Secrets of the collection business: how to work with debtors in the 21st century

Stereotypes about collectors in Russia have remained virtually unchanged since the 90s, despite the fact that over 30 years the collection business has acquired a “human face” and today operates fundamentally differently. Representatives of the collection agency Pravo Online spoke about how collectors operate these days and how to work correctly with debtors.

— In Russia, there is still a not very favorable stereotype towards collectors, which dates back to the 1990-2000s. How has the collection business changed to date – not only in terms of attitude towards debtors, but also in terms of its structure? How has digitalization affected these processes?

— Indeed, the collection market in Russia has changed significantly in recent years: collection has become seriously regulated by supervisory authorities, in particular by the Federal Bailiff Service. In addition, the activities of collection agencies are subject to No. 230-FZ, which clearly states the rights and obligations of collectors. The law establishes rules, criteria, and restrictions on interaction with debtors, including how many times you can call a debtor client.

Today we can say with confidence that our business is 100% civilized, and the times when the debtor was rude and even threatened are long gone. Now such actions are fraught with huge fines, revocation of the license and, accordingly, closure of the business. A legal collection agency values ​​its reputation and uses only legally permitted methods of interaction with clients, including digital communication channels. They greatly simplify communication and speed up the collection process.

— How do debt portfolios get to collectors? If we can talk about this, then what is their cost (without specifics, as a percentage relative to the debt).

– There are two ways. The first is the so-called agency scheme, when the lender transfers problem loans to a collection agency and pays it a certain percentage. The second option is an assignment agreement, when the collection agency completely buys out the debts and independently handles the process of collecting them.

The amount of the commission depends on which product is transferred and how long it is overdue. There is a direct relationship here: the older the debt, the higher the reward the collector receives. From the point of view of its sale, the situation is the opposite: portfolios with “old” debts are worth lower, because such debt is more difficult to collect.

Other factors, such as the type of debt, also affect the value of a portfolio. For example, bank debt, with an average cost of debt of 200-300 thousand rubles, will take longer to pay off, since a person cannot immediately repay the entire amount. Another thing is microloans, where the average cost of debt is much lower. Such portfolios pay for themselves faster and their price on the market is higher.

— Since Russia now has an actively developed system of various microfinance organizations issuing loans, there is a common belief that MFOs and collectors work together to increase their own profits. Is it so? Why do you think this opinion has not yet changed? How does the interaction between MFOs and collectors actually occur?

— The statement is controversial, because it cannot be said with 100% certainty that all collection companies work this way. Let’s not exclude the possibility that there are practices where the owners of a company have several businesses with different specifics, for example, issuing loans and collecting debts. At the same time, the collection agency has the right to cooperate not with one microfinance organization, but with several. Working with external debts allows them to feel more confident in the market and not be afraid that at some point the “main partner”, for example, will have their license taken away. But in most cases, the work scheme is different: for example, MFOs work off early delinquencies on their own, and at the next stages they involve professional debt collectors who have more legal tools for debt collection. Today, almost all microfinance organizations involve professional collectors in collection, working with them under an agency scheme or assignment agreement.

— How to distinguish real debt collectors from scammers? What fraudulent schemes have become popular in recent years and how to counter them? Is it possible to independently check the presence of credit debts?

– Each professional collection agency is registered in the FSSP register – you can go to the website at any time and check. In a telephone conversation, a representative of a legal company must introduce himself and pronounce its full name. If the employee refuses to do this, the conversation can be terminated. If in doubt, you can always ask the interlocutor to provide a contact phone number – it should belong to the collection agency, this is also easy to check. And most importantly, a professional debt collector will never resort to rudeness and threats, will not resort to psychological pressure and will not bother you with calls.

Anti-spam services offered by many mobile operators and banks can help you understand that illegal debt collectors are calling you. And such programs are quite effective. However, I do not rule out that this list may also include contacts of legal companies. Therefore, it is always better to double-check the information and not take rash actions. For example, scammers can send links to pay a debt. In this case, you cannot enter your card details and confirm the transfer; first make sure that this is a resource from a legal collection agency. The best thing to do is contact him and find out detailed information about the existence and amount of debt. Moreover, many companies are now introducing Internet services that allow them to pay off debt. You can also check the presence of debt through the Credit History Bureau.

— Is there any government control over collection agencies? Is this really a guarantee of “cleanliness” of collectors?

— As I already said, all professional collection agencies work in full compliance with No. 230-FZ. It provides clear explanations and instructions on the ways and means of interaction between collectors and debtors. Failure to comply with the requirements of the law entails not only heavy fines and even criminal liability for debt collectors, but also the revocation of the company’s license. Therefore, yes, to a large extent this is the key to the “cleanliness” of the work of collection agencies.

— What is the situation on the debt market in 2023 in the country as a whole? Have there been more/fewer offers from banks and microfinance organizations, are debts being repaid faster/slower? Does this somehow characterize the economic situation in the country?

— From the point of view of payment discipline and the average bill, 2023 is not much different from 2022 – the data is approximately the same. The only thing that can be noted is that 2022 was a very difficult year for judicial collection – then a moratorium was imposed, and according to court decisions, no enforcement work was carried out until October 1. In 2023, there was no such obstacle.

If we talk about the foreclosure market as a whole, it is growing, the volumes of portfolios are becoming larger.

— This year, the Federal Bailiff Service has increased the scope of preventive measures against professional participants in the foreclosure market. Why is this necessary, how has it affected the collection business and the interaction between collectors and debtors?

“This has not affected our company in any way, since we always strictly comply with the requirements of current legislation. We are recording positive trends in complaints from debtors and minimal requests from bailiffs.

The preventive measures of the FSSP affected those companies that did not promptly adjust to full compliance with Federal Law No. 230. But our business, fortunately, is not one of them.

Interviewed by Andrey Mikhailov