You’ve probably heard of the sniff test, which is an idiom for using one’s instinct or gut to determine whether something is right or wrong. But the sniff test actually exists in medicine. A recent study, for example, revealed that if an unconscious person responds to smell that he or she is exposed to, that person will eventually regain consciousness. The results were accurate even for people who had been classified as being in a vegetative state.
While the sniff test can be a great tool to help make decisions, it should not replace the other tests that need to be done to perform the necessary due diligence in order to reach an informed conclusion. For creditors, healthcare providers, and other companies hiring collection agencies, that due diligence can protect their reputation, keep their names out of the headlines, ensure their customers stay their customers, and recover as much of their unpaid debts as possible.
Compliance is the most important component of operating a successful collection agency today, and there are several boxes that need to be checked in order to confirm that an agency is following the rules.
The sniff test when evaluating a collection agency can be as simple as a look around an office — if you are able to do that these days — or the answers you are given to questions if the due diligence is being conducted via a phone call or email exchange. But what type of questions should you be asking to make sure that the agency prioritizes compliance above collecting?
- What type of training do employees receive on compliance topics, including the Fair Debt Collection Practices Act and relevant state laws?
- Does the agency have a Compliance Management System and how often is it updated?
- If the debt being collected is medical in origin, is the agency compliant with the Health Insurance Portability and Accountability (HIPAA) Act?
- What happens when an employee commits a compliance violation?
- Does your agency record calls with individuals?
- How do you document, investigate, and respond to complaints from individuals about possible compliance violations?
- How many complaints have been filed against the agency with the Consumer Financial Protection Bureau, the Better Business Bureau, and the state Attorney General’s office?
When looking to place accounts with a third-party agency, more than the sniff test is required to make sure your brand and customers will be placed in safe hands. It could mean the difference between the success or failure of your business.