Are you at Risk if your Collection Agency isn’t Compliant?
Presented by Rod Garrison, Transworld Systems, Inc.
The Collection Agency industry is highly regulated and there are numerous laws on the books designed to protect consumers which make it more difficult to collect. While it costs agencies more to be legally compliant and hinders their collections efforts, not complying can lead to class action suits and sanctions against the agency (and possibly their clients) that are more costly in the long run, if not fatal to the agency’s very existence. Let’s examine how this affects your practice.
The Laws You Know
Most Practice Administrators are familiar with Fair Debt Collection Practices Act (FDCPA) of 1978 which creates a set of guidelines that collection agencies are required to follow as well as penalties for not adhering to the Act. Additionally, practices are familiar with HIPAA laws and the security requirements of Protected Health Information (PHI).
But Do You Know About These Laws?
Most practices are not familiar with the Telephone Consumer Protection Act (TCPA) despite its having been a law since 1991, which also impacts collections. Among other provisions of the TCPA (such as calls can only be made between 8am and 9pm), the TCPA prohibits the use of automated dialers to a cell phone or leaving automated messages on a cell phone. While auto-dialers represent a technological efficiency that allows a collection agency to make more frequent calls and collect more money, their use is not compliant with the TCPA when the phone number the patient has provided the practice with is a cell phone. In order to be TCPA compliant when calling a cell phone, it must be manually dialed. Even if a live collector will be connected with the consumer upon pick up, a cell phone cannot be dialed using a computer.
Medical Collections Impact
A recent data analysis by Transworld Systems Inc., a large national collection agency specializing in medical collections, revealed that 60% of the phone numbers that medical practices are obtaining from patients are cell phones. Violation of the TCPA is at a cost of $1,500 per incident and class action suits,
What Does This Mean For Your Practice?
Today with the ever changing Federal and State regulations, it means you need to ask more questions of your collections vendor to find out if they are compliant with all laws. Ensure your practice can not be named as a co-defendant in a potential class action suit should your agency be accused of being non-compliant by asking questions first before you have to answer for shortcuts or missteps that could result in hefty fines for lack of compliance later. It is also important to have a Hold Harmless Agreement in your collection agency contract where the agency agrees to hold your practice free from responsibility for any liability or damage that might arise out of their collection activities. Basically, it is paramount to ensure your company of choice is an expert in their field who stays abreast of, and quickly adapts to, the seemingly endless stream of regulations designed to protect consumer’s rights, often at the expense of their creditors.
Top 5 Compliance Questions
To Ask Your Collection Agency
- Are they compliant with the following:
- State laws
- Do they perform background checks on collectors in required states?
- How are cell phone calls handled?
- Do they know what PHI is?
- Are the properly licensed to collect in all states?