Collection Strategy No-No for PaydayLoans, Car Title & Check Cashers

Collection Strategy No-No for PaydayLoans, Car Title & Check Cashers

In our industry, you’d better “get” collections. Comprehending Federal and state collection practices are crucial to us. After all, we’re really a “collections business.”

So… if you get anything out of this short Blog let it be this:

Bottom line, DO NOT CALL your customer at their employer once you’re told it’s unacceptable.

Case in point, a West Virginia resident Woman sues over collection calls at work

A  West Virginia woman claims she suffered “humiliation, embarrassment, mental anguish and emotional distress after a debt collection agency repeatedly called her at her work.”

Amy Wellman filed a lawsuit Feb. 3, 2010 in U.S. District Court for the Northern District of West Virginia against Martin and Seibert .

Wellman claims she began receiving phone calls from Martin and Seibert regarding collection for her debt in July 2009.

“When Plaintiff was first contacted by a representative of Defendant at Plaintiff’s place of employment, she requested that the Defendant cease placing telephone calls to her place of employment regarding the alleged debt,” the suit states. “Despite her request, Plaintiff continued to receive telephone calls from Defendant’s representatives at her place of employment. Plaintiff often hung up the phone on such occasions, but Defendant’s representatives would call back immediately thereafter. On numerous occasions Plaintiff reiterated to Defendant’s representatives her request not to be called at work too often explaining that calls of such a nature were not allowed by her employer.”

Wellman claims Martin and Seibert violated the Fair Debt Collection Practices Act and the West Virginia Consumer Credit and Protection Act by communicating with her at her place of employment and by continuing to call her with an intent to annoy and harass her.

In the two-count suit, Wellman seeks actual and compensatory damages, statutory damages of $1,000 for each violation of the FDCPA, attorney’s fees, costs and other relief the court deems just.

U.S. District Court case number: 10-CV-5

Just imagine this strategy being used by you in your business and a friendly class action lawyer getting a hold of you?

Don’t do it! Did you read our previous “Text Messaging Article?” There are plenty of methods you can employ to perform your collection efforts. Educate yourself and your team. Proper collections activities are micro-lending 101.


Time to Use the Power of Text in Marketing and Collections for Payday Loan, Car Title…

It’s time to use the Power of Text in Marketing and Collections for Payday Loan, Car Title, Check Cashers, Pawn & More

Here is the how and why Text Messaging can help your Collection efforts INCREASE up to 25% or more and your payment defaults DECREASE by about 40%, as well as generate new leads and create repeat customers.

Our payday loan customers are inundated with “noise” from competitors and others screaming at them for their attention. Print, radio, TV, email, direct mail, billboards, phone calls, magazines… on and on and on. Every company in the micro-lending space is focused on our customer.

Now, it’s “Text Messaging” referred to as SMS. The explosion of cell phone use has brought the newest marketing and collection channel to us.

Personal cell phone use has become essential to virtually EVERYONE. All of us rely on our mobile device!

Mobile text messaging can connect you to your customer. Mobile text messaging offers a powerful alternative to all the other marketing strategies.

Those of us in the micro-lending space, that includes payday loans, car title lending, scrap gold buying, check cashing, rapid tax refunds, etc., must enter this mobile marketing and mobile collecting arena to communicate with our customers immediately.

The heaviest users of SMS are ages 18-34 at 80% and 35 -49 at 63%. Those are our demographics! 97% of all text messages are read!

So, what’s this all mean to us? INSTANT COMMUNICATION! SMS dwarfs all other features on a cell phone today!!

Reach your customer anytime and anywhere, with the Power of Text.

Why is Text Messaging SMS so successful?
More than 265 MILLION Mobile Phone Users
Easy to use
Available on 99% of all cell phones
Everyone has a phone
Direct link to your customer
Able to launch a web page
Specifically target messages to your customer
Messages to your customer are permission based; CAN-SPAM Compliant
Your customer can act on your message instantly
Present your customer with a coupon
Remind them of a payment due
Contest announcements
Announcements of sales, promotions and events


Text messaging is personal
Cell phone users keep their phones with them ALL THE TIME
90% of Text Messages are read within 8 MINUTES!
Bulk SMS is economical and you can send thousands of text messages to consumers at wholesale rates
One SMS message can be created and sent to a large group of customers
Tracking of SMS delivery and customer response is simple

It’s not uncommon to improve your collection efforts 25% or more by using SMS

A 40% increase in “on-time” payments is possible by using SMS to notify customers of their upcoming payments and appointments.

Transparent integration with your software is easy or you can use a web-based gateway.

Are you ready for more info to learn how you can get instantaneous communication with your customer AND increase your collection results?


Payday Loans – Consumer Federation of America Wake-Up!

The CFA, Consumer Federation of America, continues to misstate facts surrounding the payday loan industry. It’s intentional and unfair. They are a “non-profit” organization whose sole purpose is to place limits on Americans and reduce their financial choices.

The Consumer Federation of America CFA thinks they know what’s best for the rest of us and is composed of a well-funded group of elitists.

A great example of this occurred when Rep. Luis Gutierrez, speaking to CFA President Jean Fox at a House Financial Services Subcommittee on Financial Institutions and Consumer Credit said, “If you wish to be against the bill because you wish us to do nothing other than eliminate payday lending, which anyone reading your statement can extrapolate…that’s not possible.”

CFA President Jean Fox was asked several times by both Democrats and Republicans to offer an alternative to short term, non-collateralized lending. She had nothing to offer. The Consumer Federation of America is simply AGAINST!

Too bad the Consumer Federation of America doesn’t make an effort to understand why consumers by the millions use payday loans and what criteria payday loan businesses implement to determine if a consumer qualifies for a payday loan.

A recent “Position Paper” offered by CFA erroneously makes the point of stating that, “Given the lower bank account penetration rate for minority consumers,  this payday loan product undermines progress being made to unbanked consumers into mainstream financial services.”

Consumer Federation of America WAKE-UP! Educate yourselves first!! Payday loan consumers MUST HAVE BANK ACCOUNTS TO QUALIFY FOR A PAYDAY LOAN! Of course they must have a job also in order to pay us back.


Payday Loan Business: A Magical Method to Increase Profits

Face it! Paying your payday loan employees $8.00 to $12.00 per hour just won’t get the job done. You have to incentivize your people to achieve your goals.

Doesn’t seem fair does it? You’d think a decent hourly wage with a couple of breaks and lunch thrown in would do it. But it doesn’t.

You want a tip? Figure out what you’re trying to achieve and pay your people a bonus to get it done.

You want examples? Here’s what works for us.

When we open a new payday loan or scrap gold location WE WANT TRANSACTIONS! We want to fund loans; as many as we possibly can. So… after checking our competition, studying the demographics in our area, formulating our advertising spend and determining how much money we have available “for the street”, we give our payday loan and car title loan store reps a minimum target and pay a bonus for every transaction exceeding this target. WE PAY THIS BONUS DAILY!

Now, the exact numbers will vary depending on the size of the market we’re in. But our employee bonus system looks something like this.

Our goal week 1 in a new market might be to fund 3 loans per day per employee. (In small markets with plenty of competition we might only have one employee working 10 hours/day.) Our bonus system might pay $5 per funded payday loan beginning with #4 for the day. So should our employee get 6 payday loans funded that day, they earn their hourly wage plus a bonus of $15 PAID AT THE END OF THEIR SHIFT.

(REMEMBER! That new payday loan customer could easily be worth $5000 or more in fees over their lifetime.)

We might implement this bonus system weeks 1 through 4 and then adjust it to a minimum of 6 per day week 5.

Don’t forget to adjust! Perhaps by week 30 you’re more concerned about collections than you are about transaction volume. As discussed in our Payday Loan Collections Manual, place your overdue receivables in buckets; 0 – 30 days, 31 – 60 days, 61 – 90 days, 91-120 days, and 121 days+.  You might pay your employees a percentage of dollars collected; a little more for each bucket. Or a flat fee per contract paid on.

Now, I’m not going to discuss the justifications for paying IMMEDIATE bonuses to an employee for simply doing their job. And we don’t need to quibble about the actual numbers/goals other than to say you must make the target a challenge, communicate it to your employee, MAKE IT SIMPLE and yet be achievable.


Get creative.

This system works for both our stores and our Internet business and for a multitude of products we offer.

Good software makes this bonus system MUCH EASIER TO IMPLEMENT. See the software chapters in our Payday Loan Manual and our Payday Loan Internet Report.

Empower your people. Set them free. Trust them. The amount of trust that Google puts in its employees and how amazingly those employees deliver results is impressive. This works for our industry as well.

Organize and simplify. (You really should read, “The E-Myth Revisited“)

Finally, as a business owner, the need to implement a bonus system to motivate your employees to perform their job may seem REALLY UNFAIR. GET OVER IT! JUST DO IT!!


What do you think?

What’s your biggest problem?

Need our Collections Manual?

Want to start a Payday Loan Internet Business?

How to start a Payday Loan Business?


Washington Payday Loan Law

Washington State payday loan laws in a nutshell:

The Washington State payday loan law limits the size of a payday loan to 30 percent of a person’s monthly income, or $700, whichever is less. It also bars people from having multiple loans from different lenders, limits the number of loans a person can take out to eight per 12 months, and sets up a database to track the number of loans taken out by people.

Payday loan limit is capped at $700.00 or 30% of gross monthly income, whichever is less.

A statewide databases established so that payday lenders can track their borrower’s loans.

If a person is not in a position to repay on time, they can ask the lender for an installment plan, which the lender must provide free.

Payday loan lenders may not harass people who can’t pay

Payday loan consumers have access to 8 payday loans per year.