Top KPIs for Your Recovery Operations

The goal of a recovery operation is to maximize profitability by efficiently recovering money lent to consumers—while maintaining consumer loyalty. This means that measuring the success of a recovery strategy goes beyond just dollars and cents and into consumer-centric metrics as well.

But how do teams measure overall portfolio performance, and what are the most important portfolio-level key performance metrics (KPIs)? Let’s take a look at a few of the top KPIs and how they can be categorized.

Key Collections Metrics

Key performance indicators for debt collection and recovery efforts:

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  • Accounts per Employee (APE) or Accounts to Creditor Ratio (ACR): the number of delinquent accounts that can be serviced by an individual recovery agent
  • Net Loss Rate or Net Charge Off Rate: measures the total percent of dollars loaned that ended up getting written off as a loss

  • Delinquency Rate: total dollars that are in delinquency (starting as soon as a borrower misses a payment on a loan) as a percentage of total outstanding loans – often an early warning sign on the total volume of delinquent debt

  • Promise to Pay Rate: the percentage of delinquent accounts that make a verbal or digital commitment to pay

  • Promise to Pay Kept Rate: the percentage of delinquent accounts that maintain a stated commitment to pay

  • Roll Rate: the percentage of delinquent dollars that “roll” from one delinquency bucket to the next over a given period of time – provides visibility into the velocity with which debts are heading into charge off

Metrics like net loss rate are the north star of a recovery program, while metrics like delinquency rate and roll rate are leading indicators of future portfolio performance. But just as critical as these traditional KPIs, today’s collection operations need to focus on implementing and measuring digital engagement.

Digital Engagement Metrics

A range of KPIs that capture how effectively digital channels are reaching and engaging consumers:

  • Coverage: the percentage of users for whom we have digital contact information

  • Deliverability: the percentage of digital messages that are actually reaching consumers

  • Digital Opt-In: the percentage of users who have consented to receive digital communications in a particular channel

  • Open Rate, Clickthrough Rate: the percentage of users who are actually opening and clicking digital communications

Following key collection and digital engagement metrics are all well and good, but how do recovery teams move the needle on those critical KPIs?

Operational metrics are the KPIs that collectively drive overall portfolio-level performance. They represent the “levers” available to change the economics of a recovery model.

Operational Metrics 

Metrics that create simple framework to explain the profitability of a recovery operation: 

  • Profitability of a Collections Operation Formula: R x ResF x E

  • R [Reach]: percentage of consumers in delinquency can you actually reach

  • ResF [Resolution Funnel]: how effectively you can convert initial contact with a consumer into a commitment to pay – and ultimately, a payment promise kept (see Promise to Pay Rate and Promise to Pay Kept Rate)

  • E [Efficiency]: calculation of what the “unit economics” of your collection are and how much it costs, on average, for every account that you rehabilitate

In the hyper-competitive financial services space, consumer experience is a source of competitive advantage. That’s why it stands to reason that alongside the “traditional” metrics of recovery economics, forward-looking businesses have pioneered a new set of KPIs that measure the value of consumer experience.

Consumer-Centric Metrics 

A new set of KPIs that measure the value of consumer experience:

  • Net Promoter Score (NPS): how likely a consumer is to recommend a given brand after an experience with a brand’s collection organization

  • Customer Retention Rate: how likely a consumer is to be reacquired by a given brand after his or her delinquent account is rehabilitated

Keep a Close Watch on These KPIs for Collection

As payment-driven organizations across verticals focus further into the world of recovery, it is safe to anticipate that digital engagement and consumer-centric KPIs like the ones we covered above will become even more deeply woven into the fabric of the organization.

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FTC Amends Safeguards Rule to Require Reporting of Data Breaches

On October 27, the Federal Trade Commission (FTC) announced a final rule amending the Standards for Safeguarding Customer Information (Safeguards Rule) under the Gramm-Leach-Bliley Act. The Safeguards Rule requires nonbanking financial institutions to develop, implement, and maintain a comprehensive information security program to keep their customers’ information safe. The amendment will require financial institutions to notify the FTC no later than 30 days after discovery of a security breach involving the information of 500 or more consumers. The amendment will go into effect 180 days after publication of the final rule in the Federal Register.

Specifically, the amendment applies to “notification events,” which are defined as the “acquisition of unencrypted customer information without the authorization of the individual to which the information pertains.” Notably, the FTC final rule requires notification where customer information has been acquired, rather than when misuse is considered likely, although the FTC agrees that notification should not be required when harm to consumers is rendered extremely unlikely because the customer information is encrypted. Although the FTC received public comments advocating for the inclusion of a “risk of harm” to consumers analysis, the FTC believes that determining whether acquisition has occurred simplifies the requirement and will enable financial institutions to more speedily determine whether a notification event has occurred.

If a notification event involves the information of 500 or more consumers, the covered entity must notify the FTC “as soon as possible, and no later than 30 days after discovery of the event” using a form on the FTC’s website. The FTC will deem a financial institution to have knowledge of a notification event if such event is known to any person, other than the person committing the breach, who is the financial institution’s employee, officer, or other agent.

The notice must include:

  • The name and contact information of the reporting financial institution;

  • A description of the types of information involved;

  • If possible, the date or date range of the notification event;

  • The number of consumers affected or potentially affected;

  • A general description of the notification event; and

  • If applicable, whether any law enforcement official has provided the financial institution with a written determination that notifying the public of the breach would impede a criminal investigation or cause damage to national security, and the contact information for the law enforcement official.

This is a supplemental rulemaking to the Safeguards Rule updates previously finalized on December 9, 2021.

Four Quick Steps to Take Now:

  1. Incident Response Plan. Update your incident response plan in line with the requirements of the amendment and its 30-day period to notify the FTC.

  2. Service provider agreements and security assessment questionnaires. Update service provider contracts, statements of work, and security diligence assessment questionnaires to make sure service providers of financial institutions (including nonbanking financial institutions): (i) have developed, implemented, and maintained a comprehensive information security program around customers’ information; and (ii) are required to promptly notify their financial institution customers given that the 30-day notification clock starts when the triggering event is known not just by a company officer or employee, but also by an agent, including service providers.

  3. Update training to make sure the updated incident response plan, service provider contracting processes, and new amendment requirements are explained.

  4. Update/conduct cyber simulation tabletop training exercises that include FTC notification questions and third-party service provider security incident scenarios to further provide exposure and practice to the new amendment.

Troutman Pepper will continue to monitor important developments involving the FTC and the Safeguards Rule and will provide further updates as they become available. If you need assistance with complying with the requirement of the new amendment, please reach out to the authors of this article or any member of our Privacy & Cyber or Consumer Financial Services groups.

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Executive Order on Artificial Intelligence Includes Actions Impacting Consumer Financial Service Providers

On October 29, the Biden Administration issued a broad Executive Order (Order) on artificial intelligence (AI).  Titled “Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,” the Order establishes guidelines for AI safety and security, aims to shield Americans’ data privacy, and emphasizes equity and civil rights.  As stated by the White House in its Fact Sheet about the Order, the Order “stands up for consumers and workers” while fostering innovation and competition.

Ballard Spahr has issued a legal alert that provides an overview of the Order.  In this blog post, we highlight the provisions of the Order that are most noteworthy for providers of consumer financial services that use AI.

Guidelines and Best Practices

For consumer financial services providers that use proprietary AI, the Order includes provisions directed at AI developers and designers.  It directs the Secretary of Commerce, acting through the Director of National Institute of Standards and Technology, in coordination with certain other agencies, to “establish guidelines and best practices, with the aim of promoting consensus industry standards for developing and deploying safe, secure, and trustworthy AI systems.”

AI and Civil Rights

 Last October, the White House identified a framework of five principles, also known as the “Blueprint for an AI Bill of Rights,” to guide the design, use, and deployment of automated systems and AI.  One of those principles is that automated systems should be used and designed in an equitable way to prevent algorithmic discrimination.  For instance, measures should be taken to prevent unfavorable outcomes based on protected characteristics.  In April 2023, the CFPB, FTC, Justice Department, and Equal Employment Opportunity Commission issued a joint statement about enforcement efforts “to protect the public from bias in automated systems and artificial intelligence.”  (CFPB Director Chopra has repeatedly raised concerns that the use of AI can result in unlawful discriminatory practices.)

Building on those developments, the Order encourages the CFPB Director and the Director of the Federal Housing Finance Agency, in order “to address discrimination and biases against protected groups in housing markets and consumer financial markets, to consider using their authorities, as they deem appropriate, to require their respective regulated entities, where possible,” to do the following:

  • Use appropriate methodologies including AI tools to ensure compliance with federal law; 

  • Evaluate their underwriting models for bias or disparities affecting protected groups; and

  • Evaluate automated collateral valuation and appraisal processes in ways that minimize bias.

The Order also requires the Secretary of Housing and Urban Development and “encourage[s]” the CFPB Director, in order “to combat unlawful discrimination enabled by automated algorithmic tools used to make decisions about access to housing and in other real estate-related transactions,” to issue additional guidance within 180 days of the date of the Order that addresses:

  • The use of tenant screening systems in ways that may violate the Fair Housing Act, the Fair Credit Reporting Act, or other relevant federal laws, including how the use of data, such as criminal records, eviction records, and credit information can lead to discriminatory outcomes in violation of federal law; and

  • How the Fair Housing Act, the Consumer Financial Protection Act, or the Equal Credit Opportunity Act apply to the advertising of housing credit, and other real estate-related transactions through digital platforms, including those that use algorithms to facilitate advertising delivery, as well as best practices to avoid violations of federal law.

Protecting Consumers  

The Order encourages independent regulatory agencies, as they deem appropriate, to consider using the full range of their authorities to protect consumers from fraud, discrimination, and threats to privacy, and to address other risks that may arise from AI, including risks to financial stability.  The agencies are also encouraged to consider rulemaking, as well as emphasizing or clarifying where existing regulations apply to AI.  The agencies are also encouraged to clarify the responsibility of regulated entities to conduct due diligence and monitor any third-party AI services they use, and to emphasize or clarify requirements and expectations related to the transparency of AI models and regulated entities’ ability to explain their use of AI models.

The impact of AI on the consumer financial services industry has been the focus of two episodes of our Consumer Finance Monitor Podcast.  The episodes are available here and here.

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Harris & Harris Announces David Peters Appointed Chief Executive Officer

CHICAGO, Ill. — Harris & Harris (“H&H” or the “Company”), a leader in accounts receivable management and customer care solutions, announced today that it has made an organizational change.  David Peters, who has successfully led the Company as Chief Operating Officer, will assume the role of Chief Executive Officer.  Salvador (“Sal”) Hazday, the former Chief Executive Officer, notified the Board of Directors that he wished to resign for personal and professional reasons. The Company is thankful for Sal’s service and wishes him well in his future endeavors.   David Peters

Prior to joining Harris & Harris, Peters spent six years at Automatic Data Processing, Inc. (“ADP”) where he held increasingly senior executive positions, including Divisional Vice President/GM Major Account Services.  In his final role, David led ADP’s mid-market business on Workforce Now through the Central US.  Prior to that role, Peters served fifteen years at Perdoceo Education.  He served in various capacities, from leading large and small businesses, building the company’s Shared Services function, and leading Mergers and Acquisitions.  

Jon Haas, a Partner with Clarion Capital Partners, commented, “We are excited to promote David Peters to CEO.  In his time at Harris & Harris, he has won the respect of our employees as a great communicator, a problem solver, and a leader.  We expect he will be terrific in working with our customers to help them manage their difficult revenue cycle challenges.  H&H has a lot of momentum right now, and we believe David is the right person to help us build for the future.” 

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“I am excited to take on this role at Harris & Harris and honored to work with a talented management team to take the Company forward to its next level of business success. H&H is poised to achieve the highest revenues in its history this year, and with significant recent client wins and new analytics and technology investments we are well positioned to continue our growth in the future,” said Peters.

About Harris & Harris

Harris & Harris is a leader in accounts receivable management and customer care solutions. The Company provides third party and first party debt collection, complex claims, customer care, and other complementary services through onshore call centers and employees distributed throughout the US working from home. Harris & Harris serves clients in healthcare, government, and utility end markets. For more information on Harris & Harris, visit www.harriscollect.com.   

About Clarion Capital Partners, LLC

Clarion Capital Partners is a New York based middle market private equity firm. Clarion is actively seeking investments in growing companies in a variety of industries including Business and Healthcare Services, Specialty Financial Services, Media, Entertainment and Technology, and Consumer. Additional information on Clarion can be found at www.clarion-capital.com

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ConServe Cares Program Donates to Ibero-American Action League, Inc.

ROCHESTER, N.Y. — Continental Service Group, LLC d/b/a ConServe, in conjunction with the company’s “Matching Gift Program”, donated its September ConServe Cares proceeds to the Ibero-American Action League (IBERO).  The ConServe team supports and funds the efforts of numerous local non-profit agencies that strive to make a difference.  The kindness and generosity of ConServe’s employees have touched countless lives, enriching the community we all share.

ConServe is committed to doing the right thing, at the right time, in the right way.  George Huyler, Vice President of Human Resources, has said, “At ConServe, we are proud of our commitment to making a positive impact on the world around us.  We believe that doing good is not just important, but essential to our success as a company, and as individuals.” 

President and CEO, Angelica Perez-Delgado commented, “Ibero is inspired by the support of individuals and organizations committed to our mission and trusting our work.  We are grateful for the generosity of ConServe’s employees and the matched contribution received.”

About ConServe

ConServe is a top-performing accounts receivable management service provider specializing in customized recovery solutions for their Clients.  Anchored in ethics and compliance, and steadfast in their pursuit of excellence, they are a consumer-centric organization that operates as an extension of their Clients’ valued brands.  For over 38 years, they have partnered with their Clients to provide unmatched customer service while simultaneously helping them achieve their accounts receivable management goals.  Visit us online at: www.conserve-arm.com 

About Ibero American Action League, Inc.

IBERO has evolved into an agency that serves individuals and families of all ethnic backgrounds. Our unique ability to target the Latino community remains unprecedented in this region. We are committed to social justice and to addressing systemic disparities in housing, education, health care, entrepreneurship, and employment. Ibero has now offices in Rochester, Buffalo, Albany, Amsterdam, and Geneva. We remove systemic barriers by increasing access to an array of services that are person-centered, community-rooted, bi-lingual, and culturally responsive, serving the underserved, the vulnerable, and those most at-risk without regard to race, ethnicity, gender identity and expression, or age. Visit them online:  https://www.ibero.org/

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Using the Bona Fide Error Defense: 3 Legal Developments to Know

The Bona Fide Error (BFE) defense may be a strong shield when defending a Fair Debt Collection Practices Act (FDCPA) lawsuit, but that shield can be difficult to hold. To use the BFE defense and protect their organizations from FDCPA lawsuits, it’s crucial that debt collectors understand the defense’s nuance, intricacy, and application. Three recent cases highlight and provide insight into the important aspects, challenges, and alternative uses of the BFE defense.

The BFE defense, found here at 15 U.S.C. § 1692(k)(c), can protect debt collectors from liability if they can prove “that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.” Those attempting to avail themselves of a BFE defense must show all three of the following: 

  1. The violation was unintentional. 
  2. The error was bona fide (made in “good faith”); and
  3. That the error was made despite procedures adapted and maintained to avoid the error that occurred.

Challenges in Successfully Defending FDCPA Suits:

While the bona fide error defense offers debt collectors a valuable tool in avoiding liability, successfully using it in FDCPA suits remains challenging. Debt collectors must be prepared to meet a stringent standard of proof, demonstrating that the violation was unintentional and made in good faith. 

In Kaszko v. RSH & Assocs., Civil Action 22-2316-KHV (D. Kan. Sep 01, 2023), a district court in Kansas denied a debt collector’s bona fide error defense based on a lack of evidence submitted to establish that the violations were unintentional and on the debt collector’s failure to reasonably investigate the error. Though the debt collector argued that they believed, in good faith, that the consumer was a guarantor on the debt owed, they admitted they never bothered to check the guaranty agreement itself. The Court held that this lack of thorough investigation created a question regarding whether the debt collector acted reasonably. Consequently, the debt collector’s bona fide error defense was unsuccessful. 

The Defense is in the Details:

To effectively utilize the bona fide error defense, debt collectors must establish and implement comprehensive policies and procedures to prevent common errors that lead to FDCPA violations. These policies and procedures must be rigorous enough to withstand scrutiny. 

This issue was highlighted in the case of Sprayberry v. Portfolio Recovery Assocs., 21-36000, 21-36001 (9th Cir. Aug 28, 2023), where the Ninth Circuit Court of Appeals stated that the debt collector fell short in showing that they maintained policies and procedures created to avoid errors regarding the statute of limitations. Specifically, the Court said that the debt collector “provided no evidence of [their] legal research nor any details of the procedures used for either reviewing or updating [their] research on state statutes of limitations.” Further, the debt collector did not provide evidence that it implemented any review procedure.

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If you’d like access to an always up-to-date Statute of Limitations Matrix, be sure to check out insideARM’s Research Assistant and sign up for a free trial by using the code “TRYRESEARCH”.

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Versatile Uses of the Bona Fide Error Defense

Though the BFE defense is most often used to avoid FDCPA violations, a debt collector in California recently used it to help vacate a default judgment. In Antich v. Capital Accounts, LLC, B313167 (Cal. App. Jul 26, 2023), a default judgment was entered against a debt collector on an FDCPA claim related to credit reporting. Unbeknownst to the debt collector, their in-house counsel abandoned their employment without filing a response in the case. Upon learning about the judgment, the debt collector sought to vacate it. However, to do so, the debt collector was required to show that had the case proceeded, it would have had a meritorious defense. 

The debt collector argued that had the case proceeded it would have been able to assert a bona fide error defense. In support of this argument, the debt collector provided evidence of its system and policies and procedures tailored to prevent credit reporting errors. In light of the procedures provided by the debt collector, the court agreed that the debt collector might have been able to avail himself of the BFE defense and agreed the default judgment against the debt collector should be vacated. Thus, providing the debt collector a chance to avoid a costly judgment.

Tying it all together

The bona fide error defense remains a critical protection for debt collectors, allowing them to defend against FDCPA suits arising from unintentional errors. However, as illustrated above, successfully utilizing this defense is no sure thing. The three requirements to successfully mount a BFE defense (unintentional, good faith, and that the error occurred despite policies and procedures) hinge on creating and maintaining robust policies and procedures adapted to prevent a wide variety of errors. 

It is equally important to be able to provide a court with the details necessary to show that these policies and procedures are being implemented. Companies must also be vigilant and thorough when investigating complaints and disputes. Only by taking these precautions can a bona fide error defense be a useful tool when debt collection doesn’t go as planned.

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Southwest Recovery Services Automates Inbound and Outbound Consumer Interactions with Skit.ai’s Voice AI Solution

NEW YORK, N.Y. — Skit.ai, the leading provider of conversational Voice AI solutions, announced today its partnership with Southwest Recovery Services, a financial services company with over 20 years of experience in debt recovery and accounts receivable management. With the Voice AI solution, Southwest Recovery plans to automate outbound and inbound interactions with consumers, tapping into large volumes of untouched accounts while enabling the live agents to focus on high-priority and revenue-generating interactions.

Skit.ai’s conversational Voice AI solutions enables lenders and collection agencies of all sizes to accelerate revenue recovery and grow their operations by automating collection calls. The solution typically achieves 100% account penetration, as it initiates thousands of compliant calls within minutes and automates crucial steps of the recovery process such as right-party contact verification.

“Before implementing Skit.ai’s Voice AI solution, we were only penetrating a small percentage of our accounts each month. We wanted to dig deeper into our portfolio in a cost-effective manner, without straining our resources. We were drawn to Skit.ai’s industry-specific expertise,” said Sawyer Dietz, Vice President at Southwest Recovery Services. “I believe that this technology is going to be paramount and highly profitable in the future, as tightening regulations continue to make the recovery process more challenging.”

Headquartered in Dallas, Texas, and with additional locations in multiple states, Southwest Recovery Services operates in multiple industries and types of debt, including medical, subprime loans, property management, B2B , and B2C. The company plans to utilize Skit.ai’s fully compliant solution across different industries and types of debt. The company’s leadership has reported that, so far, both consumers and the live agents have welcomed the change.

“We are witnessing a notable change in the account receivables industry, and organizations like Southwest Recovery Services are leading the way by adopting Generative AI-powered solutions to scale their operations, improve their efficiency, and increase revenue. Market trends and consumer expectations indicate that many more organizations will seek to replicate the success of our early adopters,” said Sourabh Gupta, Founder and CEO of Skit.ai.

Skit.ai has had notable success in the account receivables industry across the U.S., with dozens of small, medium, and large collection agencies already using its technology to streamline and automate their recovery strategy.

Schedule a meeting to learn more about how Skit.ai can help you accelerate revenue recovery with higher efficiency and at an infinite scale.

About Southwest Recovery Services:

Southwest Recovery Services, LLC is a nationally recognized leader in financial business process outsourcing (BPO) headquartered in Dallas, Texas with additional locations throughout Texas as well as Georgia, Missouri, Florida, Oklahoma, and Ohio. Southwest Recovery Services has spent 20 years building its expertise across nearly every industry and business sector. Southwest Recovery Services is nationally recognized as an ethical, professional, and diplomatic service provider in receivables management.

About Skit.ai:

Skit.ai is the accounts and receivables industry’s leading conversational Voice AI company, enabling collection agencies to streamline and accelerate revenue recovery. Skit.ai’s compliant, configurable, and easy-to-deploy solution enables enterprises to automate nearly one million weekly consumer conversations. Skit.ai has been awarded several awards and recognitions, including Stevie Gold Winner 2023 for Most Innovative Company by The International Business Awards, Disruptive Technology of the Year 2022 by CCW, and Gold Globee CEO Awards 2022. Skit.ai is headquartered in New York City, NY. Visit https://skit.ai/

For media inquiries, please contact: media@skit.ai

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State Donates $21,000 to Gilda’s Club

MADISON, Wis. — State team members recently had the honor of presenting Gilda’s Club with a $21,000 donation. State’s leadership team, in collaboration with our partners, raised the funds at the 3rd Annual Great State Golf Tournament. The entire outing was filled with fun and laughter, ensuring the team had an opportunity to live the company’s core value of FUN while creating a positive outcome.

“Gilda’s Club offers a supportive community to those living with cancer. Not only has my mother been a long-time volunteer and donor, additionally our family experienced the benefits of this critical organization during my father’s courageous battle,” said Tim Haag, State’s president and chief executive officer. “I’m grateful to our team and partners for banding together to make this donation and make a difference in our community.”

Gilda’s Club is operated solely through donations and offers emotional and social support to those living with cancer, as well as their families and friends. The Madison chapter is celebrating its 15th anniversary of providing this deeply needed support.

“You and your team are amazing and very much appreciated,” said Lannia Stenz, executive director and chief executive of Gilda’s Club Madison.

About State

State improves the financial picture for healthcare providers by delivering increased financial results while ensuring a positive patient experience. Rooted in a tradition of ethics, integrity and innovation since 1949, State uses data analytics to drive performance and speech analytics with ongoing training to ensure patient satisfaction. A family-owned company now in its third generation of leadership, State assists healthcare organizations with services spanning the complete revenue cycle including Pre-Service Financial Clearance, Early Out Self-Pay Resolution, Insurance Follow-Up and Bad Debt Collection. To learn more visit: www.statecollectionservice.com.

About Gilda’s Club Madison

Gilda’s Club Madison provides free emotional support, cancer education, and hope to children and adults with any kind of cancer and those who care for them. To learn more visit: https://www.gildasclubmadison.org/.

 

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Utah State Court Rejects Claim Based on Debt Collector’s Alleged Failure to Register Under Collection Agency Act

The Utah court of appeals has recently affirmed the dismissal of a plaintiff’s suit against a debt buyer based on its alleged failure to register as a collection agency prior to filing collection lawsuits. The court’s decision in Meneses v. Salander Enterprises LLC, not only holds that a violation of the Utah Collection Agency Act (UCAA) is not a deceptive or unconscionable act under state law, but also calls into question whether the UCAA ever even applied to debt buyers. As discussed here, the UCAA was repealed by the state legislature earlier this year, but cases asserting this theory of liability remain pending before state and federal courts.

The UCCA provided that “[n]o person shall conduct a collection agency, collection bureau, or collection office in this state,” or engage in other collections-related solicitation, unless “that person or the person for whom he may be acting as agent, is registered with the Division of Corporations and Commercial Code and has on file a good and sufficient bond.” Utah Code § 12-1-1. The plaintiff alleged that the defendant, a debt buyer, was required to but failed to register as a debt collector under this provision, and that filing lawsuits to collect money owed to it without that registration constituted a deceptive or unconscionable act under the Utah Consumer Sales Practices Act (UCSPA).

The plaintiff’s argument relied heavily on Lawrence v. First Financial Investment Fund V, LLC, a 2020 decision from Utah’s federal district court holding that a debt buyer was subject to the requirements of the UCAA like a “traditional” debt collector who seeks to collect debts owed to others. The Utah court of appeals expressed significant skepticism that First Financial was correctly decided, noting that “the statute is open to multiple interpretations” and that “a reading of the wider statutory scheme of the UCAA suggests that its purpose was not to protect the interests of those who owed a debt but to protect the interests of those to whom the debt was owed, which supports the position that the registration requirement applied only to those who collect debt on behalf of others.” However, the court of appeals ultimately concluded it need not decide this issue, affirming on the alternative ground that a UCAA violation, standing alone, did not support the plaintiff’s claim for deceptive or unconscionable acts under the UCSPA.

Specifically, the court of appeals concluded that, even assuming a debt buyer was required to register under the UCAA, a plaintiff does not state a claim under the UCPSA by merely alleging a defendant “engaged in the ‘business of collecting debts acquired in default and filed collection lawsuits in Utah courts’ without first having obtained ‘the mandatory license required by Utah law’ pursuant to section 12-1-1.” Instead, a plaintiff must identify some additional “act of wrongdoing,” such as an “affirmative misrepresentation” concerning whether the debt buyer was registered under the UCAA. The court of appeals rejected the plaintiff’s argument that a debt buyer’s filing of a lawsuit constitutes an “implicit[ ]” misrepresentation that the filing party is entitled to collect the debt. Rather, “Salander’s representation that it had the right to collect on a debt it owned is not the same as Salander representing that it was a debt collector operating in full compliance with the laws of Utah. Indeed, Salander — not knowing (given the UCAA’s ambiguity on the point) that it was required to register and bond — could hardly be said to have withheld its registration status since there was no information for Salander to withhold from the [plaintiff].”

The court of appeals concluded that the plaintiff’s argument was “an improper attempt to ‘transform[] a violation of the UCAA’ into a cause of action” that the UCAA did not itself provide. Instead, a plaintiff must identify “some other affirmative misrepresentation or attempt to conceal its registration status on the part of [the defendant]” to establish an actionable claim under the UCSPA related to a failure to register under the UCAA.

Authors’ Take:

This decision should spell the end of most consumer litigation under the UCAA, particularly in light of the repeal of the statute effective as of May 3, 2023. However, several cases remain pending before the Utah court of appeals on issues related to the UCAA, and we will continue to monitor those matters for further developments.

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Markoff Law Celebrates Breast Cancer Awareness Month With Donation To Susan G. Komen Foundation

CHICAGO, Ill. — October is a time when people around the world turn to pink to show support for those who have battled, are battling, or have been affected by breast cancer. This year, Markoff Law has stepped up its commitment to making a difference by contributing to the Susan G. Komen Foundation, an organization at the forefront of the fight against breast cancer.

The Susan G. Komen mission is to save lives by meeting the most critical needs in our communities and investing in breakthrough research to prevent and cure breast cancer. Markoff Law is proud to support an organization working tirelessly to help the nearly 4 million women affected by breast cancer in the United States. 

Why Breast Cancer Awareness Matters

October is Breast Cancer Awareness Month. This month holds immense importance in our society. It serves as a powerful reminder of the prevalence of breast cancer and the need for early detection and comprehensive support systems. 

By wearing the symbolic pink ribbon, communities worldwide express their solidarity with patients, survivors, and their families. Moreover, it emphasizes the significance of regular screenings and educates individuals about breast health, fostering a proactive approach towards the disease.

Markoff Law encourages everyone to join them in supporting Breast Cancer Awareness Month. Whether it’s wearing a pink ribbon, sharing informative resources, or participating in local events, every effort counts. By spreading awareness and encouraging open conversations about breast health, we can make a significant impact in our community. It’s a collective endeavor that amplifies our message of hope, resilience, and compassion.

A Cause Worth Fighting For

Markoff Law’s recent donation to the Susan G. Komen Foundation signifies its commitment to making a tangible difference in the lives of individuals and families affected by breast cancer. By providing financial assistance to this esteemed organization, they actively participate in funding critical research, treatment programs, and support services for breast cancer patients. Markoff encourages any and all who can to support causes like Susan G. Komen and continue to provide funding for the valuable research and support these organizations provide. 

About Markoff Law LLC

Markoff Law LLC is a forward-thinking firm with a history of experience and success representing creditors throughout the Midwest. Through the decades, Markoff Law has earned and maintained a reputation for excellence, honesty, and integrity. The firm’s thought leadership and adherence to industry best practices have established it as a leader within the accounts receivable management industry. Markoff Law is firmly committed to setting and achieving the highest standards of excellence.

Markoff Law Celebrates Breast Cancer Awareness Month With Donation To Susan G. Komen Foundation
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