persons in your contact list ." This is a clear invasion of privacy .
As we apportion the blame to lenders , it is also worth noting that the Kenyan society has its own challenge of paying debts , in credit management terms it ’ s called a " Moral Hazard ," where people borrow with the intention of not paying back . This poses a big challenge to lenders because it is a widespread habit among our populace .
All players in the lending and collections space would agree that the regulations we have are not sufficient or are always overlooked ; for instance , no act regulates and governs debt collectors . We find them scattered in other acts like the data protection act , consumer protection act , and central bank act . On the other hand , backstreet lenders seem to be thriving with skyrocketing interest rates and predatory lending . One common feature of most unregulated lenders is that they lack conflict resolution mechanisms ; hence most borrowers feel harassed and their rights trampled upon .
Common threats used by Debt Collectors
Collecting debts sometimes is a challenging task as you contact the customer who is full of excuses , but collectors have one thing in mind when they are on the phone with a customer about getting their money . And some don ’ t have a problem playing dirty .
Some tactics include threatening to attach your salary : a collector may tell you that they will get orders to attach your salary even before it gets to you ; threaten to have you arrested : this one can get people scared because they might compare debt to theft ; claiming that they will take you to the CRB and you will not borrow again . It ’ s frustrating when a collector says you will not be able to borrow again ; and threatening to tell others about your debt : this tactic is meant solely to embarrass you . A collector will say that they ’ ll call all your neighbors , friends , religious leaders and tell them that you are a defaulter .
One debt collection tale goes that a debt collector was following up on an unpaid invoice , but whenever he visited the debtor ' s office , the secretary always told him that " the boss is not in " this happened many times until he did his research and ensured that the boss was in . He went into the office and asked for the boss , on being told he ' s not in he ‘ fainted ’ forcing the secretary to call the boss for assistance only for him to rise and ask the boss " where is our money ?"
Sins Of Debt Collection
Debt collectors usually have tricks in dealing with the so-called excuses given by defaulters . Some of these tricks border on falsification , manipulation , or even overaggressive collection practices , and credit experts have branded them the " Deadly sins of Collection " debt collectors are warned against . These include : Allowing a customer to have two points of contact which generally confuse the debtor as to whom they are dealing with ; Threatening the customer with an action that you are not ready to take , like for example , we will take you to court when you ' ve no intention of doing so ; Talking about a customer to third parties , like the idea of calling relatives , pastors , and friends and sharing debt details , is the typical type of sin .
Asking leading questions that only require answers like YES or NO . " You will pay our invoice by Friday , Yes or No ; Taking an action that is not coordinated , sometimes you call , you have no details of how much you are demanding , even just talking to everyone in the organization , even those not concerned ; Showing you are desperate some debt collectors will plead like , " just pay even if it is very little we need to pay salaries , tax , or any other obligation "; Being compromised by the debtor , this can be in the form of favors , say bribe or other non-material favors to go slow on collection .; and Locking horns in the form of bitter exchange between the collector and the debtor , it is known to make debtors develop belligerence towards paying their debts .
Whereas debt collection as trade has existed for many years , it ' s obvious that it has existed with little regulation and professionalism . Historically many firms were formed by ex-policemen or auctioneers whose main methods of collection were fiat tactics . Threats took center stage . I went for a business presentation in a micro-finance company , and the credit manager insisted that I must have enough muscle as their customers require that and nothing else . I insisted on the professional way , they ended up taking an auctioneering firm , but six months on , they realized they had no results ; they called me and handed over the accounts , I had a much better turn-around than the so-called muscle men .
In Conclusion
The central bank governor is on record having said that people have suffered from the debt shaming tactics of collection agencies working for digital lenders . Kenya is doubling down on regulating mobile loan Apps to combat predatory lending . The country ' s central bank is proposing new laws to regulate monthly interest rates levied on loans by digital lenders in a bid to stamp out what it deems predatory practices . If approved , digital lenders will require the central bank to increase lending rates or launch new products .
Digital lenders , having realized the need for self-regulation , have organized themselves into an outfit called Digital Lenders Association of Kenya - DLAK and have vowed to name and shame rogue peers among them as CBK noose tightens on their playfield . The DLAK chairman is quoted as saying , " Not only does this behavior of shaming customers go against Kenyan data protection laws , but it reeks of indignity ."
As a result of the shaming tactics , many lenders have experienced high customer attrition , and legal tussles have increased on a large scale because of the uncouth tactics applied . On the side of the debt collection firm , these unprofessional and deadly sins against customers only increase their chances of performance failure , and the chances of winding up are very high .
Now that you know , when hiring Debt Collectors , ensure you look at their professional orientation lest you visit unnecessary sin to your valued customers .
Wasilwa Miriongi is a Certified Credit Professional currently working as the Managing Director , Del Creder Credit Management Limited . You can engage him on this or related matters via email at : WMiriongi @ gmail . com .
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