Jamacian Call Center News

One of the services provided by Lighthouse Consulting is near shore call center management, consulting and agency set up, particularly on the island of Jamaica. So in order to better educate my US call center operators I will start providing information about call centers that are involved in debt collection, debt settlement or other ARM services in Jamaica.

an overturned boat on the beach in the Caribbean. Boat is painted "Rasta" colors.

an overturned boat on the beach in the Caribbean. Boat is painted “Rasta” colors.

Let’s start by giving you some information. Jamaica is a major call center destination receiving and making calls around the world to English-speaking countries. Call centers handle everything from Pizza delivery orders in Montréal, Medicaid healthcare products sales, Cable TV sales, debt collection and many other projects. There are tens of thousands of trained call center workers in Montego Bay and Kingston. Vistaprint has they’re only worldwide call center in Montego Bay and is one of the major employers of the city. Delta, Fingerhut, American Airlines, Insurance companies and many more all use call centers on the island.

I first came to the island as an auditor for collection accounts that were placed in there with Alliance One in 2000. So as you can see the island has a long history of debt collection. In future articles I will provide information on some of the call centers that currently exist on the island and how they may Bring value to your debt collection operation. With the average wages for a trained bill collector in Jamaica equaling half that of the US and similar results, the ROI is easy to caculate.

Reasons to use a Call Center in Jamaica

English is the primary language 

Accents are mild and pleasant

Jamaica is a call center hub

Favorable wages 

ROI is high VS USA staff

Close to manage (1 hour flight from Miami, 2 hour flight from D.C.)

Work lower unit yield accounts at a profit

Data entry and admin functions

Insurance reps

Transfer agents

wZtizoK

“¡Me pica qué, me rasca aquí! Translated “It itches me here, but you are scratching me there.”

The Quote above is from Judge Million of People’s Court. In the court case, the judge quoted this Cuban phrase, describing a defendant’s avoidance in answering her question, by answering a different question.

judge-milian-photos-i18

Question avoidance, intentionally or unintentionally, is a common issue in the debt collection process. The agent is seeking specific information that will help him or her collect the debt. Yet they ask a question that leaves the door open for a variety of answers. The individual on the other end of the line ends up providing useless data to the agent.

A debt collection call is much like the job interview process. Many common questions are looking for specific answers, even though the question is vague. For example, it is common to ask an interviewee to, “tell me about yourself.” The manager wants specific work history that relates to the job in question, helping the interviewer to evaluate their work experience. If the applicant responds with places they have lived and their growing up years, this information does not provide valuable insight regarding the type of employee they are. Employers are fortunate that most job applicants understand the questions intent and give the manager what they want, even when questions are obscure.

The collection industry does not work with customers educated in the debt collection process. Consumers require more guidance and handholding, in the form of the right questions. Customers are not typically experienced with the debt collection process, and may be hesitant to cooperate because they don’t want information they provide used against them.

It is the agent’s job to ask quality questions that provide clear guidance on the information they need, and this comes with proper training. Staff training is essential to your business because the agents must remain compliant with regulations, obtain valuable information about the consumer’s financial situation, and bring them into an agreement on a payment arrangement. Those are not the skills of a rookie.

In order to avoid the situation faced by Judge Million, agents must have the grace of a Gazelle with the questioning skills of a lawyer. They must lead the consumer to the conclusion that the agent will help them pay off the debt within their financial constraints and move the collection process forward. Lawyers much like debt collectors must phrase each sentence in a specific manner to increase the likelihood of gathering useful information.

Lighthouse Consulting has almost two decades of experience working with companies just like yours. Their industry experience can train your staff to quickly and efficiently obtain the information required to collect on the debt.

Contact us today to learn how we can increase the efficiency of your staff through proper training.

What Does the Future of Collections Look Like in 2020?

Here is my version of ‘1984” for the collection industry. 2020 is just a few years off and with the direction and level of change in the collection industry here is what I perceive the industry will look like in the year 2020.

First; TCPA reform will allow collection agents to contact consumers on their smart watch or some other yet to be invented device. So let’s look at a normal account flow in 2020.

Dental Office Account for $1,000 Placed with Agency after 90 Days Delinquency

Day One

Email and text sent to consumer with the following:

  1. a) disclosures;
  2. b) a link to an online interactive negotiating website;
  3. c) no contact phone number is provided to contact the collection agency;
  4. d) a link is provided in the electronic communication to file a dispute within 30 days.

After the IT department launches the text and email campaign, the marketing automation system, using artificial intelligence based machine learning, begins to analyze the interactions of the consumers to the text messages and emails. Depending on the timing and frequency of the consumer engagement, and the devices they utilize when responding to the campaigns, the collection automation system then begins to build follow up campaigns created in real time, utilizing the most likely communication channel through which the consumer will engage. These follow on communications campaigns are created and optimized with compliance rules and conversion goals at the heart of the analytics model

Days 2-4

Based on the actions, or lack of actions, over the previous 24 hours, the collection automation system now begins to optimize and expand the contact strategy, introducing new contact channels to the strategy. In this stage of the campaign, expanded contact options such as a collector chat/assistance option or a “Click to Call”button are introduced to some, but not all consumers utilizing the web payment system. Based on certain actions performed by the consumer or inferred by the system during the web session, such as payment intent or exit intent, new communications options are presented to the consumer in the web payment session based on their actions or perceived intent. As consumers interact with different communications tools, the system identifies patterns and measures actions against predetermined collection campaign goals, and provides attribution to the different communication channels, giving credit to assisted conversions across the different engagement channels utilized. By measuring the number of touches, and identifying the different channels the consumer engaged with, the collection automation system will continue to learn and optimize the most effective strategies.

Days 5-10 

Over the next 5 days of the campaign, the collection automation tool will now begin to incorporate selective outbound calling campaigns, but tailored to actions in near real time that identify a consumer’s likely intent to engage. Based on actions such as opening an email for a second or third time, visiting a payment site and viewing offers but exiting without making a payment, or visiting the payment site or opening the email from given type of device such as a mobile phone or desktop device, the marketing automation system can direct the dialer to make an outbound call to the most likely number the consumer will answer based on the device they were previously using. The system might also opt to just send a text message to the consumer directing them back to the payment site for a new set of offers available only for a limited time. This one-to-one contact strategy is designed to present the right offer, on the right device, at a time that the consumer is most likely to receive the communication and be able to act upon it.

The Collection Manager of 2020

In the new data driven collection environment, managers will view portfolio performance with a new set of metrics, balancing total liquidations against channel cost and time decay. Managers will leverage multi variant testing tools to develop complex champion challenger tests, constantly testing every aspect of each communication from verbiage, to color, to logo placement and even designing dynamic messaging down to the recipients preferred email provider or device model. This begins to look like marketing at this point instead or collections.

Testing will become a science in and of its self with complex champion challenger tests designed to squeeze the maximum number of basis points of liquidation from every file. The collection manager of 2020 will be data scientist first, and collection specialist second, with a strong background in direct to consumer marketing functions. The collection managers of tomorrow must be focused on the science of consumer engagement first in order to compete with the constant barrage of messaging and communications consumers will be presented with in multiple channels.

The Connected Society of 2020

Credit bureaus will be forced to become more responsive, leading to the requirement to add and delete records in 24 hours or possibly in real time. Credit applications will be originated using electronic applications or device based apps, virtually eliminating the need for paper applications. Consumer communications will be almost exclusively electronic as society moves to a near 100% connected status.

Durable goods and large ticket items will be enabled with GPS communications and location tracking systems that allow remote diagnostic and servicing as well as lockout and disable functionality in the event of non-payment or default. Retail brick and mortar establishments will continue to suffer as consumers make more purchases through online outlets and rely on retail locations for same day Pick Up convenience or showroom services.

In the connected society of 2020, hard currency will become almost non-existent with biometrically protected mobile wallet applications replacing the need to carry currency or credit and debit cards. Barriers of language that exist today will be gone in 2020 and reading anything in another language will be as simple as snapping a photo on a cell phone or looking through the viewfinder on a camera.

Massive personal databases housing all types of information on millions of Americans will become connected and consolidated, aggregating personal, financial, medical history, genomic/DNA, lifestyle and behavior data that will be accessible by the government, employers, insurance providers and financial services companies under the auspices of protecting consumers and the nation. A medical diagnosis or treatment immediately updated in this database may automatically trigger a search for DNA or other genomic information to treat the condition or simply implement an abatement of collection activity against a person with an outstanding debt.

As communication changes from personal to electronic over the next few years, the few agencies and law firms that embrace that technology will be the big players in 2020, the ones that shun technology as a collection tool will fade away. If you’re interested in learning which of these tools now exists and how you can get on board call Phillip W. Duff CEO of Lighthouse Consulting today at 904-687-1687.

My Thoughts From Nashville

After attending some meetings in Nashville last week I have returned with some thoughts about the legal debt collection space and its future. The first thing I noticed in the Omni Hotel lobby was a change of the average age of the attendees of the NARCA conference. Many younger faces were wearing badges that branded them as attendees of the conference. As I began to look at the firm names on many of the badges, I was left with two distinct thoughts.  First, the average age of attendance was much lower and secondly, the older, familiar faces were not there. Many have retired, sold their firms or just handed over the keys and moved on.

I have been around the industry for many years and personally know hundreds of law firm employees and many of those friends were not in attendance at this year’s conference. In fact I was there to host a private party for many of those friends and a few new friends in the industry with another industry veteran Ranjan Dharmaraja from Quantrax. We had a great turnout at the party and are starting to see a change in attitudes about the marketplace, but more on that later.

Compliance has finally become part of doing business and not the hot topic for discussion. It seems that the firms that were so focused on the cost and processes of compliance have finally realized that this is the new normal and just part of doing business as the marketplace has evolved. Now the focus is how to be more compliant and control costs at the same time and this is driving firms to seek out vendors and consultants that have the answers.

Another thing that has changed dramatically is the client list of many law firms.  A steep decline in placements from debt buyers, both large and small, has drastically changed the makeup of the law firm client base. With fewer buyers in the marketplace today, and issuers holding more of their debt for collection or legal recovery, many firms are seeing more stringent work standard requirements as the more conservative issuers place their accounts with law firms.  The result of this is more compliance oversight and cost for the firms working for original creditors.

Technology is changing and advancing to the increased compliance needs of the marketplace.  As the demand for more complex work flows is placed on law firms, and the demand to create more automation increases, many firms are looking for a better solutions than the old school software that they have been using for years. It is my opinion that as some software vendors struggle to create and update their software to meet the demands of the marketplace, there will be a shift from platform to platform with the hopes of a better solution, more user control and reduced costs. Now that the marketplace has provided multiple software solutions for law firms to choose from, firms are exploring these new and advanced systems as the firm’s software requirements become more complex and demanding.  As firms begin the process of comparing features and functionality, they will discover things like advanced voice analytics and start to see opportunities where their current software provider cannot deliver these advanced technologies and other vendors can.

So the new normal in a collection law firm is BIGGER is BETTER. As the issuers migrate toward larger firms who can more effectively demonstrate compliance and reduce the issuers costs of vendor management, the larger firms will see strong demand and growth in the foreseeable future. While profit margins have been depleted, the higher volume the bigger firms receive will allow them to meet the work standards of the new marketplace and still recognize an acceptable profit. To not survive but thrive, these firms will have to recognize more economical ways of operating.   Optimizing internal processes can deliver substantial cost savings and therefore increases in profit margins on the work performed.  Every process must be considered and evaluated in order to maximize profits.

Even processes and techniques that may seem outdated or underutilized can deliver significant efficiencies and economies of scale when implemented correctly.  One example of this is the use of transfer agents to maximize agent productivity.  The use of transfer agents is making a comeback with cheap domestic labor changing the old school staffing solution into today’s money saving, productivity generating process. Effectively leveraging transfer agents to get the consumer to an experienced collector can effectively reduce your cost by as much as 50%.

Other proven technologies like web-based payment sites and online negotiating systems are proven technologies to increase liquidations and lowering costs, but consumers demand mobile friendly, responsive websites at a time when over 60% of internet browsing occurs on small screen devices like tablets and cell phones.  Not only do these sites provide 24/7/365 access for consumers to pay, they deliver an uncompromised level of compliance that cannot be matched with human collectors.  Every account that is effectively treated with through this channel is one less account a skilled collector needs to waste valuable time working.

Emerging technologies such as voice analytics systems allow the collection managers to audit hundreds of collector calls and while delivering a higher level of compliance through more effective training and re-training of staff when issues are recognized.

Finally, firms are realizing that they simply can’t keep up with all of the latest compliance concerns and technologies available to stay up to date and relevant in a market that changes by the day.  For that reason, they are turning to consultants, like myself, to help them identify opportunities for growth, technology, efficiency and operational compliance in order to maximize profits and reduce risk.

So what does the future hold for the debt collection industry? More change and consolidation!  It is my projection that most of the current trends will continue over the next 12-36 months with little change in focus. The debt buying industry is the one factor that could bring more change to the industry if it is able to survive these difficult times. The debt buyers, both BIG and SMALL, face substantial challenges to their business model.  Pricing pressures, inventory, purchase restriction on post sale activity and compliance remain the biggest challenges, and the industry will have to make major changes to recoup lost profits from these issues.    The focus for the bigger firms over the next few years will be to take a critical look at every system and process in the organization and identify ways to use technology and expertise in order to deliver the maximum efficiency.  Starting with things like training programs, voice analytics, operational consulting and new and more powerful software systems will are the low hanging fruit should be focused on in the short term.

If you are looking for answers and want to speak with me, just pick up the phone and give me a call.  The first call is FREE 904-687-1687 Phillip W. Duff | CEO Lighthouse Consulting.

An Interview with Bob Weltman of Weltman, Weinberg & Reis, Co., LPA

When interviewing Bob Weltman, my first question was, “When did you first enter the collection industry?”  To which he replied,

“One summer I worked as an inside and outside collector for a local finance company and that was important because some of the policies that they had back then I later adopted here, I started with a law firm in September of 1962 and when I started with the law firm, that’s when I started getting involved with more full-time collections.”

I then asked, “Was that this law firm?”  “Yes.” Bob said.  “What was the name of the firm back then?” I questioned.   Bob stated,  “Gardner, Spilka and Weltman, that was my father. As I said before, I was born in Cleveland and when I was in third grade, right after the Second World War, my family moved to Florida. My father was a lawyer, one of the youngest lawyers in the state of Ohio. But he went into business down there and then after the 10th grade he moved back to Cleveland, which would have been 1953.  He got a job working in a jewelry store and he worked at night, I used to see him typing and I would ask him what he was doing.  He said “well I’m helping out the jewelry store to collect some money because I’m an attorney.” And sometime soon thereafter the owner of the jewelry store said to my father “I know these two attorneys called Gardener and Spilka that do collection work.  Maybe you can make more money working there”,  so he came over here working for Gardner and Spilka and almost immediately they named the firm Gardener, Spilka and Weltman after my father. When I started my first day at law school, the second time around, and I came to work here, Gardener had already passed away, so when I came to work here there were eight people working here.  There was my father, Spilka, another attorney, a couple of bill collectors we had in a collection agency and a couple of secretaries and me.”

 

Then I asked, “What kind of debt will you collecting back then?”  He responded “Department stores primarily and oil companies so the largest clients we had were department stores and oil companies.”  “And that was all primarily local businesses in the Cleveland area?” I continued.  Bob replied, “All local department stores and at that time Ohio which was part of the Standard Oil group.  Then what happened was, I started here in ‘62 as a law student, I graduated from law school in ‘65, took the bar, and some time, I started in ‘62, sort of working outside running errands, checking court dockets, and sometime in ‘63 I asked my father what the people did in that other room and he said that’s our collection agency.” So I said to him, “I used to work in a finance company doing collection work, if I run to the court real fast can I come back there and work in the collection department?” and he said, “Yes.” So I went to work there and I asked him after a couple of days, “Did you make any money there?” and he said, “No.” and I said, “Why do you keep it?” He said, “Because at that time to be a trustee in bankruptcy, to be the trustee of the bankruptcy estate, the creditors used to elect the trustee, and so they gathered all the creditors at that time which were basically department stores and the oil company, and we had the majority number of claims and almost 75% of the cases, so that when a bankruptcy was filed they owed one of the department stores money, we had that department store elect us to become trustee since we had the collection agency , I said to my father “I think I can make money in there at the department. Can I buy it from you?” And he said “I’m not going to sell you a department in my law firm I’m going to let you run it.” So when I was in law school I started to run the collection department and by the time I graduated from law school most of the bar was shocked because they thought I was an attorney before that because I was running the collection department while I was going to law school.”

“Was the collection agency separate from the law firm or were they two separate entities?” I queried.  Bob answered, “At that time there was a case that came down that said a lawyer cannot own a collection agency so they just collapsed the name of the collection agency and incorporated it into the law firm and then in the 60s the banks got into credit cards and my father’s partner Ted Spilka said “I represent all the banks and all their bankruptcy cases, they’re going to get into the credit card business and they don’t know what to do with it when they go delinquent.  I want you to meet with the bankers.” So we met with the first local bank, we got that credit card business and then as all the other banks got into credit cards, I met with them to get their business.  At that time the largest bank in the state of Ohio was Cleveland Trust and they went into the Visa card and I was introduced to them.  Pretty soon it was starting to grow. Also going back in those days we used to collect in one month what we now collect in 30 seconds here, and I remember one of the department stores called me up and he said, “When we sue someone, we give you all of our judgments to collect the judgment, or execute on it, or garnish people’s wages.  We want to get out of the collection work, we want to turn over all our inventory.” and so at that time they would give me three or four files a month, and I thought they would give me maybe 10 and so I went over there, and there were hundreds and hundreds of jackets.   That’s when I took Scott’s red wagon and I would wheel it back-and-forth from the client, a wagon full of new accounts, taking them home setting them up, getting them in circulation.  That’s how the collection process started.”

“So you were working off of paper then or off ledger cards?”  I asked.  Bob replied, “Not off of ledger cards, off of jackets. The first day with the jacket, then not too long thereafter we hired another attorney who used to work at Sun finance, that’s the Sun finance that I worked for, and he said “remember the old tabbies that they used to have where they yellows would be the zeros and then the reds and so we then develop collection cards where you put a number on it and the tabby would be the last two numbers. Then we put them behind dates and then the follow-up date and that card was where you made all of your notes on” and so that was the beginning of the cards so we went from the jackets to the cards.”  I noted, “I remember that even more than I want to, personally.”

Next I asked Bob to what he contributed his longevity, to which he replied,  “Focus. Are you talking about the firm or me?”  “You”, I said.  He continued, “Focus, you’ve got to stay focused.  A lot of good people work here, a lot of hard-working people that have dedication and commitment. I’m very competitive so I treat everything I do with the competitive manner and so the challenge, the challenge, the focus, the commitment, keeping an eye on the ball.”

Then I asked Bob, “How different is collections now versus then, taking in for example the difference of working off of cards and working off of computers, and the challenges that technology brought, especially in the 70s and the 60s?”  Bob replied, “What happened is the office began to grow and it became more and more difficult to locate cards when someone would call up because the card would also be your method of collection, your method of matching mail to it, the method of litigation.” “And accounting payments.” I added.

Bob stated, “I had a partner back then, may he rest in peace, who said that maybe a computer would do it so back in the late 70s early 80s we were one of the first law firms in the country to bring a computer in, in order to organize it all, so that it would be instantaneously at your fingertips. The biggest change obviously is technology, I mean technology really drives the business, and it’s obvious that without technology you can’t run an operation, because it’s important; the technology just speeds up your ability to recall things and to gain access to information, and so technology is the biggest change and also the industry as a whole has gone from one of performance, to security, to compliance.  So it seems in the beginning where the clients were more interested in how well you perform and how much money you collected for them, today they are more interested in how you are keeping them out of trouble not so much how much you collecting.  The clients have said to me several times “we’re risk averse, so if you have to pass up on a collection that would improve our bottom-line, if there’s any risk involved in it at all, we don’t want you to take the risk, we’re risk averse.” The mentality of the client has changed and also technology has become a big boosting step in helping the industry.”

Next I asked, “Give me some idea when technology first came in, how was it even more challenging to you then, actually probably the cards were because I’ve seen that before, or was it?”  Bob answered,  “First of all when somebody said a computer I thought it was a typewriter you wheel off the elevator, you plug it into the wall and go to work on it. I’ll never forget the day that they wheeled off the first IBM computer and they said to us, “where’s your air conditioning room?” and I said “what do you mean air conditioning room?” and they said “we can’t put this big huge computer in a room temperature room, you’ve got to build an air conditioned room.” So we had the computer sitting in a corner while we built an air-conditioned room.  They said to me, “where’s your programmer?” So just the entire intelligence of what a computer was like, the conversion from the cards to the computer, taking the time and then of course once you’ve mastered that, the programming of the computer, Scott described to you before that we have an HP homegrown system. The system that we had was all drafted by me, the logic of the system was drafted by me and the yellow piece of paper of the flows that I wanted to have down and so the intelligence of the computer had to be put into the computer and somebody had to program.  The programming took forever, we financed the computer and I think that within six months of the computer that we financed over five years we outgrew its capacity, so we’re constantly upgrading, constantly refinancing the computer so we never really courts up with the payments of the computer It allowed us to operate at a higher volume and allowed us to operate in a more intellectual manner. We never got the whole system converted. We always talked about phase 1 phase 2 and phase 3.  We got phase 1 done and that’s exactly where we stood.”

I added, “One of the things that’s changed a lot, I entered the collection industry calling nearby’s, calling same last names, things like that, Skip tracing and of course back then we used to actually call the other banks, and whoever had the cards.  Tell me how Skip tracing has changed over the last 30 years.”  Bob replied, “Because of all the laws that now exist out there you can’t share information with anybody. You’ve got the fair debt collection practices. They have PCPA which makes it more difficult to do the things but now you still have access to credit reports, but I think the Internet, those people that know how to search the Internet has made Skip tracing easier today than it was back then.  You have online access to court and so I find it very handy that when I’m looking for somebody I can go up and check all the courts in the local, areas where they are and the federal court system.  What you used to gain by calling nearby’s and other creditors, you more than gain that by all the online access that you have and I think that the collector today can do a much better skip tracing job if they know their way through the web and how to search in different search sites.”  “It’s definitely changed.” I stated.

Bob said, “Yes, to the positive; real estate records, death records, bankruptcy records, now everything’s online with bankruptcy, you can search bankruptcy records, so there’s a lot that you can search that you couldn’t do before, property ownership, you can zero in, you can go through Google, view and look at someone’s home, you can see the neighborhood there and you can see the condition of the home, you can see the condition of the neighborhood, so there’s a lot that changed. You can get appraisal value of real estate, so it’s easier today to do skip tracing than it was back then.”

Next I noted, “Nowadays compared to when I began in the industry, actually taking a payment from the debtor is a whole lot easier. Talk a little bit about what you used to have to do 30 years ago to actually get the payment from the debtor. Nowadays they can take it over the phone but back then those options didn’t exist.”

Bob replied, “I always tell the story, which is one of my favorites; when we were very small, I used to come in on Saturdays and open the mail, that’s how little mail we had, and I remember the day before I spoke to someone that lived in one of the local municipalities and I called him up, and I said “you didn’t make your payment”, and he said “I’ll mail you hundred dollars tonight”, and the next morning when I was opening the mail there was an envelope from that suburb area, we didn’t have that many accounts back then that I knew everybody who paid back then. I opened up the letter and there was a $100 bill with no letter so I called the guy up on the phone and I said to him “you promised me a payment you didn’t send it to me”, and he said, “yes I did mail it to you”, so I said “well then you better call the bank and stop payment because I haven’t gotten the payment”, and he said “I didn’t pay by check”, I said “well how did you pay?” he said “I mailed you $100 bill”! OK, so back then the only two ways to pay was to mail it or come in in person.  When we first started we were very local in our collections so we sort of confined ourselves to northern Ohio.  The people would either come down to the office and make a payment in fact the department that I took you through which was a real estate department, and is used be the collection department there was a window there that where people would come, and make them payment today, or they would mail it in.  They can do it online today so we’re hopefully migrating to more online payments where we can get the payments instantaneously. It’s much faster.”

I told the story way back when I started GC services is where we used to get a debtor first of all to write out 30 or 50, a whole book full of postdated checks and then we would get him to go down to his local Greyhound station put that on greyhound package express so that it would go on the bottom of the bus from wherever and bounce around before it got to RC.  Our collection manager would go over three times a day to Greyhound and pick up our payments and then you had to find a ledger card to post a payment to and then the first check bounced, and that’s just the way it used to be. Kids today have no idea how easy it is for them.  If they ever tried to talk someone into sending something Greyhound package express, they could never do it.

“What’s has turned out to be the best advice somebody gave to you many years ago?”  “Work hard”, Bob replied. “Who gave you that advice?”, I asked. Bob responded, “I’m also a very good sports fan, a huge sports fan, and I like to look at people that have been successful in sports and I like to look at how hard they’ve worked to get to where there got.  I’ve read a lot of books about successful people and it was obvious that they didn’t work 8 to 5, they worked 24 seven and so I have always been a firm believer in that.  When I was younger I played a lot of sports and I was head of many sports teams and I always felt that practicing often and doing a lot of repetitions makes you better and so I’ve always lived like that.  It’s how my father worked.  My father got up early in the morning went to work, pounding away early in the morning on his typewriter in the basement on lawsuits for the jewelry stores and so that was a pretty good message. I’ve also worked and gone to school so I never was in an eight to five person so even when I went to college I took a double load of courses, not just the normal load and then I would still have jobs in between so there was very little downtime in my life where I’m always doing something to keep busy.”

My next question to Bob was, “How do you think that your love for sports has helped you in your business? Do you think that because you believe things like training and development and those things, do you think that’s been something that’s been stronger for you because there’s are a lot of people in this industry that are not as strong into that training development coaching type of management?”  Bob answered, “The first thing I learned is that to be a good collector you’ve got to be a good salesperson so you have to learn how to speak to people.  You have to be able to convince people what to do when you’re dealing with debtors.  You’ve got to make them feel important. You can’t pound on them am browbeat them.  You’ve got to talk to them like a human being and work with them. If a debtor were sitting outside the office, I would shake his hand, remember who he was, make a comment about his wife, make him feel important.  There is a connection to name recognition.  I know that in collection work the more you get your name out there the better the results will be. You know, indirect advertising and so I found that in sports I looked at the great athletes what did to become great, the commitment they have to the job, the practice they have for the job, so I combined a lot of those skills plus a lot of good marketing skills that I’ve learned and picked up over the years.”

I asked, “Where did you pick up those marketing skills?”  He replied, “Probably from reading a lot about people that have been successful.  Also learning from commercials. If you see a commercial you see a product and the repetition of the product over and over again, it makes an impression.  Getting my name out there very early on in my career helpful.  I was the sole marketing person with the firm and people used to say to me and no matter where they went I was there so the more   your name is before your client the more you put before you client more you put before the public the better it is for name recognition.”  “I fully agree”, I stated.

Bob continued, “So we have a very robust marketing department here as you can see as you walk around just in the building itself.  The amount of marketing things that we have hanging around there to help the employees with their job.”

My next question was, “What do you think someone needs to do to succeed in today’s current collection marketplace? The whole market has changed completely, you know, even just over the last 10 years, so what do you think is most important in today’s environment to succeed?”

Bob’s reply was “To learn. We have a very good mentor program in the law firm and I’ve agreed to be a mentor.  You need a mentor so I have three young attorneys that worked with me.  I think that I teach them by example.  I teach them by the hours I work, the intensity I work at and the example I try o set.  I think like anything today, it’s a highly competitive market.  I think they’ve got to learn the basics, you know you’ve got to learn what it is.  First, you’ve got to learn the industry, what it’s all about.  You’ve got to read about the industry, you’ve got to read the journals, you’ve got to read the success stories, you’ve got to work in the environment you can’t be afraid to get your hands dirty and I think it’s like anything that you learn.  I have seven grandchildren and three of them are boys that play sports.  They started off at the bottom league, they started off with T-ball baseball, and just to watch the progression, to watch the training which the dedication and the commitment made them become better athletes as they are right now. It’s the same thing in the work environment.  I think that you’ve got to start at the bottom, you’ve got to learn the industry, you’ve got to learn where you work and you’ve got to learn to follow the good people and act like the good people to try to become successful.  So, I think the basics are still there and I think obviously the younger generation is much more tech savvy than I am and so they are light years ahead of where I am far as learning technology on the job.  But at the end of the day, collecting money, asking someone to pay on a bill and getting them to pay it, is what it is really all about.”

I stated, “I’m a firm believer in some of the things you’re saying about training and development and having a good strong background, but that doesn’t exist a lot more in this industry. I noticed as a consultant that somewhere around 2005 to 2007, most of the big agencies and law firms that I dealt with quit training, because they didn’t need anybody that was smart to collect.  Back then all they needed was an order taker, just turn on the dialer and you put someone on the phone to take the money and so most everybody quit training and developing and I think that’s really hurt our industry right now. I’ve got some of my clients that say, “listen, go out and find me a high end manager to run my office.”  Well the only high end managers that are truly qualified now are either my age, 50 or older, or they don’t exist anymore because the ones that should be there, that should’ve been developed along the way, that should be around 35 to 45 years old, aren’t there because we quit training them.  Why do you think everyone else quit doing that?”

Bob responded, “In terms of the compliance education and training and testing. That’s a given, we also do, I’ll say, corporate level training, what we call WBR.  You get to learn about business skills, life skills, some of the basics, how to sell.  But we are talking about collections in general, obviously there are very robust training systems, training mentoring, the training side-by-side, if appropriate and obviously all of the stuff is training.”

I then said, “It’s the continuing development that everybody drops the ball on. They bring someone in, they train them for a week, two weeks, a month, whatever period of time, then they leave them alone, and they do not understand. When I started GC services you started out as a bill collector and within so many months they were going to move you to a unit manager and you got moved up the ladder kicking and screaming whether you wanted to or not because that’s what they did, and by doing that, GC services created a large majority of high-end people today who still running a lot of agencies, but I don’t see that in the average shop anymore. I just don’t see that continuing development.”

He said,  “I can’t speak for other organizations, but all I can say is we had that huge wave of expansion and consumer credit where you could be successful just by tripping over yourself, so now there’s been a sizable cut back.  Those organizations will not survive; they will not be around for that reason. We were located in northern Ohio.  Mr. Weinberger was working for me and Mr. Reese had just started.  A credit card client said to me “if you open up in Columbus we’ll give you all of our work” but at that point I had no idea even how to open up an office, let alone to expand, so than the banks came to me, because I was very tight with all the banks when they got into the credit card business, and they said banking is going to go statewide, if you open up in Columbus, we can give you all the work in the state of Ohio, so I went to Weinberg who was just a young attorney, and I said do you know anybody that can open up our Columbus office? He said, “Al Reese used to be from Columbus, he went to school there, he will go down there.”  Al Reese grew up under my tutelage and worked with Mr. Weinberg and me. He was experienced when he went there. Every successful office that we had was all run by homegrown people. Those offices that we tried to bring new recruits in, recruit or merge without firms have all failed because they were not homegrown and so training is essential to the all or merge without firm’s organization. When I started here I had no one to train me, I was the boss and I did whatever I wanted to I did it on gut and that’s how we learned. We weren’t as fortunate as Scott’s generation and all those people were who worked for us there’s no doubt who worked for a spent many years and got the training that was necessary and there’s no doubt that the next generation of the firm which is Scott’s generation is gonna carry this firm to heights unseen before, and in fact even today as we talk, Scott’s already decided about the next generation , so here it is Scott’s , his generation is now taking over the management and leadership of the firm and should have no problems at all because they’ve had sufficient training by watching the way veterans did it,, and the way we’ve done it and the way we work. There is no doubt that they’re are going to hire so we’re already planning on the third generation today. You see signs all around training in progress. We have compulsory educational courses, we encourage people to attend conferences we’ve been trying to engage ourselves everything known to learn. When I used to go to conferences, I didn’t go to conferences to be with the good old boys and sit around and drink beer and play golf. I don’t drink, I don’t play golf, that’s not a bad mark to people who do. I would go to the conferences to hear, what are the problems people were having, and then I would take them all together and gather them, and on the way home I would try to figure out a solution to that problem, so everything I’ve done has always been to learn and to train and to solve problems and that’s how the firm grew, and so that continues on today as we sit here, even more so today than when I was in college.”

I next asked, “Do you still have that passion for knowledge that you obviously have had for a long time, is it still just as strong with you today?”  Chuckling, Bob answered, “I don’t know.”  I followed with “Are you still reading books? Are you still reading that kind of stuff?”  Bob replied, “Yes when I’m on vacation. Scott told me to read Steve Jobs book. I read his book. I was blown away by it, absolutely blown away by it.”  I agreed, “That’s a good book, and I read all that stuff like crazy too.”

Bob continued, “and then of course the next book I read was Rev. George Steinbrenner’s book, and that blew me away even more so when I go away those are the  kinds of books that I read. Those about great people and famous people and how they achieve their success.”

Changing the subject, I asked, “How would you compare the installation of the CFPB be with the passing away of the FDCPA in its day?”  Bob responded, “We don’t know yet, we don’t know. I know that we’re gearing up.  I know that it became obvious about two years ago when this came down that we better get our act in gear. I know that Scott is very much behind making sure that we are prepared. I know that clients, as Scott told you, the trickle-down that was that CFPB will be coming in to see us.  They have, indirectly through the clients that are coming into see us. I know that with passing the audits with regularity. I know that several times he said we are further ahead than anybody else out there, that’s the way I want it to be. I’ve always said that the CFPB and the entire regulation is going to be a huge marketing tool in the future, I think that once we are visited by the CFPB, that we can go out and sell our compliance. I think that no longer can we tell the client that we can out collect you, no longer can we tell the clients that we are the hardest working people, no longer can we tell the client that we have the best lunches, and the best sports teams, no longer can we tell the client that we have cameras everywhere, and we’ve got badges even Bob Weltman wears a badge. Now we can tell them these are the things we are doing to keep you out of trouble, and I think that’s going to be a huge selling point, a marketing point for us in the future as we redirect our marketing in that direction.”  I said, “I agree.”

Bob said, “Fast Eddie Watkins was a bank robber, and Fast Eddie Watkins spent more of his adult life in prison than he did out of prison.  Fast Eddie Watkins was an inmate of the Ohio State penitentiary and was scheduled to be released he begged them not to release him because he didn’t know how to adapt to society, he had a better life in there, and the reason why I know these stories is because a husband of one of my wives closest friends was a psychologist and knew who Fast Eddie Watkins was, and he said, “Eddie we can’t keep you around anymore, we’re going to let you go. He walked out went into a local bank, robbed it, the day he got released, took the money to a field in the suburb and burned the money in a field and surrendered and went back to prison.  That bank called me sometime after that and said we got word that Fast Eddie Watkins is writing a book, and they’re going to make a movie of him, and we want to give you our claim because we are self-insured and we want you to attach the loyalty rights from the book and the movie.  So I sued Fast Eddie Watkins, when I got an anonymous phone call that Fast Eddie Watkins maintained a bank account at one of the local banks, it was a Christmas account, where he was putting money in every month. I could not reveal my source and I couldn’t just attach that bank, so I had somebody drive in that neighborhood, and give me the name of every bank on 25 streets of that street and I filed an attachment against every one of those banks and hit the bank that I wanted to. I went to court, the judge turned to me and said “how do you know the money was at that bank?” I said “your honor you note that I tagged every bank that was in 25 blocks where Fast Eddie Watkins girlfriend lived or mother lived.” That’s what I did. The judge was so impressed by that he went to the papers and told them about it. I got written up in every magazine about Bob Weltman is the only person ever to get money from fast Eddie Watkins. Now that story sat out there and about 20 years later, couple years ago, I got a phone from a guy like you saying, “I’m writing a book about famous characters from Cleveland Ohio. We have all the gangsters in there, Chandra Burns, John (?).  The movie they made about the guy, Kelly, you know the guy that blew himself up you know we’ve got all and one of the characters we ran across was Fast Eddie Watkins I understand you’re the only person ever to collect money from him. I picked that up online so I was included in that book Fast Eddie. That was probably the case that got my career started with the publicity in this article hanging like that somewhere on the walls right here.”

I next asked, “Do you have any other interesting stories such as that that you’d like to tell?”  Bob replied, “There’s so many stories I don’t even know where to begin. And what you looking at there is that I started with the firm in September of 62 and so in September of 12 it was my 50th year of the law firm.  The law firm decided they want to do something.  I obviously didn’t want anything to be done but we rented the lodge at the ballpark and had a special night there for me where I was recognized so on and so forth.  They asked me to give them 50 of my favorite one-liners and these were some of the ones that I rattled and wrote down.  You can only disappoint one client at a time?”  “That’s funny”, I said.

Bob continued,  “It’s so important when you do collection work, both from the client’s perspective and from the debtor’s perspective, that it’s how you’re looked upon by the client and the debtor. If the client looks at you as someone that’s interested in just making money off of you, you won’t get their business. You’ve got to sell it to the client, not so much today because the way the things have changed, that it’s a partnership, that I’m in it with you, and that if you’re successful, I’m successful. We’ve been conducting educational courses at the client level for 30, 40 years. We always said that if the client is well educated, it makes our job that much easier. I had internal clients at banks that have gone from one department to another, and when they left that department they left to go into the collection department, I would say to them, I’m going to give you suggestions of how you can save money, the work you’re giving to me, you’re leaving money on the table. I would not be sending this kind of work to me, and I think you can do a better job internally and so I try to work with the client, to give them cost-saving ways to conduct business, to establish a relationship with the client more than just being a salesperson, but when I deal with debtors one of my favorite questions is “what would you do if you were in my position and I told you the story I just told you? What would you do?” And I try to make them let them help with the solution so I tried to work with debtors; I try to work with clients to come up with the best possible solution. When people come in here to interview me, to represent them, similar to what you said, I say to them I don’t want to lose out the opportunity to accomplish what you have to have done over how much money no one else going to do the job that I can do and therefore give me the file let me handle it and you pay me at the end what you think it’s worth, so as you know there’s a lot of sales work that’s got to go into establishing a relationship, and it’s important that your employee buys into that, that your clients buy into, that so we’ve always been client focused in all the years that we’ve ever represented the clients. The people that have helped make the organization successful, are people that have bought into that culture. You get a lot of new people here at a high management level and they say the cultures got to change and I say what is the culture we have and what are the changes going to be without us compromising what we do best. Were the only organization today doing what we do that was around 50 years ago when we started.”  “Very true about that”, I mused.  Continuing, I said’ “If you were to give any advice to someone entering the industry today, what would  that be?” Laughing, Bob said  “Go find another job!”  “No, no, as I said before, credit is very much part of what we do. In addition the firm has always been ahead of the curve in many of the areas that we’ve entered. We were the first law firm to have a computer; we were the first collection law firm to open up in more than one locale. We were the first law firm to develop a probate collection operation, so we were diversified in that we were in many different areas, so where consumer collections is still the backbone of the organization, we also have a very robust bankruptcy department, a very robust real estate foreclosure, a very robust commercial collections unit, and so on and so forth, but we’ve always seem to be an incubator for new ideas in the market place, and so what I would tell someone entering the industry is, I would tell them to get a job at a collection organization for 3 to 5 years and learn what it’s all about. The learning education is very important part of what you do. There aren’t a load of clients sitting out there and in today’s world clients aren’t looking so much as how much money you collecting them, but they looking what you doing to keep me out of trouble so I think you’ve got to learn what it is to work in an office. I got a guy in here the other day, and was on a business loan, and I said to him how long have you had your business? And he said,” about five years.”  I forgot what industry it was in, and I said, “What did you do before that?” He said, “I’ve been in this industry about 20 years.”  I said, “What happened?” He said, “Well 15 years I worked for someone and I saw how much money I was making for the guy and I decided to go out on my own.” I said, “What happened?” He said, “I underestimated what it was to own my own business.” I said, “Yeah you got to make sure the lights are on, you’ve got to make sure the air-conditioning and heat is working, you’ve got to make sure that the people are paid, you’ve got to make sure that you can manage the place when people don’t show up for work, you’ve got to learn how to run an office, you’ve got to make sure the supplies are ordered, and so on, so forth.”  I said, “It’s a lot different than when you work for somebody.” So he said, “Yes. To go into this industry, it depends how you want to go you want to go into it, if you want to go into it as an employee, then you’ve got to buy into the training courses that are offered. If you want to become your own person, run your own firm, you better work for somebody first because it’s hard to go out there and start on your own. Training.  That’s it all it comes down to, training.”  “I’m so glad you keep saying that,” I responded,  “because I’m a firm believer in that, and I wish everyone else thought that way.  Our industry would be a lot better.”

Bob stated, “There’s a book I read called “Bounce” and it was the discussion whether greatness is hereditary or is it self-made, and the theory out of that book is that every great person whether they be a swimmer, a baseball player, a violinist, whatever it may be, all practiced their trade something like 10,000 hours before they achieved close to the level of success, and then they talked about the fact that all these foreign runners that run the Boston Marathon are all from some place in Africa. He said you look at where they are from they are all from a very central place where the school is 20 miles away from where they live. They used to run to school and run home from school every single day and that’s how they developed the endurance, so I’m a firm believer of that.”

Next, I asked, “What advice would you give the industry as a whole if you could have had everyone from the industry in one room and you could say here is what we need to do?”  He quickly replied, “Clean up our acts, clean them up.”  “Self regulate?” I asked, “How?”  Bob replied, “First understand what’s right and what’s wrong, I mean that’s the first thing.  You’ve got to know what’s right; you’ve got to know what’s wrong. You’ve got to get into the bowels of the client that you represent and find out what are their problems and where do they need the help. No shortcuts; there are no shortcuts. There are a lot of shortcuts offered out there. There are lots of deals offered to people to do the work, and so I think that you’ve got to brush up more today on the regulations then you do on anything else and that’s the biggest part. You’ve got to master the FCDPA. You’ve got to learn what the Consumer Finance Bureau is going to do, CFPB, you’ve got to study that to the point where it becomes a second nature to you, and I think that everybody’s got to clean up the act. The job is not hard; it’s not rocket science. It’s the volume, managing volume. I can tell within two days when I hire an employee whether they are going to cut it or not. You can just tell either they have it or they don’t have it. It’s the ability to manage volume.  I think the industry is lazy.  I forward claims to attorneys, you don’t get acknowledgments, you don’t get reports, there’s no sense of urgency in what you’re doing, so there’s a lots of things. I think that clients are badly neglected.  I don’t think the clients are getting the service they deserve. I don’t think we understand the clients business, what the problems are, and I think you’ve got to modify. I always tell the client that I’m a complement to what they do. I pick up where you leave off. I’ve got to understand where you are, where you’re leaving off. I’ve got to understand what you want, what your goal and objectives are, and I’ve got to meet them. It’s not the same for everybody; every client is different because it’s a different type of product and its different person to deal with. You’ve got to learn what it is that the client wants, and you’ve got to be able to service them. So I would say to them that we have to do a much better job in running our own shops to be successful. The wave is over with. It’s like buying in the stock market. When the markets going wild you can take a dart and throw it at the wall and everyone can win, but when times get bad you’ve got to do a lot more study and understand that the market the market is changing.  The collections are going to be more difficult, the banks have finally awakened and have decided we are not going to give credit away; we are going to be a little bit more selective.  That’s why I feel a collection law firm has it way over the average collection agency if the clients are doing their work. If the clients have a robust internal collection by the time you get the account, if you do things properly, it’s going to be difficult to collect it, that’s when a law firm that has a combination law firm agency built-in, you’ll be more successful.  In the early days when we would be competing against collection agencies, we would be very slow out of the box, but we would pass the average collection agencies somewhere around 8 to 9 months out, and the problem that we had was that we spent more time in developing the legal strategies instead of the collection strategies.”  “We’ll, you’re lawyers, what do you expect?” I laughed.

Then Bob said, “And that’s another thing. It’s hard to sell the public that lawyers can do collections work. So we developed, if you go out to look at our operations out in the suburban area, you have a front-end collection and you have post litigation collection, so when business comes in we have a very robust collection agency approach on the front-end that slides very neatly in the litigation stage after a certain period of time. Unless a client wants us to do it right away and as a result of that, our results are better.  We have no competition.  The only competition we have is ourselves. We shoot ourselves in the foot more often than not, so if we do everything right, if we do everything timely, for example, I don’t know what we average, we get about 100,000 payments a month, that’s what we put through in northern Ohio only, and I know that now that we scan payments to the bank there’s no more checks bouncing, and I know that today is the last day of the month, yesterday is the next last day the last three days of the month probably account for 20% of all our collections, all of the ACH payments and everything else.

I know that. I got an email last night. My day starts the night before. I’m 75 years old. I’ve been doing it 50 years. My car is loaded right now with maybe 15 to 20 boxes of files. I go home, I have my dinner, I go in my office and I work there. I work from the time dinner is over with till time to go to bed, 10:00, 10:30.

In the morning somebody greets me at the side door at 6:30, my daughter, and she helps me unload the boxes at 6:30 in the morning, take them upstairs.  I’m unloading the boxes, putting the files where they go based on what I do, and the day starts. So my day starts at 6:30 in the morning and ends at 10 o’clock every night Obviously, I go to baseball games.  I go out socially with my wife. Just like my life in college, there’s no downtime.   It’s important. So last night I got an email that says that the scanner at the bank will not accept the payments, and as a result the people were all coming in early this morning to scan them through because the scanner at the bank was broken down.  And then there was another email that came in that said and by the way, the accounting manager said, I want to apologize to the rest of the firm, we have about 250 or 500 payments that are left over that were not posted yesterday because of all the trouble we had in getting this through. Okay, it was open communication that’s another good thing if you do something wrong, tell the client. We are a very, very forgiving nation. Let the client know what happened before they find out. These are all simple rules.”  I added, “It’s the same thing if it’s your boss.”

Bob said, “Right, right. If you do something wrong, tell your superior, tell your client. If a client calls you up and says what have you done with my file? Tell them I just haven’t gotten a chance to get to it, you have every right to recall the file or you can allow me to handle it, and I will get to it today.  If I don’t then you have it right to recall it. That’s the hardest thing in the world to just be open and honest, and don’t give the client the impression that you’re in it for a profit, give the client you’re in it to help them and assist them because, this is not a one-time relationship. You’re building a long-term relationship. Here is another war story: I’m sitting in my office one day and the secretary to the head of one of the banks, the collection department, calls me up and he says “Mr. Brownell wants to see you in his office right now.” I said “What about?”  She replied, “He didn’t tell me he said just come up.”  I go out there, and I walk in the room and he’s sitting at the head, and there’s a circle of chairs around there and he puts me right down the middle, and he says “You owe me $30,000.” I said What for? He said “Are you a man of your word or not?” I said, Yes I am. He said “You screwed up on a file and I figured the value of that file is $30,000. Are you gonna pay me the $30,000?” I said, If I screwed up a file I will definitely pay you the money. He said, “How long will it take you to get the $30,000?” I drove back to the office, I told my father who was livid about it. I don’t know where we are going to get $30,000.  I said, I didn’t know what to do, my partner who introduced me to computers said, “Do you think this clients worth $30,000?” I said, Yes it’s a bank. So somehow we agreed to it. I drove back out there I said, Yes, I’ll pay you the $30,000 just make sure we have the ability, I said will you tell me what it’s all about? He said, “One of your people handled a bankruptcy case, some kind of fraud, and you approved the reaffirmation for less than we would have approved it for. We figured that the amount of the loss was $30,000.” Well, there is no way we would do a reaffirmation without your approval. He said, “No one in this room, and I’ve asked every one of them, told me that they approved the reaffirmation.” I said I owe you the money. He said, “Okay when you give us the check we’d give you the claim to collect. It was the reaffirmation for like $90,000 but if you paid $60,000 within a period of time we’d accept it, the present cost of money back then was $30,000.

So I went back and I spoke to the bankruptcy attorney and I said, Tell me what happened? And he said, “I called Randy and Randy approved it.” I said Randy was in that room. But I could understand. It was Randy’s job versus $30,000. So we paid it and I kept the reaffirmation. The guy called me several times to settle it. I said you’re not settling this for a penny, I hope you default so I can go after you for $90,000 instead of 60. Eventually I got more than my $30,000 back. That story lived in the halls of the bank for years; for years, for generations. This is PNC that became National city Bank was putting its work up for bid. They had hundreds of attorneys throughout the country; they wanted to go to one law firm. My contact said we want it to be you. I said how do I do it, I’ve never submitted a bid before for a client? He said send me the bid ahead of time and will make sure you win it. So I win it, and there was a meeting held in this room. All my friends were there. There was a new person there. I said I really appreciate the opportunity to do it. He said you not only got this because of the quality of work that you do, but because you are a man of your word. And you paid a claim on an account you didn’t have to pay.

Several years after that I ran into Randy; who is now retired. You’ve got to tell me the truth I hope you understand I said of course it was your job.

Randy did not make the final decision. An entry-level collector made that decision and that entry-level collector to was told by Randy who was told by the head of that if Weltman doesn’t pay the $30,000, you collectors are fired. That collector that day had just bought his wife, his girlfriend a ring to be engaged to her. That collector is today President of PNC Cleveland.”

I added, “Interesting and that’s something I always say. People say, how come you talk to so many people, ( when I go to an agency I give everybody my card, every collector), and they go “Why’d you do that?” You never know who this guy may be one day. You never know who he’s going to be one day.”

Bob said, “Work the room, It’s one of the sayings out there.”  “Work the room?” I asked, Bob replied, “No, no right here. Be good to the client regardless of their position. Someday that person may be in a position of higher responsibility.” I responded, “There you go. And I’ve actually had that happen to me, years later, here’s the guy, I will give you a perfect example. I started working at GC services in 1979 working off of ledger cards. The guy that was sitting next me was a guy by the name of Frank Taylor who owned the Coke machine. I thought he was so entrepreneurial because they wouldn’t buy a Coke machine for the office, so he went out and bought one and he makes all kind of money out of it, a quarter for Coke, he spent half the day giving out change. Frank is now the CEO of GC services. 37 years later. He never even wanted to be an assistant manager back then, but now he is the CEO and he’s just some dude who sat next me and owned a Coke machine for the sake of it.  That’s funny and I didn’t even know he was a CEO. When I started doing the research for these interviews I said well let me go in see if I can find J B Katz. I started calling around asking some of my other buddies who used to work there and I said who’s running this? Frank Taylor. Frank? Frank used to own the Coke machine yeah, oh my God so you just absolutely never know.”

Bob said, “Larry Rothenberg, you’ve met him, the little guy at the back there.  I gave Larry Rothenberg a file (first year attorney) and he came to me one day and he said I’ve got a problem I said what is it he said I blew the statute of limitations I said thank you for telling me, I’m a professional problem solver. Thank you for being honest with me, now I have to work around it. So when you know the truth it’s easy to work around, and there’s a story where I park my car not this location, but another location, in a lot. I go out to get my car in the parking lot attendant comes up and he said did Frank tell you what happened? I said no. He said Frank was backing his car and rammed into the pole and there’s a big dent in the back of your car, I went back there and sure enough he said I told Frank to please tell you because I don’t want you to blame the parking lot for doing this.  I said well Frank is the errand boy; maybe I missed him.  The next day I told my little Kim up there, I said when Frank comes in let me know. He came in. Frank was walking this way, I walk this way and I said good morning Frank and he said good morning Bob.

On the way back and said Frank have a nice day, he said same to you Bob. Now at that point I don’t think I had an HR director whatever I was the boss.  I called Frank in and I said you are fired. He said why? I said I said because you are dishonest.  He said what do you mean? I said you backed my car into that pole, and you didn’t tell me about it, and I gave you two opportunities, and the only thing I could do was blame the parking lot for doing it. That isn’t the way I operate. You’re out of here.

I said you’ve got to be honest. I’m huge risk taker. I’m not afraid of failure. I didn’t think I was a pioneer in what I did. I never feared anything. You know when the computer blew up in one of the conversions all I did was go to the company. The company was going to repair and I said I don’t care how much it cost I don’t care how long it takes you I don’t care How many lifetimes I have to work to repay you we’ve got to say this operation you’ve got to fix the computer simple as that. So my number one lesson if you’ve got to take a risk if you’re going to take a chance and you fail you better be man enough to stand up to face the consequences, and that’s it, that’s a simple rule for everybody.”

I recalled, “I’ll give you a perfect example of exactly that.  About six years ago a guy called me up, I’d heard of his name, but I had never met him.  His name was Steve Goldberg and said listen, I want you to help me sell some debt and I said Steve, I don’t really know you that well, where are you from? I used to be at savers. Okay that’s what I thought; You’re the guy that was the VP at savers. So I did a little quick checking, to check it out. This is December, so I said I need a copy of a bill of sale. He shows me a signed contract with Brian Falerio’s on the bottom of it from Sherman, I’ve seen the same signature a million times, I’m good.

I start selling off states. I sell 13 states in two days good GE paper, good prices, and the next day we are doing a call with one of the buyers, with Goldberg, and his answers to the buyers questions were not wrong, but weird, and just weird enough that I , that’s a strange way to answer that damned question. I could not sleep that night. I just could not sleep. I kept thinking something’s wrong, something’s wrong, something’s wrong. The only thing I could think of that was wrong is that he didn’t really own that file.  But I saw the contract, so I said the only thing I can do is get up in the morning, wait till 9 o’clock and call Brian, because I know Brian. I call Brian, I said Brian this is going to be a stupid question, you’re going to laugh me, you are going to think I’m dumb, but I’ve got to ask this question. Did you sell a file to Steven Goldberg? He said yeah, but he never funded it. I said how does he have a signed contract? He said I screwed up. I said how does he have unmasked data? He said I screwed up. And I said “you don’t know how bad you screwed up, let me tell you how bad you screwed up, let me tell you what I’ve done to screw you up even more.”

And so I go out and I realize I figure out this is the end of my career. I’m gonna go tell everybody that I did this, but that’s what I’ve got to do. I call DBA, ACA, I called everybody I could call, and and them what’s going on. Even one of the people that I talked to had already actually been screwed by them, and wouldn’t say anything. Which kind of pissed me off. And one of people I asked for a reference on already knew that there was a problem, but wouldn’t tell me, because they won’t admit they had been ripped off. That’s how people in this industry are.  I was exactly the opposite and in the long run that turned out be a great thing for me because people believe me even more. I figured I would have to get a job at 711 or something. I figured I was done ever brokering a piece of debt for the rest of my life. Of the eight people I sold out to, only one of them is still mad at me, even though they lost their money. They didn’t get it back in most cases. Some of them got some of it back. And he went to jail, and I got the Boca Raton and the feds and everybody involved and him, and he went down, and I knew I could only do one thing and that was the right thing, and I was even upset at how badly I had to push the DBA to take his membership away, and they waited to actually at the DBA show to do it, he wasn’t even there, but all these things. I had to push so hard to do the right thing, which to me seemed like I shouldn’t have never had to push that hard.”

Bob stated, “But you can’t compromise that, the important thing is that you’ve got to teach young people what’s right and what’s wrong. And you’ve got to tell them there will be times when you want to waver from that, but you can’t waiver. People have always asked me. “Has a client ever approached you to give them compensation or bribe you to get the business? I’ve heard stories that so and so gets all the business because he gives this guy money under the table, and I said to him,  “I broker debt. I know brokers like that.”  Bob continued,” And I said to him I’ve only been approached once, only one time in my entire life was I ever approached, one time in my entire life. Cleveland’s first black Mayor in the country was Carl Stokes from Cleveland Ohio; Carl Stokes was the first black mayor in any city. Carl Stokes left here and went to New York, and Carl Stokes went into television and radio, failed there badly, came back to Cleveland. Carl Stokes brother, Lou Stokes, was a Congressman for maybe 50 something years, a household name. You drive around Cleveland, you see the Stokes name, you see on the federal building. Very, very well known. Carl Stokes was back in Cleveland, the city of Cleveland put his work up for bid. He needed minority participation. I didn’t have any minority ownership in the firm. I didn’t submit a bid . Several black people I know very well approached me, “do you want to the work? I can get you the work.” I said, “I’d like to get the work, but I don’t have a minority component.”  So one day I get a phone call from the ex-mayor of Cleveland, TV personality,

Biggest name in the city of Cleveland, if not in the state of Ohio, and they said Mr. Stokes would you like to go to lunch with you. I met Mr. Stokes at a well-known restaurant that since closed, black guy. Very cordial. He said he’d never met me, knew me by reputation. He said, “How would you like to get the city of Cleveland collection work?” I said, “I’d love to but I don’t have the necessary minority component.” he said, “I’d like to be your minority partner.” I said that’s interesting. I said “How do you know that I can get the work if you become my minority partner?” He said the head of city Council, which was another big-name, a national name, owes me a favor, and I’m going to use that favor of mine. I said what’s going to be your minority participation in our entity that’s going to get the city clean work he said I’ll come by every Friday and pick up my check, so I said Mr. Mayor in all due respect if George owes you a favor, we’re going to be collecting money from poor inner-city people that can’t pay their utilities. We’re going to be collecting money from people that got parking tickets in the city of Cleveland and rammed their cars into water poles and things like that.  I said Mr. Mayor if George owes you a favor, this will not be a very lucrative for you. I’d use the favor for something else. I was twenty-something years old. That’s the only time I’ve ever been approached, and the reason, and when I tell that story and people say because well you don’t present yourself in a way that would open it up for someone to make that invitation. It’s a simple as that.

I ended, “I know other debt brokers that do exactly that. They’ve bought their way in.”

Regarding debt buyers Dr. Wood stated “I don’t know if it’s going to be consolidation or just annihilation”

An interview with Dr. Gary Wood by Phillip W. Duff

As I began an Interview with Dr. Gary Wood in Jan. 2013, I asked,  “When did you first enter the collection business? What year?”  Gary replied, “97”. I continued, “What brought you into the business?”  To which Gary responded, “I lost the job I had. Walt Collins was a friend of mine and he had just started Collins Financial so I told him that I needed something to do, and he said “well you can come over and sit here but, I can’t pay you”‘  and  since I didn’t have anywhere else to sit , I went and sat there and I eventually wound up going to work for the company and I was there for about 12 years.”

My next question was, “How did you meet Walt, how did you become friends prior to working together?” “At the Barton Creek Country Club”, he replied.

“So playing golf?”  “Well, yeah playing golf, and we were both members out there, and we just met and liked each other and so that was how that happened”.

You’re known as Dr. Gary Wood. Tell me about your education” I said. ” I have a PhD in money and banking and finance or economics. I’m not sure what it is.  It’s from the University of Texas in Austin, and before that I had a Masters degree from the University of Florida in economics, and I graduated undergraduate from Baylor with a Economics degree”.  “That means you spent a lot of time in higher education”, I noted”.  “Yes, I spent a lot of time in higher education. I worked in higher education. I taught at UT San Antonio for three years and then I got a job at Baylor and I was there for eight or nine years. The last three years I was the director of government affairs for the University and didn’t have any classroom responsibilities, but before that I was a professor”.  I followed with ” So, you’ve been in the industry quite a long time at this point, maybe not quite as long as some of the other people. To what do you attribute your longevity?, I asked?  ” Walt’s not firing me”, he laughed.  ” No, we sold the company and I’m trying to think what year my new contract ran out, I guess it might’ve been 2006, but I had gotten involved with DBA. Walt was the second president of DBA and I have been participating with him in it since the very first meetings.  Then I got elected to the board and served on the board for, I guess eight years, and two years as president.  This resulted in my getting a lot of good friends at the DBA, and so that’s how I managed to stay active in the industry.”

I then stated, “You’ve been fairly influential in the growth of the Debt Buyers Association because of exactly what you’re talking about. Talk a little bit about the Debt Buyers and when you first came in and what it looked like then and what it looks like now.  Also, what way do you think it’s going.”  Gary answered, “Well when I first came in there was no Debt Buyers Association and we finally got the thing cranked up. There were maybe eight or nine people. I was not involved at that level at that time, but it was Walt and Mitch BONILLA and probably Dennis Hammond who were involved. Dennis and Judy Hammond, I guess, were really the driving force behind the creation of the Debt Buyers Association. They identified the need, formed the Association, had the experience with the companies that they already had going for how to get things organized and so they worked with a few of the people that ran the business. And I guess Bud Reitzel was involved back then to a degree. This is the 17th public conference (2013), I’ve been to every one of them, and when we started there were about 20 or 30 companies that were involved in the business and debt buying, it was brand new and there were no standards, definition or how to operate or exactly what was going on. I was telling you that one of the big issues was “what do you mean when you say paper is fresh, or old primary or secondary?” There was no universal agreement on issues like that and so that’s one of the things that DBA did in the early years while trying to exist to bring some standardization with regard to contract terms, and just how things should work, and so that went on for five or six years.

And so that has now turned into an Association with over 600 member companies, and with an annual conference, that I think arguably is the one you have to go to if you only go to one in this whole industry. It’s worked out great and I have really enjoyed it and I like the people here.  I enjoy being involved with federal government relations because I spent a couple of years working in the Senate and I really enjoyed that so it’s been very good for me”.

I continued my questions, ” What were the original reasons for creating the Association?  Was it made for a revenue stream or was it just made to create defined standards?”  “Well, Phillip”, he replied, “I guess it was when we looked around at what other professions were doing, (like accountants, lawyers etc.) They all have associations that provide a couple of things for them. One is the synergy of being around other people in the same business. You can go to any of these little tables sitting around here and find two people sitting down talking about “what’s going on in the business, can I buy paper from you, can I sell PAPER to you?   Eventually things work out, so there was a perceived need for the same sort of thing to happen with regards to the debt buying industry, and there was a need to distinguish the debt buying industry from the collection industry and I guess that was a temptation to say “why did we all just join the ACA?”.  Most people belong to both but these days; interest and motivations are different from debt buyers. It’s a different business with some overlap but you have different issues that you have to deal with.

And so it was that sort of thing and there was eventually a need for standardization.  If you didn’t have an organization in which to work on the standardization, it was very hard to get guys together who were just scattered around the country.  I think that is what led to the creation of DBA”.  I noted,” It’s always been a fractionalized business, so you’re right it’s difficult to get people together to agree on anything and plus the industry’s always been kind of, “I’ve got my own secret sauce and I don’t want to tell you what’s going on”, Even though there is no secret sauce, everybody always thinks they have one but there is not one!”  Gary added, “You’re right.  That was one of the things that has impeded, that used to impede, the growth of the Association and I think the industry itself HAD this secret sauce notion “I’m not gonna let you look at what I do with this paper”  “And that seems to have changed some especially as the availability or supply of debt to purchase seems to be dwindling currently.  It seems that it’s bringing a lot of people less fractionalized together and trying to become more consolidated. IT Is moving in one direction.  At least that seems that way to me. do you see that as well?”  “Yes”, Gary responded. ” I think that’s right.  The availability, the almost limitless amount of paper has been available; it’s not there anymore. I think the industry as it grew attracted a lot of people who had limited geographical interest in paper, they were interested in a couple of states or one state, Steve buys Tennessee, Glenn buys Indiana. And there was good business to be had in doing that, but you were limited in the places you could go to find paper like that. Companies like Collins, knew some of the states for which you could charge more than you paid for the whole portfolio and some of the states like Texas you couldn’t give away. Just because of the collection laws in the state, there was this market out there for that kind of paper, for state paper. It would seem like the regulatory environment is getting to be such that the pressure that’s been put on the banks and other issuers is causing them to have less interest in selling on a state basis. And certainly less interest in selling to a company like Collins used to be, and allowing us then to divide their portfolio up because of all the regulatory requirements with regards to documentation and safety of data.  So, as the players in the industry looked out and see that kind of situation with regard to what’s going on, and what’s likely to happen, they began to look for ways to consolidate their efforts and I don’t know if it’s going to be consolidation or just annihilation. But I think there will be fewer and fewer companies in the debt buying business over the next decade or so. I have no idea to what extent that will happen, but I think it will happen. And that will continue to reduce debt companies”.

I then asked, “When you are talking about the changes in the regional buyers, (there is much less paper for them), in fact there may be may be no paper for the Steve’s of the world.  How do you see that’s going to impact the DBA since that’s a large majority of the membership of the Association for those type of buyers?”. Gary answered, ” That’s one of the issues that the board has been talking about for a few years.  Of course nobody knows exactly how it is going to influence it but the best judgment is there will be fewer member companies. I don’t think it is possible to behave in such a way as a trade Association to mitigate that.  I think it’s in response to what’s happening in the market place and there’s nothing much we can do about it. Some of the big member companies of DBA have openly admitted they would like to see less of the smaller companies, and in large part they have a good argument. I suspect an inordinate percentage of the disputes and claims against collection operations are coming because of behaviors of some of the smaller companies. I think the larger companies have the capabilities to do better training and they have a much broader base from which to learn.  They will stay in business and be around but I think that they would just as soon see 10 companies in the industry”.

Changing the subject, I questioned, “How do you see differences between technology from when you began and now?  And how is that technology is not only different but how it’s being used differently?  To which Gary replied,” Of course the technology is different, it’s vastly improved with the ability to communicate with the debtors.  As someone mentioned at breakfast, it used to be you get your cards out and called the debtor and sometimes you would call them collect (charging the call to the consumer).  Then came the dialers and the capabilities that exist with regards to that followed by word processing. The whole range of ways to communicate with your clientele has been transformed by the new technology, and it is good. I think it’s just about all-good and I can’t think about anything too bad to say about that. As far as other uses of technology, Phillip, I never was much involved in that end of business so as I said the dialers sit back there and depending on the regulation that you’re subject they can make calls to the debtors but I’m not really too aware as to how the technology works”.

I noted, ” The business has completely changed from when you and I and a lot of other people got into it till now. What do you miss about the old days and maybe less technology and maybe less regulation and all these things but what is it that you miss most?”  Laughing, Gary responded, “I miss being 10 years younger”. It was more of an adventure I guess, then, because you knew you had this ability to make money if you did things right, but there were lots of things that we didn’t even know were issues that turned out to be issues.  I just think that I miss the operating in an uncertain environment. Of course there are uncertainties that are involved today with what the kids are having to deal with”.  “The uncertainties are a little bit clearer”, I added. Gary said ,”Yeah they are, they know that they are out there and they have so much. Well they have us: DBA. They have NARCA, they have ACA; all of us are working towards trying to improve the qualities of the service we deliver I miss a few of the people from back then”.  ” Relationships?”, I asked.  Gary replied,” Yeah, but I truly enjoy getting to come to this conference once a year and renew friendships from a long time ago”.

I added, “: There’s no doubt that the biggest thing about DBA has always been the networking, and that’s what everybody has always said. It’s not really as much about the sessions, even though in the last few years the sessions have gotten much better than they were in initial years, much better attended, much more even to pay attention to, because I think initially it was just networking. They didn’t really come for a whole lot.  What advice that you got many years ago that has stayed with you forever, would you like to pass on to someone else?”  Gary said “Operate with integrity. We always believed THAT at Collins, and I was always glad to agree with it, that it is possible to do this business and take advantage of people you are working with whether it be the debtor, someone you’re reselling to, or some you’re buying from. If you want to you can behave in a way that disadvantages people you’re working with but the philosophy that we always operated with was “if we treat you fairly then you’ll keep doing business with us”. If something happens to one of the trades that we make, it turns out that it wasn’t as we thought it was, it wasn’t as we depicted, the paper wasn’t the kind of paper that you thought you are buying, it’s almost impossible to unwrap the deal that caused this concern but we always use the analogy we’ll make the tire round on the next trade, and so the next time somebody comes to buy some paper from us we would give them a break on the price because of the disadvantage that they incurred from the earlier trade. I think it’s impossible to have a system in which the disadvantage never occurs, but you always gotta be willing to make it right. We were looking for long-term relationships NOT one-off sales, so I think that that is the core belief that I come away with”.  To this I added, “Well I know for a fact that that was Collins philosophy and I know many deals that that happened and I know from some of those deals, that a lot of times it wasn’t necessarily you giving them a bad deal, a lot of times it was them not being a knowledgeable enough buyer.  Yet I know, still, the next time they came around they were given some better type of deal or a better deal.  I have personally seen that more than once”.  To which Gary stated “ Well I’m glad, because that was the goal, well the goal was to make money and stay in business, the secondary goal I guess, or the one that you felt was helping you to get to where you wanted to get to, was having a good reputation”.  I responded,” And I think that’s what brought people back for the third, the fourth, the fifth, the six or the  20th buy, and everybody else if they didn’t see it directly, we all saw Collins Financial  in some chain of title whether they bought directly from Collins or somewhere else”. Gary added,” We bought a lot of paper over those few years”.

I broke in,” I think I know what you are going to answer to this and probably similar to the last question. What would you say you need to succeed in today’s marketplace?”  Gary said, “Patient capital. Certainly the right philosophy, the right business philosophy, if you’re going to succeed. But I think one of the things that you can see most readily is you watch people come and go in the business and that is, you can’t predict how long it’s going to take to recover on a portfolio. Well you can predict but you won’t be right. And so I think that the thing that from time to time caused us trouble and has caused other people trouble, is that they get financed by the bank X or big finance companies X.  They just want the cash to flow to start right away and be predictable and be the way that you agreed on, and it doesn’t always happen that way.  So, if people that are providing you with the capital, understand that there will be glitches, but over the long-haul it’s going to work   out, then that to me is critical to be successful in this business.”

I next asked Gary, “what advice would you give to someone entering the industry today?”  He lost no time in replying, “Don’t!”

I replied “That’s exactly what almost everyone said”.  Gary continued, “it’s a tough time in this industry, and it would be, I think, especially tough to enter it because it is operating on reputation and relationships and of course you see somebody like Walt who’s entering it right now,  but he knows what he’s doing”.  “He has the reputation”, I told him.  Gary said, “he knows what he’s doing.  If you are going to enter this business as a rookie, I would advise against it.  I think certainly until we get the regulatory uncertainties straightened out and you find out if it’s going to be something you want to do.  A lot of people just don’t want to fool with it.  I’d tell those to find something else to do.”  ” I would tend to agree with you”, I responded.

My next question was “What advice would you give to the industry as a whole?”  He answered,”wow, I don’t know!  Support the DBA.  Well, I guess one bit of advice would be do the best you can to participate in and understand the governmental affairs side of the business, whether it is the FEDERAL, State or local level.  As an example, in Austin, Texas they have a regulation on how much payday loan companies can charge .  It doesn’t apply to the rest of the State.  There’s a large degree of uncertainty about whether they can even do that, that it should be a State regulation that handles that or if Federal preempts the State.  So I would say that because so much of the ability to succeed is going to be a function of what happens to you from the regulatory end of the business, if you are going to be in this industry, if you are going to be a debt buyer, if you are going to be in the DBA, you’ve got to pay close attention to that.  The DBA membership has been very good at supporting the efforts that we make lobbying.  It’s expensive, costs a lot of money because you have to hire a lot of people that have day-to-day connections, like Bob Belair  and John Blount.  They’re on the hill every day, they talk to people every day and are helping to develop an image of this industry, this trade association.  That’s where you need to have patient capital because you still get a lot of complaints coming to the Federal Trade Commission, (now the Consumer Financial Protection Bureau), to see about people misbehaving in the collection business and it still goes on.

I guess the other advice I would give is to have patient capital, be ready to support the lobbying efforts of the Trade Association and get to know your State and local representatives and your congresspersons plus have an understanding of the fact that this business can be done with ethics and integrity, however if you don’t do it that way, you’re going to be in a world of hurt”.

At that point I stated, “I definitely agree with you, particularly about getting more involved in the Industry.  A lot of people are doing their job but they are not as involved in the industry as they should be.  I understand that to some extent because a lot of the agencies are small or medium and there is only so much bandwidth and so much money to spend.  I think that, again, that is because we’re such a fractionalized business.  I think that’s part of what has pushed that back, but I firmly agree with you that it is expensive and is a problem for a lot of the guys.”  “It’s damned expensive”, Gary added

I continued, ” I have been on the DBA legislative fundraising committee and in talking to some of the guys, they say they have been asked for three or for grand and that’s a lot of money to them.  They don’t see the value going down to their own backyard.  They don’t realize their backyard is also the Federal’s backyard.  What legislation have you succeeded in getting passed”.  ” None”. Gary replied. “What have we prevented?” I asked.  “Some”, he replied.

“What are we doing to set the stage for the future?” was my final question.  To which Gary responded, ” a lot, because the more often we have our fly-ins to Washington where DBA members come in and we take them around to different government agencies or congressional offices, somebody at the congressional level now knows that we exist, that there’s a good side to the collection end of the business, and so it’s a lifetime’s work.”

I remarked, ” I think the fly-ins are a great idea because it humanizes the industry instead of it just being a perception of bricks and mortar, or an idea when there’s people involved.  Then it looks much different and I think it does help the regulations some, to what extent, who knows?   But it has been a good program”.

” I think so, too.” Gary agreed

An interview with John Frey conducted by Phillip W. Duff

I had the pleasure of interviewing John Frey in January 2013 and began by asking him if his entry into American Express in 1968 was his first introduction into the collection business and why he chose that as opposed to some other department.

 

John replied, “I got out of the army in 1968, (which I had joined in 1965), and my father said “john, you are my son, I love you very much and you can live here as long as you have a job.  I went looking for a job and ended up at American Express and they put me to work in the credit department.  It wasn’t collections.  It was what today you would call early-stage collection which included pre-billing, because with the open line of credit and no-credit limit, we were monitoring spending and looking for risk.  That was really what was my entry into credit cards”.

“How did you end up working collection agencies from that entry”, I asked.  John said, “I did a lot of things at American Express.

After a year, less than a year, I guess, I was supervising a unit and working with them on some of the technology development?

They were having a very significant problem in the recovery area and at the time asked me to go over and see if I could help them fix it.  That was in 1975.  I had no experience with recovery, but that’s where I started”.  At that time I asked John how long he remained at American Express and he told me it was 22 years.  “That doesn’t happen anymore these days”, I noted.  “No, unfortunately, most corporations wonder why their employees are not more loyal and fail to recognize that it’s because they don’t have any loyalty to their people”.

“When we talked earlier, you had some clear ideas on hiring and longevity of personnel.  Explain those a little, please”, I said.

John replied, “I think the important thing is to get the right people on the job and I have found that Pre-employment testing , if done correctly, (there are some out there that don’t work very well), and you get the right candidate for the job, one who is going to take responsibility for their actions, one who is willing to understand the rules and work through the rules, you are going to get a much better employee and will result in much less turnover.  Then the next thing is to provide good training that gets them trained exactly as you expect them to perform their duties.  I don’t train people on things like FDCPA.  I train them on my policies and procedures here and if someone questions them about FDCPA or bankruptcy law, or whatever, their answer needs to be that we abide by the policies and procedures here which are all constructed to be compliant with the various regulations.  If someone wants to talk about an FDCPA or a bankruptcy violation, I send them to a law firm and they can ask attorneys their questions.  Collectors don’t need to be dealing with that.  To sum it up, you won’t to hire them, train them and follow up on the training.  Once a collector is certified from training, the training manager’s responsibility is to deliver the employee to the supervisor ready to work.  That means the employee can come into work in the morning, say good morning to the supervisor, log on and go to work.  The employee is assigned to a certified coach.  A coach is a successful collector that has gone through some coursework and achieved certain levels of excellence in performance, and that person has been trained in the ability to assist that new guy along the way and get him settled in.  Coaches, of course, get a $1000 a year more in their paycheck plus a coach whistle and a yellow coach hat and they also get some activities.  It’s that crew, that as they are successful as coaches, we test for managerial skill sets and start moving them into supervisor training programs.  This becomes our pool of future managers.

“So you are continually developing and trying to push people to higher levels?”. I asked.  “Absolutely, absolutely”, John replied.

“You need to continue to provide for that person to have an avenue for growth so they don’t get stale in that position.  Now you do find some people that get to be a damned good collector and that’s all they want to be, thank you very much.  And that’s okay, that’s okay.  That’s a good citizen and you don’t want to lose that guy.

“Everybody can’t be President”, I noted.  “No”, John responded.  “And there are some people that don’t want to be.  But for the guys that want to see a future, if you provide the recognition, the opportunity and the development course, you will not only keep those people, if not in collections, at least in the company.  I usually end up becoming a recruiting source for the finance guy, the risk guy and the customer service guy”.

I then asked John to tell me more about how he tied quality or compliance to the bonus of a particular collector and the importance he placed on that.

“I think the compliance is critical” he said.  “And I think every collector needs to be performing, not what they think is going to get the account resolved or methods they think are going to work, but rather the collection strategy that we have established and signed off and in fact want to monitor and measure.  See, you can’t know if the strategy is successful if everybody else is doing something else.  So, what you need to do is to be constantly monitoring.  I believe that the supervisor needs to monitor each of his people.  He needs to certify that each of his people on the phone are handling accounts the way they are supposed to be doing and in addition, I have a third party team that goes in and monitors the same people and we have meetings to ensure that we are monitoring for the same items so you have an alignment of what you are monitoring for and that’s a very difficult thing to achieve.  Forget the piece of paper that’s got 20 boxes on it to check off, it never works.  You really need to understand if that was a good collection call.  Did  we do what we needed to do?  And then you need to have a methodology of providing feedback to the collector.  We record the scores online.  They are moved into a scoring mechanism that looks at other things, as well as the score.  We are looking at productivity, achievement, dollars collected, accounts cured, number of right party contacts, conversions and the number of contacts you converted to a promise.  Okay, but if you have failed compliance, you do not go into the incentive pool.  I believe that incentives are important.  You need to have around half of your people qualify for incentives at the end of the month.  I think that the top 10% should qualify for some really significant incentive money and then I think you need to scale it back and the middle group needs to get some recognition but not at the level the real achievers are getting.  This gives everybody an opportunity to scale up their performance”.  “And to achieve something”, I stated.  “And to achieve something and some real money”, John said. ” I don’t feel like it’s unachievable”, I said. “I’ve been in some offices where they felt the bonuses were unachievable, so they didn’t”……..   John continued, “the way I set  bonuses is to array actual performance, look at the top performers and then go in and do diligence on what those top performers are actually doing to make sure they are not working the system, and then use that information to set the standard for performance in each of those incentive categories.  Now, if you commit a blatant violation knowingly, even if you have otherwise good scores, you may be knocked out of the incentive pool for the month”.

 

“To what do you attribute your longevity in the industry?”, I asked.  “Tenacity”, John replied “you know you can’t quit, you can’t let those bastards win.  You probably shouldn’t print that!”.   I responded,”I think that’s the perfect answer.  I think it’s very true.  I think most of the people I know that have been considered consistent in one industry and have been successful, think that same way”.

John said, “I think you have to have a good work ethic, you have to have objectives, you’ve got to believe in yourself that you are doing the right thing and you’ve got to convince others that you are doing the right thing.  Most of my jobs after leaving American Express were being hired to improve a process that was not working the way people like it to work, and I think I have been successful in every case doing it”.

I continued,”back when you worked in American Express, and back when I was a collector working some of that type business, that was the preferred client and was the client everyone wanted.  So why do you attribute that to that and what did that bring to American Express?  Did they feel like everyone  was courting them and that they were the best looking bride on the block?”  John answered,” American Express at the time was a very profitable portfolio to work.  It was a very high unit yield paper and American Express was okay with that.  Their philosophy at the time was that they were not going to invest bricks and mortar in collection work because it’s not their business, that’s not the industry , and they were happy to have the accounts placed with reputable firms that would do a good job, that would treat their customers right, and they didn’t mind it being profitable.  It was good paper, it was usually placed early, it wasn’t real old paper at placement time.  Again that goes back to not wanting to invest in bricks and mortar for collections.  So the reason they were so desirable was because they were so profitable.  They were also quite demanding.  We would audit every branch every quarter.  We had very high standards, the work we expected to be done on our accounts.  When I first got to the recovery world in 1975, it wasn’t unusual to see collection agencies having 1000 accounts per collector in their file.

 

They never returned an account, it could be there for years.  When I left they were averaging about 125 accounts per collector and that really got to the point where you were getting a number of accounts per collector that was manageable to get really good, high quality work down on the file”.  I added “when I was working at American Express, we would have 80 to 100 accounts and we were pretty much working every one  every day to some extent whether it was skip tracing or calling nearbys”.

John recalled, “doing something, but doing the right work, and today one of the things I based my strategies in managing collection agencies on is ensuring that I have a good partnership relationship with the agency and that the paper is profitable for them.  Nobody works for free and if you put a portfolio out and underpay it, the agency is going to take the portfolio and work it at a level that causes them not to lose too much money and that’s not what you want.  What you want is, you want to be the reward queue, you want to be the queue that the collector at the branch wants to work your paper because he can make some money on it and it’s a good paper for him, and to some extent I even funded programs for the branch collectors.  I think you’ve got to recognize that, I think you’ve got to understand that part of your team and you’ve got to know who they are.  You’ve got to know if someone changes them if they move them.  I mean how many times have you not made your recovery number this month because the top collector in the unit was promoted to supervisor and wasn’t replaced,or was replaced with a new guy, or quit, or whatever happened, so you really need, your collection agency managers really need, to be very closely in communication with the branches to understand the inventory, to understand who’s working the paper.  If somebody is not performing well, you need to question that so you need to know at the collection agency level who are your best performers, just as you need to know in-house, who your best performer is if it’s not good”.

I added’ ” as a former auditor, I agree with that 100%, because I did know exactly, and I would even go “John, so good on that one collection last month, here’s $20.00.  Nobody else could find this guy, how did you find him?, or whatever”.  John responded, “just call the guy up and thank him or I don’t know how many times we’ve provided lunches for the collection floor, or a TV or whatever, something, a little incentive, you know, here is a couple hundred bucks, do something special for the collectors”

“You were involved in computerization?”, I asked.  “Yes”, John replied.  I continued” do you have any interesting or funny stories in that regards to that because we all know that it was difficult , but there were also a lot of just strange and funny things that happened along the way as well?”  Laughing loudly John said, “the funniest one I can tell you is any old story, and it was going back to American Express, probably in the early 1970’s, when one of the Vice Presidents, ( I think I was a supervisor or an entry level manager at the time)’ brought In a staff of temps to refile 80 column cards because they didn’t realize that the 80 column card sorter could actually do that”.  “That’s interesting.  How did that turn out, who went and told him?”, I queried.  John said “I did, yeah, I brought a box of cards up to the 80 column thing and put it in the sorter.  But I knew how to work it.  You must understand your technology and how to work it.  You can’t be held hostage by someone that doesn’t understand, so to be a leader, if you are going to introduce technology into your organization, you have to understand it yourself and provide the leadership as to how it’s going to be installed and how it’s going to be best used and you better know what you are talking about”.

I continued,”as we talked earlier, we’ve both seen dialers,  and people using them incorrectly”.  John responded,”they just know how they’ll go out and invest in this technology and think without spending a lot of time learning about it, at the highest level.  I really think that theguys of my level (I was Executive Vice President) if I didn’t know how to work a dialer, I’d go sit in at the assistant administration class.  Why?  I need to know what the capabilities of this technology are so I can provide leadership to these people that are going to actually implement the technology in the collection strategies”.

What would you say was the best advice somebody gave you many, many years ago that still rings true and that you still think about over the years”, I asked.  John replied “so many.  I’ve been blessed.  I’ve had so many really credible mentors over the course of time.  Probably some Key advice is from a guy named Pete Maddie at American Express who encouraged me to understand technology and not let it drive me, but to have to be able to understand to drive the technology and Pete was an old time factoring guy.  He was Vice President of American Express and was an early adaptor of things like computerized collection and encouraged development of things like predictive dialers and gave me the opportunity to really understand them.  So Peter, I think, was a great guy.  I also think along the way we run into a lot of people.  I think Bill Barton with whom I worked at American Express was one of the brightest guys I have ever known in my life.  Bill was an MIT graduate and he would give you an impossible task and then roll up his sleeves along side you to help you get it done.  Don’t be giving tasks that are going to take all night and weekend and walk away.  So you’ll give an impossible task, help them get it done and they’ll learn from that.  And then there was Fred Murkoff for really just understanding your portfolio, understanding all there is to know about it”.

 

Next I questioned,”what advice would you give somebody entering the industry today?”  John responded” when you ask somebody about entering the industry today, I tend to think of the  entry-level collector, or the entry-level customer service representative or the entry-level credit guy, not necessarily the guy with a graduate degree in statistics who’s also a very important guy in our industry, so I think the advice to the entry-level collector is that this business is not for everyone.  You need to decide early on if it’s for you.  You’re going to have to pay your dues and learn the industry and improve yourself.  Get your education, keep developing, see how you are doing competitively with your peers to be better and you’ll advance.  You have an opportunity to be a leader in this Industry. To the person coming in at the graduate degree level, very much the same advice.  This is a good Industry to work in and you can be very successful.  But you also need to understand the  industry, not just the statistical assumptions.  Statistical assumptions may often lead you down the wrong road, so you also need that, you need to be well grounded in reality, in making assumptions based on data.  That data is really what’s going to drive your decisions and drive your business and drive your success”.

 

“Without a doubt”, I stated.  “I agree with that.  I really think that if you really want an agency now, what you do, is you need good data, good scoring, and then good skills-based routing and then you’ve got the right people and the right results”.  John agreed, saying “absolutely.  And the skill-based routing really gets us back to our understanding of technology.  When you set up a collection system, or typically on an ACD is where we talk about skill-based routing in your collection system”.  “Absolutely, in his queue or not”, I replied.  John continued “we were very successful at Compass when the mortgage crisis first came in, firstoccurred, in training  a core of collectors and how to screen those calls for mitigation or mitigation opportunities or default, opportunities to avoid a default, and those accounts would get routed, didn’t matter where that collector was sitting, didn’t matter what bucket he was in.  If a call came in and it was that kind of issue, it went to the collector that was skilled in that issue, so skill-based routing , both in your inbound calling system and in your collection system are very critical.  You certainly don’t want to have your 30 day collector, your new guy that just came  in, and he’s brand new, working an account that was 90 days last month and was cured, is now coming back into collection.  So that account that is new into collection as he was current now he’s moving into collection but the month prior was 60 or 90 days past due, that needs to go to a very different collector set and those are the things that we, as leaders, have to understand and direct those activities that occur in our systems”.  I agreed and added “as a leader, it’s your responsibility to help them to get better, and that’s a part of how you do that, is by giving him something, they have a skill to handle”.  “Absolutely”, John replied.  Continuing, I said “they have to have a skill to handle.  If, and like you mentioned a minute ago, they don’t then sit down with them, roll up your sleeves and help reach the skills to handle”.  John added,”you have to look at your system very much as if you were asking a specific account and handing it to the collector and saying I want you to work this account.  Think about who you are giving it to and what file you are giving to him, what skill levels he needs.  And if you can’t do that in your system, your system ain’t working”.

 

I agreed and then asked,”anything else you want to say that you want  the world to hear-cause you don’t look like the kind of guy who’s not going to say what he thinks?”  Laughing heartily,  John replied,” very few people, if any, ever question what’s on my mind, cause I usually told them”.  “I’m exactly the same way” I said, “and most of the people  I’m interviewing probably are.  We are probably all pretty outspoken”.  John added, “one of my bosses at one time, who I think I had a good relationship with, did tell me that I was, to him’ a bully.  I would bully my boss”.  “I’ve done that.  I’ve done that many times”, I stated.  John reiterated, “Absolutely, you’ve got to bully your boss”.  I went on to say”that’s one thing I didn’t know how to do when I was at GC but I learned after that because  I probably would have stayed longer if I could have, and I had some really good ideas, and they ended up doing some years later that it was just too corporate and I could not figure how to get through the corporate bull shit”.

 

John continued, “there also comes a time when you’re a learner.  You’re always a learner, you never stop being a learner but there is a time as you come in as an entry-level guy into the  industry, in your learning the industry, in developing your skills and then there’s a point in time you become a teacher, and that role changes somewhat gradually.  It doesn’t happen, you don’t come to work one Monday morning and I’m the teacher. It probably happens over a period of a few years that you sart becoming, sharing more knowledge, and championing more strategies and technologies, than you do as a learner, but you still are always learning”.

I acknowledged, “I like that thought because it makes good sense and it’s something I can use in my own consulting.  The biggest thing with my consulting is, as you probablyFigured out from this whole thing, it’s not finding a solution, it’s wetting to buy into the solution and the. Getting everybody to actually just buy into doing it and then to buy into doing it right, like you were talking about.  You can have a great strategy, but if this guy’s doing this and another’s doing that, nobody’s actually doing the strategy.  How do you know if the strategy is working or isn’t”?  “Right”, John added.  “I can’t tell you how many reputable consulting firms have come in and given very good advice.  And a higher-level guy, you know, maybe the chief finance officer says, ” well, how much is this gonna cost?  No, we’re not going to do it”.  That doesn’t help you.  You really have to understand what tools they have at hand, what they’re willing to do, as far as the expense, and it’s not all expense, sometimes it’s taking your understanding of your existing technology,how doesn’t work, am I optimizing it, do I have a collection strategy in place, or is everybody just doing whatever the hell they want?”  Smiling, I said “which is what usually happens.  It is often not anymore than the cost, other than the cost of consulting because most of the time it’s redeployment of resources you already have or redeployment of technology that is not being used right”.  “That’s true, that’s true”,

John said.  “I find that very often”, I mused.  John continued” unless you get into place, where I’ve been, that the technology they are using is old technology and will not support the growth the company would like to,achieve”.  “Or the growth fits even hardly growing sometimes”, I added.  John said ” right, and especially when you look at things like Benchmark, I think Benchmark is great stuff, but it’s nice to know how your peers are doing, and I actually know that because I told to them, but you have to understand is the guy in the same technology realm that you are, is the guy as sophisticated in scoring.  How many accounts do you have the collector is a meaningless number if you don’t know automation is available to somebody”.  “And what his accounts really are what the quality of them are” I followed.

 

Finally John said “what is your loss rate to a competitor if you don’t know what their risk strategy is.  I mean, loss rate is more a reflection of risk in your account origination than it is of collections and it’s also geographic.  If you’ve got a portfolio in Louisiana and we start putting California,, Texas and Florida into your loss mix and you’re heavily biased there, the guy in Chevy Chase when I was there in the mid-Atlantic when you’re in DC, Maryland, Pennsylvania, Delaware, he’s going to outperform you every day without  even trying.  He can be an idiot and turn better numbers than you because of his employment rates, so if you are in Chevy Chase (a very conservative lender, mid-Atlantic states, beautiful portfolio), then you come into Compass, or First Card, with heavy presences in California, Texas, it’s just the rates are different.  GC used to have a scoring system that I think had a baseline of 100% and if you are in the forecast and you are a California or Texas guy, you maybe needed to achieve 80% and if you were a New York guy, you need to achieve 125% of this”.  I said. ”

As I reflect back on my conversation with John the point that comes to mind is his commitment to training and development. This is something I’ve been teaching for the last decade and very few people truly here, the importance of developing your staff.

If we can all learn one thing from John and his many years of experience it is to train and develop everyone; we need to become a better citizen for the ARM industry. Thank you John!