Silence Is Golden And Duct Tape Is Silver

As a consultant to the debt collection industry one of my duties is to create and perform collector training classes. I have been doing this for many years and a few years ago I came to a realization which lead me to change my training.

It was hard to get collectors to embrace this new technique as it was revolutionary to them. They resisted and would revert quickly to their old habits but the first few that listened and got the concept were seeing the results in increased liquidation, more debtors would agree to pay and it reduced time on the phone and frustration.

What was the new thing that was so hard to teach collectors, SILENCE. Yes to try to teach a collector shut up and listen is not an easy task but what they will hear will change the direction of the call quickly. At times when I first started teaching listening skills I wished I could put duct tape over their mouth right after they finished the Talk off. Instead I began to teach them to use the mute button. The real trick is not to get them to push the mute button but to LISTEN.

It was listening skills I was trying to teach but collectors are hired to talk and most can talk your ear off about nothing.  So I had to first just get them to shut up so they could listen and hear. What I had learned many years ago from both my experiences and from others in industry is that if you will listen long enough the debtor will suggest a solution.

Here is what I learned, If you tell the debtor that the balance in full is due today and then hit your mute button the first thing is awkward silence, then the debtor will say he cannot pay the bill in full its impossible, then more awkward silence and the debtor says why he can’t pay “I am out of work” or “I am on disability”. This is followed by more excuses and more silence till finely the debtor says “Well I could pay you $5 a month if that helps”. OK now you have achieved the desired results and now the collector can begin to talk and negotiate an arrangement to repay the debt.

What happens is amazing as most people will follow this pattern if you can listen long enough. Remember your last statement was “The bill is due in full today” so thats starting strong. Even though the debtor is starting very low he is now ready to make arrangements and the skills of the debt collector will get the BPA or best possible arrangement.

So teach this method and try this when you hear the staff not listening go by and put 4 inches of duct tape on their cube to remind them to listen.

Silence is golden and duct tape is silver but listening is where the money comes from.

Does The Santander Supreme Court Decision Change Everything? I think so!

Ok what does the recent 9-0 Supreme court decision in Henson V Santander https://www.supremecourt.gov/opinions/16pdf/16-349_c07d.pdf mean for the debt collection and especially the debt purchase industry? It means it could be the wild west. Does it mean that a convicted felon in N.Y. can buy a spreadsheet of debt for $5k and collect it as first party with no fear of the FDCPA and no need for licensing?

Here is how InsideArm explained the ruling “In this unanimous decision, the Court determined that Santander Consumer USA, Inc. did not fall under the plain meaning of the term “debt collector” in the federal Fair Debt Collection Practices Act (FDCPA) when it purchased defaulted loans originated by another lender and proceeded to collect on these loans because it was not seeking to collect the debts “owed another”. The act of purchasing the loans meant that the debt was owed to Santander—not another entity” . https://www.insidearm.com/news/00043001-industry-association-urges-caution-when-i/

So will this change the face of debt purchase and therefore the face of debt collection? Possibly! So if your a debt buyer and you want to reduce your exposure to the FDCPA then you would have to collect the money yourself in-house. The collection agencies that have always done the work for you are now a possible FDCPA lawsuit liability. Will the third party agencies disappear and be replaced by in-house shops? Will this spur debt purchase again to be a big business? Will the Supreme Court amend the decisions to say something different or re interpret the meaning?

There are many questions and possibilities but on the face it looks like this to me based on the decision. I believe this will change the debt purchase industry by allowing it to grow. If the decision allows for someone to buy debt and collect it as first party then the need for third party agencies will diminish for the debt buyers. The debt buyers who in most cases were already increasing there in-house shops due to the no resale provision in most sale contracts, making the buyer keep the debt forever, will now build those in-house shops bigger and bigger. They will expand offices, build payment sites, buy software, increase head counts and embrace nearshore operations to reduce costs.

What will this do the average collection agency out there? Not too much because only a few agencies are dedicated to working debt buyer business, most are healthcare or banking type collection shops and these accounts will not be effected in the same way as debt buyers. Hospitals will continue to hire agencies, banks will still place the debt with agencies prior to sale. But it will have an effect on the agencies that are dependent on debt buyers for business as they lose market share to the in-house shops.

Many debt buyers will also go on with business as usual because they hold themselves and their third party agencies to standards similar to the FDCPA whether they are required to or not. The biggest debt buyers will continue to place accounts but they may increase their in-house staffing and reduce the outsourced debt volume. But look at the Square2 model which did not work well before this ruling. They had franchisees not third party agencies to collect there debt.  Now this decision makes their in-house shops first party and the franchise idea has much stronger legs.

There are many scenarios but this will have some impact and it is likely to be big in my opinion. Call me if you want to discuss this and how you can protect yourself or find opportunity in this decision.

My Life in Jamaica Continues

Well its been another month in paradise and here is what is going on with Lighthouse Consulting Jamaica and Phillip Duff its CEO. It was a wet week in May on the island which lead to heavy flooding. Most of the interior of the island received hurricane volumes of rain for a 4-5 day period causing many roads to be washed away and lots of flooding. Montego Bay and Kingston were the least effected areas. There was no hurricane it was just a tropical storm with lots of rain.

Following the biggest day of rain in which the entire island was getting inches an hour my internet and TV went out at my residence. The company that I and most of the island get service from is FLOW, think of them as Comcast. I have learned patience from the island already so I waited a couple of hours for service to get restored and then called FLOW to find out what might be the problem. I got the following message;

“Due to heavy rains the Montego Bay area Flow’s service has been interrupted. We apologize for the inconvenience, Also due the inclimate weather in the area many of our service reps were unable to make it to work today so unless your need is a life and death situation please call back at another time.”

Life or death? Internet and TV service that is life or death? HUMMMMMM. Well my service was restored later that night but that was an interesting message.

So the last week of May has been challenging as I had 1 new collection agency client in Kingston training 24 collectors to work on their system and at the same time had 5 guys in Montego Bay as prospects. The two cities are a 2.5 hour drive apart. Thank God I have a strong partner and team, Karl my partner was able work with the new client in Kingston while I entertained the prospects in Mo Bay. Both of us did make the trip back an forth to see the other but it went very well over all.

I was able to experience a new thing on the island by flying to Kingston and back to see the new client. The experience was a great one and this will be a common travel method for me. The flight was on a 24+/_ seat Inter-Carribean Airlines Turbo Prop plane that made the trip in 22 minutes a great improvement. It allowed me to meet with the new client and have lunch before I headed back to Mo Bay to sleep in my own bed that same night. The trip was easy and I will repeat it many times in the future.

While the new client training was happening in Kingston I had 5 executives from a large collection agency in the US at Half Moon the most wonderful resort on the planet in my opinion. Half Moon in Montego Bay has hosted every US President since the 50’s and every British Prime Minister as well. Jackie Kennedy wrote her will at Half Moon on Half Moon stationary. There are images of many famous people in the lobby such as Richard Branson, Prince Harry, Prince George, Usain Bolt and many more.

The prospects fell in love with the island and were ready to do bussiness here even before we went and visited the call center in Mo Bay. I know the CEO of this company very well and told him the 5 day visit “would change his life” and it did. He found a way to turn off the cell phone and relax in the private villa with a pool and a maid and butler. He also clearly saw the opportunity of doing business here. The great English language skills, their understanding of the US culture, the low cost of start up, the overall ROI, the reduced cost and the ability to have staff that want to work. He signed on the bottom line to start with 88 agents, 🙂

As this business is growing at a pace faster than Usain Bolt I have had to completely give up my US residence and be on the island 100% of the time. I have 10 new prospects a month and 5 of them are signing contracts so I have to be here to make my clients and myself successful.

If your reading this blog your interested in either just want is happening or being part of it, let me suggest you come to Jamaica and let me show you what you can do here. Let me show you just how easy I can set you up to have your own office collecting your debt in Jamaica at half the cost your paying now. “Come to Jamaica, you’ll do business in Jamaica.”