been out in their area for two days, or someone yells at you that their house has flooded. So you turn on the news (or these days Google the area) and find out that the area you are calling across the country has been hit by a natural disaster. What should the collection agency do?
In 2015, this has happened twice in Texas – in May they were subject to flash floods in Northeastern areas of the state, and in October Hurricane Patricia caused flooding of up to two feet of water, driving people out of their homes in Southeast and coastal areas of the state.
When we heard about the flooding in May, we put a one-week moratorium on affected areas an notified our clients, and not only were they happy we were showing compassion to their consumers, we received four referrals that ended up as new clients as a result of our approach to the situation.
This October, after the hurricane wreaked havoc and we started getting complaints from consumers, we did the same thing, put the areas affected on a one-week moratorium from calling and notified our clients – and one of our clients asked why. As we work as their representatives, it’s a perfectly good question. Here’s our reasoning.
The Money Pit
Collection agents spend 80% of their time not generating revenue – they leave answering machine messages, diffuse hostile consumer calls, follow up on broken promises and arrangements, and so on. That means you need to maximize the effectiveness of the 20% that they do spend talking to consumers. In the case of a flood area, you can reschedule these calls and remove a segment of consumers that may not be able to pay their accounts – there will be an increase of no answer or answering machine calls, consumers will not be able to meet normal expectations for payment, and in many cases are dealing with life-changing disasters to their home and family, and aren’t going to have the mental and emotional balance to get a call from a collector. By rescheduling these calls for later, after the dust settles, you can avoid a large segment of their productive 20% of time from being wasted.
Ethics and Reputation
The days of burly gentlemen smoking at their desk and banging the phone receiver in their garbage cans is long gone – we are all accountable in business now, through social media, consumer networking, Twitter, Linkedin, Yelp, and Google+ reviews. We are in an era where brand reputation has value, and a single Youtube video from a disgruntled consumer can wreak havoc with Air Canada. Now imagine you are calling to collect money – it’s a tricky tightrope to walk, being in a position of authority but still being conscious of your clients’ and your agency’s reputation.
Collections doesn’t usually have a lot of empathy, but in this case it can – not calling file for a few days won’t impact the recovery rate in the long run, and the consumers that you are calling will appreciate it. It’s all a matter of being reasonable – if you called a consumer who told you their spouse/child/parent just died and were distraught, you would give them a week or two before pursuing a call to them again (I would hope). The same should stand for a natural disaster zone.
Canadian law is silent on calling at inconvenient times or under times of disaster – many provincial statutes do talk about allowing the consumer to send a registered letter demanding no further calls, but really this isn’t a likely scenario here, as a flood victim’s post office is likely under water at the same time as their house. However, the Fair Debt and Collection Practices Act (FDCPA) states:
805. Communication in connection with debt collection
(a) COMMUNICATION WITH THE CONSUMER GENERALLY. Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt—
(1) at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o’clock antimeridian and before 9 o’clock postmeridian, local time at the consumer’s location;
So that means there is potential cause for an FDCPA complaint if a collector calls an area he knows to be under extreme conditions – certainly in a litigious environment where collection agencies are screening their files for bankruptcies or litigation, there is the risk, no matter how unreasonable on the surface, that a consumer might initiate litigation for a call made during a natural disaster, stating the collection agency ought to have known about the issue in advance.
Our job is to communicate with people – and not always under the best of circumstances. We speak to the elderly, the infirm, the distraught, and the angry consumers. These circumstances aren’t avoidable, and a collector needs to navigate these circumstances as they come up. However, when it comes to external influences on collections, we should all be aware of natural disasters and apply some empathy and breathing room when necessary – it will ultimately result in a higher liquidation in the long run, better care of everyone’s brand reputation, and a more positive experience with the consumers we are collecting from.
I’m always happy to talk about handling challenges and obstacles to collections – if you would like to chat, feel free to email or call me with my contact information below.
KINGSTON Data & Credit