Tag: payday loan collections


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.


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? Jer@PaydayLoanIndustry.com

What’s your biggest problem? Jer@PaydayLoanIndustry.com

Need our Collections Manual?

Want to start a Payday Loan Internet Business?

How to start a Payday Loan Business?


Payday Loan Collections: Will You Get Paid?

There is considerable evidence that 2009 and beyond will see record demand for payday loans, car title loans, rapid tax refunds, pawn and other consumer loans of all types. We are experiencing this in our stores and our online businesses. Our clients are reporting record loan volume as well. Volume is up!

Of course, that means collections will become more of an issue as the economy continues to sputter along. So, will your business prosper during the coming year with this increased demand for your products or will you go down in flames because you can’t get your customers to pay you?

Online Resources Corporation (Nasdaq: ORCC), a provider of online financial services, released results of a survey on the bill payment patterns of U.S. households. Results show which bills Americans consider highest priority and are most likely to pay on time.

Their press release highlighting their key findings show how different bills rank in consumers’ stacks, in order of priority:

* Mortgage – Though the number of households with delinquent mortgage payments are up 67 percent over last year, this bill remains at the top of the stack;
* Insurance – Of all major bills, insurance premiums have the lowest delinquency rate at 2 percent;
* Loans – In just one year, households with overdue loan payments have increased 58 percent;
* Utilities – Delinquent utility payments are up 18 percent since last year;
* Healthcare – Emergency medical care bills are most delinquent with 34 percent of respondents late;
* Phone – More Americans say they can do without phone service, and 26 percent of households put this bill on the bottom of the stack; and
* Credit Card – 1 in 3 of the households that are late paying their credit card bill continue to use their card, thereby increasing their outstanding balance.

Across multiple industries, their survey results indicated that one in three households was contacted by a collector in the past year. Consumer preference for resolving delinquencies online has increased by 18 percent over the past year, but only one percent of delinquent households were contacted via the Internet.

Households that set up recurring payments had a significantly lower likelihood of becoming delinquent in the first place. (Do you have an EFT preauthorization from your customer? If not, implement this approach!)

Bottom line, get proactive! Tighten up your underwriting if necessary. Consider modifying the number of NSF’s you allow on a previous checking account statement. Call all references. Verify time on the job and consider increasing the minimum from 3 months to 6 months or longer. Call, email and text your customer BEFORE the loan payment is due. Use SCAN for collections help. Integrate with a minimum of 1 or 2 ID Validation services like TeleTrack, Accurint, Lexus Nexus, etc.

If you are faced with significant collection challenges check out
The Collections Manual for insight, tactics and strategies to improve your operation.

In the coming months and years record profits are possible for those of us who know how to get paid! Evaluate your performance and make adjustments NOW if warranted.

On Line Resources has a free white paper with additional collection and consumer bill payment insight available here:
White Paper

What do you say? Are your collection efforts becoming more of an issue?