Collection agencies, debt buyers, and attorneys turn to Cornerstone Support for assistance in developing an appropriate licensing strategy, evaluating an agencies current licensing situation (identifying any gaps in compliance), and/or dealing with issues that may arise with various state regulators. Auditing and consulting project fees can either be structured as a fixed fee arrangement or actual hours can be billed at a predetermined billing rate.
What strategy should an agency employ to become compliant? First, the agency should identify the states where they are currently communicating with or anticipate communicating with debtors. The statutes are consistently clear among the respective jurisdictions that communicating with a debtor, whether by phone or mail, without being licensed is a violation of the law. The penalty for such violation varies significantly from state to state but ranges from administrative action (fines and a cease and desist) to potential criminal charges. As such, it is imperative to obtain and maintain the appropriate debt collection licensing and registrations in all states where debtors will be contacted.
Secondly, the agency should identify what types of credit grantors they are currently representing and more importantly what types of credit grantors they are working hard to attract. The credit grantors fully understand the debt collection licensing requirements and the related exposure that exists for them by forwarding accounts to agencies that are not appropriately licensed or registered. Most national credit grantors expect the agencies they use to be appropriately licensed in all jurisdictions that require licensing for the collection of debts and the performance of other related functions. As such, licensing has become one of the most significant barriers to entry into third party debt collection.
In summary, an agency needs to invest the time and resource necessary to develop and implement a licensing strategy that not only protects them from state imposed sanctions and possible civil litigation, but also attracts high-volume and high-yield clients. The perfect strategy for licensing couples the technical requirements imposed by the states with the intangible benefits of properly positioning the agency in a very competitive market.
As you are aware, each state has the right to enact its own set of debt collection laws and requirements. As such, each jurisdiction has very different licensing and registration requirements. Failure to comply with state licensing and registration requirements could prove costly (civil and/or administrative action, negative press, etc.) not only to the collection agency but also to the creditors that they represent. To minimize this risk, most creditors establish internal policies, programs and procedures to ensure that the agencies that represent them remain licensed and in good standing in all appropriate jurisdictions. Depending on the scale of your outsourced recovery program, this can prove time consuming and costly.
The Cornerstone Support Assessment Services Program provides you with a strategic alternative that will effectively mitigate the exposure that you have concerning unintentionally using an agency that is not appropriately licensed while eliminating any cost to your organization. Resources currently utilized by your organization to facilitate the process of continually monitoring agency compliance could be reallocated or eliminated. Simply put, let Cornerstone Support provide your organization with the assurance that the agencies that represent you are appropriately licensed at all times.
The following provides a macro level analysis of how the program would work:
Develop a Licensing Matrix
Cornerstone Support will assist your organization in developing a licensing matrix based on specific statutory requirements.
Initial Compliance Report
Cornerstone Support will prepare an initial compliance report that identifies where an agency is currently licensed and conversely where any gaps that may exist in their statutory compliance. Please note that this report can be adjusted (information added or removed) to meet your specific needs. These compliance reports should be prepared for all prospective agencies at the front end of any RFI/RFP process – why spend any internal labor hours evaluating an agency that is not appropriately licensed and therefore will not earn your business. Furthermore, we should prepare an initial compliance report for all contracted agencies in an effort to identify any gaps that may exist currently.
Remedy Compliance Gaps
Cornerstone Support will facilitate the process of correcting any statutory compliance issues identified in the initial compliance reports.
Your organization will require all contracted agencies to participate in one of the two following programs:
Engage Cornerstone Support to facilitate the process of maintaining the appropriate licenses and registrations. Our renewal service includes tracking renewal and annual report deadlines; preparing renewal and annual report applications; submitting completed renewal and annual report applications to the appropriate state department; and following up on the status of any submitted renewal and annual report applications.
Engage Cornerstone Support on a scheduled basis to perform an independent review of the current licensing situation.
In return, you will receive a regular Compliance Report for all contracted agencies that identifies where an agency is currently licensed and more importantly any gaps that may exist. Please note that an exception report that summarizes any compliance gaps by contracted agency could also be provided.