Is it Really 'No Win No Fee' Debt Collection?

The phrase 'no win, no fee' is screamed at you from a hundred adverts a day, usually in relation to personal injury claims, PPI mis-selling and so on, but it is also used in the context of no win, no fee debt collection - meaning you only pay commission to the b2b debt collection company if they are successful in recovering what you are owed.

It's worded all sorts of different ways, so you might also see 'no collection = no commission' on some ads, but it boils down to the same thing - if you don't win back your money from the debtor, then you have nothing to pay.

But is this really what it means in all cases? If your debt recovery organisation is being honest with you, then yes, but it's not difficult to do a bit of digging and find some less-than-honest operators with upfront fees and extra charges hidden deep in their terms and conditions.

Even if these are described as admin fees, rather than as commission claimed on the money recovered, it's fair to expect from the way these services are advertised that you would have nothing to pay until you get paid yourself.

Check the contract carefully

You should check the terms and conditions or contract between you and the debt collector very carefully. Some firms may have a very specific type of “good” debt that is handled on this basis and expect you to pay for any debt they deem as ‘bad’ irrespective of if they collect the money or not. Examples of these types of terms may include limitations on value of debt, supposed solvency (or insolvency) of the debtor and various other arbitrary definitions designed not to recover money, but to charge their clients additional fees.

Other agencies may offer ‘no win, no fee’ debt collection services but then ask for an administration charge, membership fee or debt placement fee be paid before they will even begin work. Again check your contract or terms carefully and consider the risks and rewards before making any payment in advance.

It is not unusual to see reviews and complaints from clients that have paid in advance for debt collection and then be left with nothing but a further loss or worse still, an invoice for yet more additional fees from the dodgy debt collector!

Wrong impressions

We're not alone in objecting to this kind of misleading advertising - the ASA recently ruled against a debt collection company using the ‘no win, no fee’ line, yet asking new customers to pay an upfront fee based in part on the volume of debt to be recovered. If that's not a commission-based payment, then what is??

The ASA's verdict said: "We considered knowledge of the fee was likely to affect the economic behaviour of the trader to whom the ad was addressed. Because the ad did not include any indication that an upfront fee applied to the service, we concluded the ad was misleading."

Even worse, a little extra digging into the reputation of the company involved reveals quite a large number of clients who claim that their debt was recovered, but that the funds were never paid over to them by the DRO, leaving both the creditor and the debtor out of pocket.

At Safe Collections we do not charge upfront fees, and we never carry out additional chargeable work without prior written approval. If your case does require additional chargeable work, such as locating an absconded debtor, then the decision is yours. We want to recover your money, not make you spend it needlessly!

We cannot control your legal costs, and if you decide to go to court to recover your money, you will be liable for solicitors' fees and court charges as appropriate. But again, we do not make the decision about issuing legal proceedings, you do and as such you stay in complete control of your costs at all times.

Apart from that, under modern legislation, we can usually charge our fees to the debtor, rather than asking you to pay them; the exception to this is if the debtor pays the original invoice amount not including recovery costs, in which case we will ask you to pay us as a fixed percentage of the recovered amount that we agree at the start, rates begin at just 5%of any recovered amount, for our work done in claiming the unpaid invoice amount back from your debtor.

Over 150 Years Of Industry Experience

Our modest but highly skilled team has a combined total of over 150 years of experience in commercial credit management and B2B debt collection. From independent IT contractors to major film and TV publishers, Safe Collections has the knowledge and experience you need to get paid quickly and cost effectively.

© Safe Collections is a trading name of Safe Collections Limited. Incorporated 1984. Company Number: 01815264. VAT Number: GB407358159. All Rights Reserved.

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