Collect Rx Joins Healthcare Revenue Cycle Leader Wakefield & Associates to Deliver Out-of-Network Solutions.

AURORA, Colo. — Wakefield & Associates, a leading healthcare revenue cycle solutions company, announced today that Collect Rx has joined the Wakefield organization. Together, the two companies will leverage combined capabilities to provide a full spectrum of revenue cycle solutions, including Out-of-Network Claims resolution to healthcare providers across the country. 

Founded in 2006, Collect Rx provides a tech-enabled Out-of-Network (OON) payment integrity solution platform, assisting customers with appeals and negotiations. Combining complex claims, medical account resolution expertise, collaborative customer services, and proprietary databases, Collect Rx serves over 5,400 healthcare companies across the country. 

“Collect Rx is thrilled to bring its market-leading and provider-centric claim resolution services into the Wakefield & Associates family”, said Ike Brenner, President of Collect Rx. “Our customers and partners will be the biggest beneficiaries of this highly synergistic combination. Together, we bring to market an exceptionally comprehensive RCM solution set.”

As one of the leading revenue cycle solutions companies in the nation, Wakefield & Associates makes vital contributions to the financial health of medical providers through innovative and proven Revenue Cycle Management (RCM) solutions. 

“With its depth of expertise and being a pioneering industry leader of complex Out-of-Network claims, Collect Rx allows Wakefield & Associates to expand our service offerings”, said Matt Laws, CEO of Wakefield. “Going forward, we will be able to deliver a full suite of RCM services to the thousands of healthcare service providers with whom we partner.” 

About Wakefield & Associates

Established in 1933, Wakefield & Associates specializes in Revenue Cycle Management Solutions, which includes System Conversions, Call Center Partnerships, Insurance Billing, Process & System Workflow Design, Eligibility Assistance Programs, Primary & Secondary Bad Debt Collections, Legal Solutions, and working with Debt Purchasing providers. Wakefield & Associates has and continues to make significant investments in people, processes, and technologies that allow us to develop and implement quality solutions that accelerate cash flow and A/R liquidation. Wakefield & Associates has developed effective recovery techniques and partnership collaborations that result in a positive patient experience.

Collect Rx Joins Healthcare Revenue Cycle Leader Wakefield & Associates to Deliver Out-of-Network Solutions.

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CFPB Enters into Consent Order with Fintech Company to Resolve Alleged UDAAP Practices Arising From use of Algorithm

The CFPB announced that it has entered into a consent order with Hello Digit, LLC (“Digit”) to settle the CFPB’s claims that Digit engaged in deceptive acts and practices in connection with an automated savings tool it offered to consumers.  The settlement requires Digit to pay a $2.7 million civil money penalty and at least $68,145 in consumer redress.

Digit is a fintech company that offers a personal-finance-management app that includes an automated savings tool.  When signing up for the service, Digit requires consumers to grant Hello Digit access to their checking accounts.  Using its own proprietary algorithm, Digit analyzes consumers’ checking account data to determine how much a consumer should save.  It then initiates automatic electronic fund transfers (“autosaves”) to transfer money from consumers’ checking accounts to interest-bearing “for the benefit of” accounts held in Digit’s name at third-party institutions (“Digit Savings Accounts”).  Consumers are charged a $5 monthly subscription fee for this service.

The CFPB found that despite using “messaging themes to consumers” that the automated savings tool saved “the perfect amount” and that there were “no overdrafts,” Digit knew from its inception that (1) its algorithms had limitations that hampered Digit’s ability to precisely predict an appropriate amount to withdraw from consumers’ checking accounts, and (2) the autosaves routinely caused overdrafts, resulting in overdraft fees charged by consumers’ banks.  Digit also represented to consumers that if it did cause an overdraft through an autosave, it would reimburse any overdraft fees a consumer incurred.  However, Digit did not reimburse consumers for all overdrafts and received complaints about overdrafts on a daily basis.  It also retained significant interest income earned on the funds held in the Digit Savings Accounts but represented to consumers that it did not collect interest revenue.

The CFPB found that Digit engaged in deceptive acts or practices in violation of the CFPA by misrepresenting that its service would save the “perfect amount” and have “no overdrafts,” that it would reimburse consumers for all overdrafts fees caused by autosaves, and that it did not collect revenue from interest earned on Digit Savings Accounts.  The consumer redress that Digit is required to pay under the Consent Order is intended to reimburse consumers for all unreimbursed overdraft fees caused by autosaves.  The Consent Order also prohibits Digit from continuing to make misrepresentations about its automated savings tool.

In addition to serving as a reminder to companies of the need not to “over promise” in their marketing materials and to be responsive to consumer complaints, the settlement highlights two ongoing CFPB themes: a focus on overdrafts and reservations about algorithms.  With regard to algorithms, the CFPB has previously expressed concerns about fair lending risks created by the use of algorithms.  The CFPB’s prominent and repeated references to Digit’s use of algorithms in its press release appears intended to paint the use of algorithms in a negative light even outside of the fair lending context.

CFPB Enters into Consent Order with Fintech Company to Resolve Alleged UDAAP Practices Arising From use of Algorithm
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4 Vendor Management Best Practices for Collections and Recovery

Finding, vetting, and on-boarding a new collections and recovery vendor is not easy or fast. You go through the trouble of wading through all of the potential vendors, assessing them, eliminating those with any red flags, and finally committing to onboard a vendor. So, whether you are outsourcing debt collections or adding new debt collections techology, you want to make sure those hard-won vendor relationships work well for you and last a long time.

Want strong vendor relationships? You need to have strong collections and recovery vendor mangement skills. How you manage those vendors will have a direct impact on how successful and lasting those relationships will be.

Good vendor management isn’t an easy job. Creditors who are too prescriptive can damage their relationships with vendors. Those who are not prescriptive enough can find themselves at risk for regulatory or reputational damage. That’s why it’s critical for collections and recovery executives to open their channels of communication, keep those channels open, and keep an open mind if they want to strike the right balance.

Here are four best practices for debt collection vendor management you can use to set up your vendor relationships for long-term success.

1. Communicate Clear Expectations to Vendors Early and Often

Collections & recovery vendors should understand exactly what their creditor-clients expect from them from the onset of the relationship.

If you’re using multiple vendors for the same process (e.g., a collections agency), it helps to standardize your MSAs/SOWs/SLAs, says Jeremy Ruth, Sr. Director of Default Account Servicing at Arvest Bank.

But don’t just hand over those expectations and expect them to be met. Collections & recovery executives should work with their vendors to create those expectations, Ruth adds. This way, you and your vendors are on the same page.

Another simple way to express expectations is to create and share a deliverables calendar, says Bekah Luebcke, VP of Operations at Crown Asset Management. Collections & recovery vendors should be able to understand performance and compliance expectations – and whether or not they’re meeting those expectations – at a glance from their scorecard, she adds.

2. Your Collections and Recovery Vendors Have Expertise – Use It

It’s critical that collections & recovery executives treat their vendor partners like experts, says Carri McQuerrey-Funk, Head of Vendor Management & Initiative Execution at Citizens Bank. She tells her vendor partners to “tell her where [she’s] being stupid,” and cautions collections & recovery vendors against feeling like they “know it all.”

“You need an expert, and they are an expert,” McQuerrey-Funk says, so when a vendor partner gives you advice, you might want to take it.

It’s also a mistake to try to off-load risk to your vendors. Not only is it no longer possible for creditors to outsource their risk, but also, trying to do so will only sour your relationship with your vendors.

The best approach is a “shared risk/shared success” approach to vendor management, advises Ruth. “You can’t look at it like you’re going to transfer risk to [your vendors]. That’s a one-sided relationship.”

3. Expand the Conversation, Connect the Experts

An ongoing collections & recovery vendor relationship typically runs through two parties: the client services manager at the vendor, and the creditor-client’s vendor manager. This is a great way to keep the relationship organized, but sometimes it’s not enough.

Connecting business units and SMEs can help you make sure that nothing is lost in translation, Luebcke explains. Some problems can only be solved by communication between business units instead of through the appointed relationship manager. It will save time and resources if the vendor’s SME can speak directly to the creditor-client SME, so don’t be afraid to take challenges out of their silos and get the real experts’ opinions.

4. Get Back to On-Site Audits

In the past, this would have been obvious. But after more than two years of a global pandemic and a major shift to remote work, many companies have fallen out of the habit. In fact, the number one question from the audience during the iA Strategy & Tech Vendor Management Masterclass webinar series was whether or not creditors were making onsite visits.

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McQuerrey-Funk, Ruth, and Luebcke, as well as T.R. Brown, VP of Consumer Finance at SmileDirect Club (all speakers on that aforementioned webinar series), all agree: If it’s safe, collections & recovery executives should be performing audits on site.

On-site audits allow you to gauge your vendor’s preparedness in a way that remote audits do not. If you’ve provided the agenda early enough, your vendor partner should have no trouble getting all the pieces in order, including getting the appropriate staff in the office prior to your visit.

If your vendor partner is disorganized during an onsite audit, for example, if they don’t have the right staff available to answer questions, it’s a signal that you may need to take a deeper dive into whether or not they are operating as prescribed by your SOW. It’s especially important to get onsite when you’re planning to audit new policies.

No vendor is perfect, but by following these four tips, collections & recovery executives can have a better chance at motivating vendors to be successful and in extending the success and the lifespan of any vendor relationship.

For more on how to successfully manage your vendors, check out The Vendor Management Masterclass II.

Bonus read: Creditors: Can You Outsource Risk by Outsourcing Collections? Not Anymore.

———–

Are you interested in Digital Collections and Recovery Strategy Best Practices? If so, you can find the (free!) iA Strategy and Tech Short Guide Digital Collections and Recovery Strategy Best Practices in 2022. You can find resources like this as well as the latest trends in collections and recovery strategy, digital debt collection, vendor management, and compliance in the iA Strategy and Tech newsletter. To get these insights delivered directly to your inbox, sign up here

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DNF Associates Employees, Vendors, and Neighbors Answer the Call for Donations

GETZVILLE, NY – DNF Associates LLC, one the leading Asset Management Firms and purchaser of Delinquent Receivables, has answered the urgent call for more blood, by hosting a blood drive in conjunction with ConnectLife Blood and Organ Donor Network. 

On August 9th, the ConnectLife Mobile Donation Bus set up shop in DNF’s parking lot for people to participate in the three (3)  hour event. Prior to the event, DNF Associates reached out to employees, vendors, and neighboring companies to boost participation.  By doing so, the blood collected was enough to save 39 lives according to ConnectLife. 

Dan Mendez, DNF President and CEO said “We are extremely proud of all our personnel and the all the businesses that took part in this event. Giving blood is one way where people can have a positive effect on their community and actually save a life by doing so. This blood drive reinforces the notion that Buffalo truly is the city of good neighbors and we all come together at a time of need.”

The donations made to ConnectLife from this blood drive will go directly to helping people in Buffalo, New York, and the surrounding suburbs. ConnectLife is Western New York’s only organ, eye, tissue, and community blood center, so donations stay in the immediate area.

Employee involvement in this event is just another example of the DNF Associates’ philanthropic focus. 

For more information concerning this release or other information regarding DNF Associates LLC please contact twilcox@dnfassociates.com or visit www.dnfassociates.com.

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Third Circuit Adopts “Reasonable Reader” Standard for Evaluating Whether a Credit Report Is Inaccurate or Misleading

What standard should courts use to determine whether information contained in a consumer’s credit report is inaccurate or misleading? According to the Third Circuit in a recent precedential decision, the standard should be that of the “reasonable reader,” not a “reasonable creditor,” i.e., not an individual or entity sophisticated in the art of reading credit reports. The Third Circuit further held that a reasonable reader reviews the report in totality: “A court applying the reasonable reader standard to determine the accuracy of an entry in a report must make such a determination by reading the entry not in isolation, but rather by reading the report in its entirety.”

In the three consolidated cases on appeal, the plaintiffs defaulted on their student loan payments and each lender closed their accounts and transferred their loans. Shortly after the transfers, the plaintiffs obtained a copy of their credit reports and found each contained a “pay status” notation stating, “Account 120 Past Due” and that the loans were closed, transferred, and had a balance of zero. The plaintiffs argued that the pay status notations were inaccurate because they did not owe any money to their previous lenders. The plaintiffs sued for damages under the Fair Credit Reporting Act, 15 U.S.C. §1681e(b), alleging the consumer reporting agency (CRA) failed to “follow reasonable procedures to assure maximum possible accuracy of the information.” The district court, applying a reasonable creditor standard, granted the CRA’s motions for judgment on the pleadings. The plaintiffs appealed.

Based on the reasonable reader standard, this appellate court found the credit reports at issue were not “inaccurate” or “misleading.” The Third Circuit held — as a matter of law — that the plaintiffs’ credit “reports contain multiple conspicuous statements reflecting that the accounts are closed and [the plaintiffs] have no financial obligations to their previous creditors. These statements are not in conflict with the Pay Status notations, because a reasonable interpretation of the reports in their entirety is that the Pay Status of a closed account is historical information.”

The Third Circuit also analyzed the reasonableness of a CRA’s reinvestigation of a consumer dispute under Section 1681i(a). The court held that before considering whether a CRA’s reinvestigation was reasonable, district courts within the Third Circuit must first determine that the disputed information was inaccurate. The Third Circuit joined “the weight of authority in other circuits” in holding that without a showing that a reported information was inaccurate, a claim brought under Section 1681i must fail.

The Third Circuit’s “reasonable reader” standard is new among the federal circuit courts of appeal, although the concept of reading a report as a whole is not. Whether other circuits adopt this standard remains to be seen. 

The complete decision can be found here

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Gen Z, Trust, and the “Frictionless” Engagement Strategy of the Future

Consumers are changing. Gen Z’s share of debt is growing and their engagement preferences matter more and more. Your debt collection strategy needs to follow suit. In this ranging interview with Justin Miller, President of Vital Solutions, you’ll learn:

  • Why you need to – and how to – tailor your collection strategy to unique consumers, Gen Z borrowers, and digital natives;
  • Which data points your collection vendors need to build effective strategies;
  • What strong creditor-agency partnerships should look like; an
  • How the economy might affect your collection strategy and how to prepare.

Gen Z and what “frictionless” engagement really means


Q: Gen Z makes up 20% of the US population and they are digital natives with a different approach to buying than prior generations. How should financial services companies change their approach to collections when it comes to Gen Z?

A: The most obvious change is how you communicate. The easiest place to start is with understanding how the customer was acquired.

What channels were used when the account was active? If they’re path was 100% digital, then it stands to reason that this consumer will expect to be able to communicate through digital channels. Beyond the communication channels, I would look at the frequency of communication expectations, not just in relation to Reg F, but asking questions like:

  • What are the consumer’s expectations?
  • How can we tailor your communication strategy down to the individual consumer, so that the frequency of communication attempts (regardless of channel), are appropriate and drive the correct result?

Finally, we spend a lot of time discussing what “self-serve” really means. I think initially, for most of us, this meant simply having a payment portal, but it needs to be so much more. Essentially it needs to be a “one-stop-shop” for a consumer to see what’s happening with their account, obtain documents, request documents, lodge a complaint or dispute, etc. Most consumers are used to having an app on their phone that serves as a gateway into their account when it’s active. Our consumer portal needs to mirror this.

I hate over-generalizing, but our data also tells us that Gen Z consumers are highly focused on “trust.” They are going through some sort of financial difficulty, which strains and erodes their trust. We need to ask: how do we regain that trust? All indications are that if you focus on this, and get it right, Gen Z consumers are more likely to engage with you, and they’re more likely to resolve their account. Speed and “ease of use” are both important, but you have to start with convincing them you are trustworthy.

Q: How are your clients who are focused on lending to Gen Z and other digital natives expecting you to adjust your strategy to collect from them?

A: As with all digital natives, top-of-mind for these clients is the digital communication channels we can offer. If we cannot align our communication channels to what they offer, then it stands to reason there will be consumer loss / detriment.

The next change in strategy is this concept of “frictionless engagement.” Now, for some clients (and their customers) that translates into “self-serve,” but not always. And I think this is where the biggest paradigm shift is occurring, because this means something different for each customer. What our clients really want is a strategy that can be tailor-made to the customer. This is really where machine learning and scoring come into play. Asking questions like:

  • How do I get to the place where my contact strategies are tailored to each individual consumer?
  • How do I know whether the next “nudge” (outbound contact attempt) is necessary?
  • How do I know “nudging” via this channel or that channel is going to yield an appropriate response?

Some of this simply comes down to trial and error and capturing how consumer behavior changes with each attempt, and then thoughtfully crafting the appropriate strategy that maximizes value for the client. However, to take this where it needs to go, we are entering an age where we can create true partnerships with our clients. As an example, I want to gather as much data from our clients as possible in regards to consumer behavior prior to collections. This upstream behavior is great at predicting downstream behavior, and as we engage with the client’s customers, this approach, of sharing data back and forth, creates a stronger value proposition for both of us.

Expect volatility, plan for stronger partnerships

Q: We’ve been in a benign credit environment for about 12 years now, but it seems that’s about to change. How would you describe the current economy, and how are you advising your clients to strategize accordingly?

A: Forecasting how the economy is going to perform over the next six, twelve, or eighteen months is really difficult. Factually, the Federal Reserve has said that 36% of Americans do not have enough in savings to cover a $400 emergency. We also know factually that charge-offs have been at historic lows. If you think about how well the economy has performed over the last few years,it can be really telling. What it tells me is that at least a third of Americans, regardless of reason, have not been able to save money during this time, but have been able to pay down debt better than they have in the past. But what it also tells me is that any shift in the market dynamics that makes household goods more expensive, raises interest rates, places headwinds in the jobs market, or any combination of the above, will cause trouble for consumers.

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Gone are the days of simply throwing something back and forth over a wall. The wall between creditor clients and third party agencies is gone, and as times undoubtedly get tougher, I expect the paths between us to grow stronger and stronger.

So, a period of inflation could absolutely lead to a period of recession, and that could lead to higher charge-off rates for our clients. Our general belief is that we should expect lots of volatility in the short term, but we don’t define “short term.”

Instead, our focus is on preparing for all manner of scenarios. We are very fortunate to work with some clients who are very transparent with how their portfolios have been performing over the last couple of years, and what, if anything, has been shifting. In many cases, we have been able to simply work on how we communicate with them (the client), and how we get the “hand-off” between us right. This cannot be discounted; getting that handoff right (and continually getting it “better”) can make a difference on how a consumer responds, and that response can have a material impact on our clients’ results. I alluded to this before, but again, this is another paradigm shift where we see a stronger sense of partnership with our clients, and it highlights how important our ability to align with them has become. Gone are the days of simply throwing something back and forth over a wall. The wall between creditor clients and third party agencies is gone, and as times undoubtedly get tougher, I expect the paths between us to grow stronger and stronger.

Q: How would you advise fintechs, especially those that are newer and not accustomed to focusing on collections & recovery, to approach a potential economic downturn?

A: For many of our fintech clients, this will be unchartered territory. They have been on steep growth trajectories over the past couple of years, and, especially for those that are start-ups, have been hyper-focused on customer acquisition. They all know some sort of pull back is coming, and so our job is mostly to be ready: be ready to handle whatever holes they need us to fill, whether in collections, customer service, or technology.

We want them to know that these are not unchartered waters for us, and we are absolutely prepared to help them out. Tactically speaking, the other message is that our partnership is exactly that. As they pull whatever levers they have from an underwriting perspective, we need to be laser-focused on delivering maximum value, so they can be better informed on which levers they need to keep pulling.

How BNPL debt is different and how it isn’t

Q: Fintechs like BNPL providers are different in a lot of ways from traditional credit card companies, and their customer base reflects that. Do you think BNPL debt needs to be collected differently than traditional credit card debt? If so, how?

A: We approach our strategy building by breaking down the collections process into some basic components, namely, reaching out to and engaging with consumers, and working with those consumers to resolve their debt. Obviously, there are many permutations and branches from those fundamental tasks, but at their core, each debt type follows very similar patterns, within the debt type.

Out of the gate, one fundamental difference with BNPL consumers is the customer acquisition and underwriting process. There is a certain amount of insight “lost” when using non-traditional data to underwrite, and perhaps the biggest piece of the puzzle is answering the question: “how much more non-traditional debt does this consumer have?”

The top of our list when working with any BNPL provider is understanding where this consumer fell in their underwriting score bands, so we can try to gauge how distressed they may be. There’s a couple of reasons why this matters. First and foremost, the more distressed the consumer, the less likely they are to engage. Secondly, the more distressed the consumer, the more difficult it will be to simply locate them. We have found, at least in the subprime and deep subprime space, consumers change their phone number once every six to eight weeks. This is predominantly driven by their inability to secure a long term (traditional) phone contract with a mainstream provider; they simply do not qualify. It is imperative that we have a data source (preferably multiple data sources), that helps us figure out the phone carrier for their mobile numbers.

The next difference is understanding the nature of the purchase. Within the BNPL space there are consumers that clearly go into the purchase expecting to use credit (though they may not know exactly what type), and then there are consumers who may have made an “impulse credit” decision. For example, if you look at an online shopping customer who is making a large / expensive purchase, it stands to reason that they went into the transaction expecting to use some form of credit to make the purchase. They landed on a BNPL option, and off they went.

The reality is the consumer may not have had a full understanding of how BNPL worked, or how it was different from a traditional credit option. You now also see BNPL options at self-pay kiosks for all kinds of goods. For example, as I travel, I see more and more “self-pay” kiosks at the airport terminals, and almost all of them offer a point-of-sale BNPL option simply by scanning a QR code. Did the person who is buying a bottle of water, and a bag of chips walk up to the kiosk expecting to use BNPL? Probably not. These consumers are probably even less aware of what they are signing up for, and what it means.

The point is, when engaging, we have to take a very educational approach. This is even more true for first payment (or “early payment”) defaults. Oftentimes the consumer doesn’t really understand what they signed up for, and our agents have to take the time to explain / educate the consumer, particularly on the benefits. In that sense, we become an extension of the customer acquisition process. The stronger our partnership with the BNPL client, the better the results.

Gen Z, Trust, and the “Frictionless” Engagement Strategy of the Future

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CFPB Warns Failure to Safeguard Consumer Data May Be Unfair Act or Practice

On August 11, the CFPB published a circular confirming that covered persons and service providers under the Consumer Financial Protection Act (CFPA) may violate the CFPA’s prohibition against unfair acts or practices when they fail to adequately safeguard consumer information.

Pursuant to the Gramm-Leach-Bliley Act, the FTC and federal banking agencies have promulgated rules and interagency guidelines requiring financial institutions to establish appropriate administrative, technical, and physical safeguards to protect the security and confidentiality of customer information. Such safeguards include restricted access to customer information, encryption of information, and periodic reports on the information security program to the board of directors, among other requirements. In the circular, the CFPB stated that failure to comply with these specific requirements may be an unfair act or practice under the CFPA in certain circumstances.

The CFPA defines an unfair act or practice as an act or practice: (1) that causes or is likely to cause substantial injury to consumers, (2) which is not reasonably avoidable by consumers, (3) where the substantial injury is not outweighed by countervailing benefits to consumers or competition. The CFPB explained that inadequate data security measures can cause substantial injury, such as significant harm to a few consumers who become the victims of targeted identity theft or harm to potentially millions of consumers in the event of large customer-base-wide data breaches. The agency stressed that actual injury is not required to meet the substantial injury prong, as a significant risk of harm is also sufficient. This means that even practices that are merely likely to cause substantial injury, such as inadequate data security measures that have not yet resulted in a data breach, can still satisfy this prong of unfairness.

With respect to the second prong of unfairness, the CFPB explained that consumers are unable to reasonably avoid the harms caused by a firm’s data security failures as they typically do not know whether appropriate security measures are properly implemented, do not control an entity’s security measures, and lack practical means to reasonably avoid harms resulting from data security failures. As for the final prong, the CFPB noted that where companies forgo reasonable cost-efficient measures to protect consumer data, the agency expects the risk of substantial injury to consumers to outweigh any purported countervailing benefits to consumers or competition.

The circular also highlighted a number of data security-related cases brought by the FTC, wherein the agency alleged violations of its analogous prohibition against unfair practices under the FTC Act in connection with inadequate authentication practices, poor password management, failure to remediate known software security vulnerabilities, and other deficient data security practices.

The CFPB provided the following examples of conduct that increase the risk of triggering liability under the CFPA:

  • Not requiring multi-factor authentication for employees or not offering multi-factor authentication as an option for consumers accessing systems and accounts, or failing to implement a reasonably secure equivalent.

  • Not having adequate password management policies and practices. This includes failing to have processes in place to monitor for breaches at other entities where employees may be re-using logins and passwords, and using default enterprise logins or passwords.

  • Not routinely updating systems, software, and code or failing to update them when notified of a critical vulnerability. This includes using versions of software no longer actively maintained by vendors and not keeping track of which systems depend on what software to ensure that software is up to date. The CFPB highlighted its complaint against Equifax over the consumer reporting agency’s 2017 data breach. The CFPB alleged that Equifax violated the CFPA’s prohibition on unfair acts or practices by, among other things, failing to patch a known vulnerability for more than four months, which resulted in hackers gaining access to Equifax’s system and obtaining the personal information of millions of consumers.

The CFPB stressed that the circular does not suggest that particular security practices are specifically required under the CFPA. Nevertheless, financial companies and their service providers should review their information security programs and take care to implement common data security measures—such as multi-factor authentication, adequate password management, and timely software updates—to help minimize the risk of an unfairness violation.

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Court Finds Servicer’s Neutrally-Worded Voicemail Advising of Payment Options Does Not Constitute Debt Collection

Really interesting one for the servicers and collectors out there.

Similar to the TCPA’s marketing vs. informational messaging divide, there continues to be a divide between collection vs. informational messaging in the FDCPA context.

In Hurtser v. Specialized Loan Servicing, Case No: 4:21-cv-00318 (E.D. Mo. Aug. 5, 2022) the Court considered whether the following voicemail constituted debt collection:

This message is from Specialized Loan Servicing. During this time of the recently announced national emergency relating to COVID-19, we are contacting you to remind you of alternative methods to receive information about your account, or to make payments. You may make payments via our website at http://www.sls.net or calling our Payment IVR service at (800) [xxx]-[xxxx] You can receive account information via our website at http://www.sls.net or through our automated phone system at (800) [xxx]-[xxxx]. Thank you.

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If it did, then SLS was in a heap of trouble because the messages does not comply with various FDCPA requirements. However, the Court concluded the voicemail–which was sent to all customers and not just those in default–did not constitute debt collection:

Based on the record before the Court, no reasonable jury could find that an animating purpose of SLS’s voicemail message was to induce payment. Nothing in SLS’s informational message is specific to Plaintiff’s debt; in fact, there is no mention of his debt. No part of the message requests or demands payment from Plaintiff. It does not threaten consequences for nonpayment. Thus, SLS’s voicemail message was not a “communication in connection with the collection of a debt” as required to establish liability under the FDCPA. 

Really interesting case.

Now I note this one easily could have gone the other way. The SLS representative testified that he hoped customers would respond to this VM by making payments–and that would include customers in default. But it does show that Courts will be somewhat understanding of messages sent to inform customers of changed payment options.

Of note for the TCPA world, the Plaintiff had originally sued under the TCPA but switched his focus to the FDCPA when consent was discovered. Something to keep in mind. Many times a Plaintiff will come for the TCPA–bigger scarier damages–but stay for FDCPA claims if/when the TCPA component evaporates.

Also, remember an “all customers” blast using a prerecorded call is a DANGEROUS thing folks. If numbers in the campaign had changed hands you can be sued for wrong number calls under the TCPA, regardless of whether or not the calls were for marketing purposes or not. Be sure to scrub the new RND database anytime your “last good” date is more than 90 days in the past–and you should consider scrubbing as soon as 30 days.

SLS was fortunate that the Plaintiff in this case was not a wrong number call recipient. Case could have been much worse.

Always happy to chat.

The order can be found here.

Court Finds Servicer’s Neutrally-Worded Voicemail Advising of Payment Options Does Not Constitute Debt Collection
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CFPB Prioritizing Enforcement Over Education

On August 4, Consumer Financial Protection Bureau (CFPB or Bureau) Director Rohit Chopra spoke at the Philadelphia Federal Reserve Bank’s Sixth Annual Fintech Conference, arguing that enforcement actions rather than financial literacy efforts were necessary to prevent consumer abuse.

Chopra said that while there is value in educating consumers to spot risks and find trustworthy advice, financial products are inherently challenging to understand. “Disclosures are not going to be what’s fixing it,” Chopra said. “What is often going to fix it is to eradicate unlawful actors who really prey on people.”

Chopra was even more pointed in his July 14 prepared remarks for the Financial Literacy and Education Commission where he claimed that “financial education can be harmful.”

Chopra’s statements reflects a marked change from Chopra’s predecessor’s, former Director Kathleen Kraninger, approach to consumer protection. Kraninger listed education as the “first tool” in the CFPB’s toolbox in preventing consumer harm. In a 2019 speech at the Bipartisan Policy Center, Kraninger stated that the Bureau could not and should not try to “be everywhere, with everyone, at every transaction” and so would look to empower consumers to help themselves and make good financial choices.

Chopra, meanwhile, cast doubt on the effectiveness of that approach on August 4. “The experiment has not had much success,” Chopra said. “One, I think in some cases financial education has made people worse off because they become overconfident.”

The CFPB’s increased emphasis on enforcement led to an uptick in fair lending enforcement in 2021, and that trend has continued with increased enforcement in areas, such as loan servicing, credit reporting, student loans and small business lending.

Troutman Pepper will continue to monitor important developments involving the CFPB and enforcement actions and will provide further updates as they become available.

CFPB Prioritizing Enforcement Over Education
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Secure Payment Capture Technology Through PDCflow/PIMSWARE Partnership

OGDEN, UT – Payment communication software company PDCflow and call center software company PIMSWARE have teamed up to deliver secure capture payment technology. 

Through an integration with PDCflow’s Flow Technology, PIMSWARE users can now send texts and emails or call via dialer and collect secure signatures and payments from consumers – all within a single system.

“Partnering with PDCflow has provided a great value-add to our customers by allowing a fast and seamless way to securely take payments within the PIMSWARE platform,” says Rachel Johnson, Business Development, PIMSWARE.

With secure payment capture, agents can take payments over the phone without seeing or hearing sensitive card information. Card numbers are entered by the consumer via the dial pad on their phone, and payment automatically reflects in the PIMSWARE collection system. 

Through this integration: 

  • All account information is merged, making it available in one place – no need to log into one tool to dial the consumer, then another to request signatures and securely process a payment.

  • Companies can offer a secure, compliant way for agents to take payments in a work from home setting.

  • Call centers can reduce fraud and limit PCI scope by eliminating receipt and storage of sensitive information.

  • Simplify reconciliation between payments processed by PDCflow and transactions entered into the PIMSWARE system with real-time, side-by-side comparison of payments posted. 

Streamlining the process of sending documents and getting signatures and secure payments from consumers turns promised payments into actual payments, reduces chargebacks, and increases consumer satisfaction.   

About PDCflow

PDCflow is a payment software that empowers organizations to engage consumers through digital communication and digital payment channels. With patented FLOW Technology, the software gives businesses flexibility and control over the secure delivery and capture of business transactions, including payments, signatures, photos and documents through digital channels.

Flexible and customizable APIs allow platforms to easily integrate, giving their users the ability to accept payments through multiple channels and electronic communication methods while keeping their software out of PCI scope. Integrators save on the cost and time of PCI compliance while still having control over their user experience.

Programming and customer operations for PDCflow’s national client base have been completed in-house in Ogden, Utah, since the company’s founding in 2003. Find out more about PDCflow at https://www.pdcflow.com/.

About PIMSWARE

PIMSWARE is a software development company that provides solutions to organizations that manage large volumes of data, online fulfillment, debt collection, and call center operations.

With a focus on the debt receivables industry, their mission is to provide turnkey solutions that meet needs of organizations across various industries.

The PIMSWARE suite of products includes:

  • Debt collection system
  • Predictive auto dialer
  • Call metrics
  • Stratification tool
  • Ring-less voicemail
  • Nearshore call center services

Secure Payment Capture Technology Through PDCflow/PIMSWARE Partnership
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