Is there a fee if the debt collection agency fails to collect or uses illegal practices?

Recovering business debt can be time consuming, but if you decide to hire a collection agency to collect your debt, it could be costly as well.  If you hire one that is not reputable, it can cost you not only money, but reputation – so you need to do your homework.

Generally, third party collection agencies charge either a percentage of the amount in collection or a flat fee; and often these fees are paid in advance.  Therefore, whether the collection is successful or not the agency is paid.  Additionally, collection agencies are regulated by the Fair Debt Collection Act, the Federal Trade Commission, and many individual state statutes.  They are prohibited from using certain methods including: 1) threats and harassment; 2) lies and false statements; and, unfair practices such as depositing a post dated check early or threatening to take property.  The debtor can file a complaint with the Federal Trade Commission and, with respect for you harmed, you may never collect that judgment.

Whatever money you have paid the collection agency is undoubtedly gone.  If you haven’t paid them, then don’t.  Instead, check with an experienced attorney to see what your rights are with respect to payment when the agency has used illegal practices.