Collection Agencies, do you think it's a good idea to use them?

[Radical Rick]

I'm sure each of you has been burned for some $$$ at least once, I've personally been burned a few times. I'm now fighting with an adult company AGAIN for advertising payment that has been owed to me for over 2 months.

I'm wondering if hiring a collection agency to go after companies that refuse to pay is a good idea or not.

On one hand I stand a better chance of getting money that is owned to me. On the other hand I fear it could burn bridges in the industry.

What do you think? Using collection agencies in this business, good or bad?

[CBLCasey]

Good. Any company that isn't responsible enough to pay there bills isn't gonna last long anyways so I don't think you'd be burning any bridges. However, if they won't pay your directly what will make them pay a collection agency?

I have actually found great success in sending invalid chargebacks to a collection agency. In my personal sites we have recovered about 50% of our chargebacks.

[Radical Rick]

I have actually found great success in sending invalid chargebacks to a collection agency. In my personal sites we have recovered about 50% of our chargebacks.

That's great! How do you determine which chargebacks are invalid?

[gaybucks_chip]

I'd also be interested to know which agency you use.

The one major annoyance I have with CCBill is their efforts on fighting chargebacks is apparently nonexistent. We offered to send them data with logs, IPs and info that traced back to the specific user who claimed he'd never, ever accessed the site, even though his "never accessed" and initial questions about accessing the site were the same IP. We were told they had their "own way" of fighting chargebacks which seemed curious... without any evidence to fight the chargeback, it obviously isn't going to be successful.

And our TOS says that anyone who initiates a chargeback without first contacting us to arrange a refund will incur a $100 charge. Don't know if it would hold up in court, but it's been very successful in scaring potential chargeback scammers from doing a chargeback.

So yes, I'd love info on agencies.

[CBLCasey]

I'm not a lawyer, but here is the way I see it. When you authorize a credit card transaction its just like writing a check. If your bank doesn't honor your payment you are able to collect the original amount plus a fee. Each state has a maximum fee which can be charged. We put it in the terms of service that a $30 fee + original amount will be charged. Now thats $30 fee per transaction. So lets assume a customer signed up at $19.95 a month for 3 months, then charged back all 3 months. $19.95 x 3 = 59.85 $30.00 x 3 = $90. Total collection is $149.85.

What I mean by an invalid chargeback is we look at the offical complaint that was sent to the customers bank. We then compair it to our database. If the customer name and mailing address match our records we check the IP and if it comes back to the same region and the customers chargeback reason was "unauthorized transaction" we proceed with a collection.

I have found that many chargebacks are a result of the customer subscribing to too much porn and waiting a few months, then contacting the bank and requesting a refund. Often times I will see chargebacks with complaints against Ibill, CCbill, Paycom, Neova, Verotel, etc all on the same statement. The company that tries to collect usually wins. When CCBill and others just accept the chargeback the customer gets back $100's of dollars. Then if they get the collection from your company there more likely to pay to avoid a porn bill appearing on there credit report.

On the other side, there are valid chargebacks. Chargebacks that are a result of a stolen credit card, customers that made a valid attempt to cancel and couldn't, etc. We do not send these customers to collections.

[Lee]

Collection agencies typically have a better chance of getting funds from non-paying clients i would say.

I forgot where i was reading information recently about collection agencies but the figure they can actually 'get back' from non-payers as a percentage was somewhere in the region of 60% success rate so yep, id have to say i was in favor of using such services.

Regards,

Lee

[Radical Rick]

Very interesting feedback!

Now what about sending other companies in the industry to collections in response to non payment? I'm sure everyone has been owed a healthy amount of money from a company at some point, do you think it's worth taking this measure in this situation? For example if you own a hosting company that hosts for an affiliate program, or perhaps if you are an affiliate that has not been paid due commissions?