On April 25, 2022, the Consumer Financial Protection Bureau (CFPB) announced that it plans to use its supervisory authority to examine any nonbank financial company that poses a risk to consumers, and it plans to make the results public. 

The CFPB will determine if a company poses a risk to consumers by looking at CFPB complaints, judicial opinions, administrative decisions, whistleblower complaints, state partners, federal partners, or news reports. Though not defined, “risky conduct” may include unfair, deceptive, or abusive acts or practices or other acts or practices that potentially violate federal consumer financial law.

CFPB Director Rohit Chopra had this to say: “Given the rapid growth of consumer offerings by nonbanks, the CFPB is now utilizing a dormant authority to hold nonbanks to the same standards that banks are held to. This authority gives us critical agility to move as quickly as the market, allowing us to conduct examinations of financial companies posing risks to consumers and stop harm before it spreads.”

Publishing Supervisory Determinations

The existing rule governing examinations of nonbanks provides that documents, records, and other items which are given to the CFPB in connection with a supervisory proceeding are confidential. Typically CFPB examiners provide a report of problems to an entity so that entity can fix any issues. The procedural change announced on April 25, 2022, will allow the CFPB to publicly release results.  

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In the CFPB’s view, the public interest in transparency outweighs the need for confidentiality in the supervisory process.  Further, the CFPB states that publicly released supervisory decisions and orders will be precedent for future proceedings.

Pursuant to the new procedure, once the CFPB issues a supervisory decision or order, the supervised entity will have 7 days to file a submission regarding why the decision or order should not be published to the CFPB’s website. The decision regarding publication will then be made by the CFPB Director or the Directors’ designee. The Director may also choose to release any challenges to publication. Notably, the Bureau explicitly declined to codify a standard regarding the criteria that must be met either for, or against, publication, but welcomed comments on that topic. 

Though comments will be accepted, in the CFPB’s opinion this change is procedural therefore no notice-and-comment period is required. Comments are due 30 days from the date the procedural change is published to the Federal Register. 

insideARM Perspective:

This announcement raises several points of concern:

• Fintechs, telcom, healthcare providers, BNPL (Buy Now Pay Later), and others should be on high alert: the CFPB is coming. Though this announcement specifically references fintechs, the announcement covers any entity that interfaces with consumers and impacts consumers’ financial status. If any company dealing with consumers in a financial capacity thinks they are immune from CFPB scrutiny, they should think again.

• The CFPB will be using multiple sources to determine which entities it can reasonably determine  “pose a risk” to consumers, including publicly available resources like bad press; it should be assumed this also includes online reviews. Further, the release did not mention the merit of complaints, just the volume. If your company or its clients are not thinking of collections and financial services as a customer service endeavor, you may want to revisit your strategy.  For example, see this article on reducing friction. 

• Along those same lines, neither financial impacts, reasonableness, nor risk is defined in this announcement. There is no indication regarding how great or minor the financial impact to consumers must be to trigger scrutiny. There are no guardrails for reasonableness, and there is no list of the types of risks the CFPB will be looking at. Therefore, the CFPB has essentially unfettered discretion to subject nonbank entities to supervisory examinations. All companies which impact consumers and their finances should take note. 

• In light of the above, any entity which is or may be subject to the CFPB supervisory examinations, should ensure that their compliance department is more than just window dressing. Although compliance personnel are not revenue generators, the CFPB’s most recent publication makes it clear the stakes are high. If a supervisory examiner finds an issue, it will no longer be a private matter to be corrected. Instead, the proverbial dirty laundry will be aired publicly for consumers, investors, and other business partners to see. The CFPB won’t be easily swayed regarding whether it has the authority to take these actions. The best defense here is a strong compliance group and compliance management system to prevent findings before they occur.

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Looking for guidance on how the CFPB’s new oversight can affect your CMS?  Subscribe to Research Assistant – insideARM’s source for premium, practical compliance guidance and in-depth, weekly peer group discussion.

When the CFPB announces new expectations, it’s a good time to think about the gaps in your CMS, too. Find out how to start your own assessment with the on-demand  Research Assistant webinar, A Complete Guide to Risk and Gap Assessments – How to Get Started. Get it here.

On May 12 at 2pm ET, learn how Risk and Gap Assessments can help you find large gaps and manage all the relevant laws in the new Research Assistant webinar, A Complete Guide to Risk and Gap Assessments Part II. Register here.  

In collections, authentication equals friction.

We’re asking customers to give us their private information, like their date of birth and the last four digits of their social security number before they even know who we are. Over the phone, the process is ripe with potential customer and agent frustration. Web portals can cause friction, too, with poorly designed processes that don’t reflect the shift to digital seen in financial services and e-commerce.

There’s been resistance to changing the industry authenticates customers because of the major risk of third party disclosure. But, according to InDebted’s Chief Customer Officer (and champion of frictionless collections) Tim Collins, there are several new-to-collections technologies that can help reduce friction and third-party disclosure risk.

1. Email Authentication

Think about how you communicate with your bank. Do you provide your date of birth and Social Security number every time you access it or call? Do you even provide those data points the first time you log in or speak with someone?

My guess is no.

Why, then, should your customers’ experience be any different?

As digital banking and digital collections become the norm, it should become more acceptable to use email as a point of authentication over the phone, and, taking this a step further, sending the customer an email during authentication. The customer opens the email, clicks “confirm” and then handles their business. This has been standard in e-commerce for years.

Remember, email addresses do not get reassigned, and there are services that can tell you who owns a particular email address.

2. Text Authentication

Many of the steps to text authentication are similar to email authentication, but this one is easier because you already have the customer’s phone number, and because consumers can port their cell phone numbers to new carriers, and we now have the ability to check for reassigned phone numbers via the FCC’s Reassigned Numbers Database, it’s easy to be sure you have the right number.

In this case, all you need to do is ask for consent to send a confirmation text, and then ask the customer to respond on the phone with the code, or better yet, type back a keyword/number like date of birth to verify they have the phone and who they are.

Again, there are examples of this method of authentication being used in financial services, from community banks to e-commerce. Allowing text authentication is key to keeping up to the digital banking and collections shift.

3. Voice Authentication

This technology has been around for a while, but it is being increasingly employed by financial services companies. It doesn’t solve authentication problems on web portals, or on the first call, but it does make subsequent phone calls with a specific customer easier. After confirming the identity of the customer on the first call, the customer is asked if their voice can be used to authenticate them in the future. If they say yes, on the next call, a computer confirms their voiceprint, and that’s it. This saves agent time and decreases the chances of customers getting frustrated and hanging up.

It’s time to remove the friction from customer authentication by implementing one or more of these authentication methods.

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Erin Kerr is the Director of Content at insideARM and the chair of iA Strategy & Tech – a digital resource for collections strategy executives.

Tim Collins is the Chief Customer Officer at InDebted.

InDebted is a member of the iA Innovation Council. The Innovation Council is a membership group for organizations that understand their future depends on thinking differently and being at the forefront of communications, analytics, payments, and compliance technology. Together, we envision the future and then map how to get there.

PETALUMA, Calif. — The Cascade365 Family of Companies is excited to announce that Denise Tobin has joined the team as Director of Business Development.

In this role, Ms. Tobin will develop strategic business partnerships within the Healthcare Industry for Cascade365 related to AR Purchase and Servicing of healthcare account receivables. Ms. Tobin’s skillset, expertise and relationships built over the years will be a major contribution to Cascade365’s continued success as she helps to increase business development opportunities, sales, and client retention.

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Ms. Tobin joins Cascade365 with over 20 years of experience in healthcare and revenue cycle operations.  Her relationships within hospitals, health systems, and peripheral health related organizations will help drive Cascade365‘s next level of growth and expansion.

Ms. Tobin has consistently volunteered throughout her career in various healthcare industry associations,  including ME AAHAM, VA AAHAM, VA HFMA, GA HFMA, AL HFMA, and STX HFMA. Ms. Tobin has also been the recipient of regional HFMA awards, including the VA Leanna Marsha Distinguished Member Award as well as the GA Distinguished Service Award.

“I am ecstatic that Denise has joined our team,” said Lee Brockett, Managing Director of the Cascade365 Family of Companies. “Her experience and expertise will enhance our business partnerships, sales and overall revenue growth.  Denise will be instrumental in Cascade’s ongoing success as we continue a strong trajectory of growth and increased footprint within the healthcare vertical.”

“I am beyond honored to work with the talented team at Cascade365 to further enhance their strong contributions to the healthcare industry,” said Ms. Tobin.  “Cascade365 is a true leader in the marketplace of healthcare accounts receivable management, which includes debt purchase, master servicing, collections, and specialty finance.  I am excited to support the organization’s endeavors, including contributing to its business development team and helping to structure innovative solutions for our clients. The progressive company culture paired with its nimbleness makes it the perfect fit.”

About The Cascade365 Family of Companies 

Cascade365 is a brand identity representing a family of companies focused on the responsible liquidation of accounts receivable.  Headquartered in the San Francisco Bay area, the Cascade365 Family of Companies are recognized leaders in the accounts receivable management, revenue cycle and specialty finance industries. Cascade365’s suite of products and services include AR Purchase and Finance, Master Servicing, Third Party Collections, and Revenue Cycle Optimization.  The Cascade365 Family of Companies believes in promoting financial accountability while treating patients in a fair, dignified, and lawful manner.  For more information, please contact Denise at dtobin@cascade365.com or 774-454-9993.

BLOOMINGTON, Minn. – Absolute Resolutions Corp., headquartered in Bloomington, MN, announced today that in honor of financial literacy month they have contributed for the second year in a row to the Minnesota Council on Economic Education (MCEE).  

Financial Literacy Month was established by Congress in 2004 to raise awareness about the importance of financial education. The five core components of financial literacy are: earn, spend, save, invest, borrow and protect. 

“It is critical that consumers are equipped with sound financial literacy as a cornerstone to their financial well-being.” Said Chris Winkler, ARC’s Chief Executive officer. 

MCEE was founded in 1961 when a group of local leaders met to discuss economics in Minnesota schools. In 2005 MCEE added community programs that have now equipped over 100 organizations to provide high-quality personal finance and economic lessons for vulnerable Minnesota communities and populations.

“We are proud to continue to support MCEE as they work to establish financial education programs in our neighboring communities.” finished Winkler. 

About Absolute Resolutions Corp.

Absolute Resolutions Corp. is a certified professional receivables company headquartered in Bloomington, MN with offices in San Diego, CA and Scottsdale, AZ.  www.absoluteresolutions.com

About Minnesota Council on Economic Education

MCEE provides workshops, training, and resources to support teachers in delivering relevant and meaningful lessons in economics and personal finance in the classroom.  www.mcee.umn.edu/mcee

Show Notes:

In a very crowded #fintech market, #CreditEcotoGo welcomes Sedric to the podcast. Voted the Most Promising Fintech Startup of 2022 by #Citi and #Visa,  Sedric is an AI solution which systemically implements the most critical part of a financial institution’s compliance management system: risk detection and remediation. Rather than wait a week or a month for the results of an audit report, Sedric identifies risk and provides on-demand real-time training in order to remediate the risk. Our guests tells us that you don’t have to sacrifice consumer protection for growth, rather consumer protection ultimately protects the financial services system. 

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DISCLAIMER – No information contained in this Podcast or on this Website shall constitute financial, investment, legal and/or other professional advice and that no professional relationship of any kind is created between you and podcast host, the guests or Clark Hill PLC. You are urged to speak with your financial, investment, or legal advisors before making any investment or legal decisions.

Medical debt continues to capture the attention of state and federal government, with lawmakers and regulators continuing to target how medical debt is collected and how it is reflected on a consumer credit report.

As previously reported, a particular focus of the CFPB as iterated in its February 2022 report on medical debt is holding the nationwide consumer reporting agencies (“NCRAs”) and other reporting companies accountable for the accurate reporting of medical debt, including a duty to act against abusive furnishers who routinely report inaccurate information regarding medical debt.

In response, the NCRAs began rolling out guidance to data furnishers regarding their responsibilities as it relates to the changes the NCRAs are making in the reflection of medical debt on consumer reports.

On the state level, Virginia lawmakers were unsuccessful this week in their attempt to pass “HB 573 Statute of limitations; collection of medical debt,” which would have reduced the statute of limitations on medical obligations from five years to three years.

The bill also would have limited the length upon which a judgment taken on medical debt could be executed, reducing the time from as much as 20 years under current law to seven years for general medical services and to three years if the medical services were for “life-sustaining treatment.”

Ultimately HB 573 was vetoed by Virginia’s governor despite having received over 80 percent support in the Virginia House of Delegates and unanimous approval from the Virginia Senate. In announcing the veto, Gov. Glenn Youngkin explained that the legislation “. . . would create unintended consequences and have significant implications on financial regulations in the Commonwealth by inadvertently capturing other forms of debt other than medical debt.”

In addition, Gov. Youngkin noted that he commended the sponsor on “prioritizing this important issue and look(s) forward to working on this to find solutions to ensure that defined statutes of limitations can clearly resolve medical debt owed directly to health care providers.” The measure is now headed back to the Virginia House which will have the opportunity to override the veto during its “veto session,” slated for later this month.

Medical debt can already be a tricky receivable and HB 573 would certainly have the potential to add to the difficulties in compliantly collecting it.

For example, imagine the difference of opinion and opportunity for factual dispute regarding whether the medical services were “life-sustaining” and thus triggering the shorter three-year statute of limitation. Would it be out of the question to envision the necessity of expert medical input regarding the nature of the services provided to properly adjudicate a debtor’s defense to attempts to execute upon a judgment? How about in an FDCPA affirmative action brought by an allegedly aggrieved debtor?

The costs of establishing the appropriate limitations could very well outweigh the value of the litigation. Additionally, compliance measures would be required to assist with an entity’s internal ability to appropriately identify whether they had seven years versus three years within which to execute upon a judgment.

Medical collections can create difficult waters to navigate and any entity that handles medical debt needs to be ever vigilant with new developments in the landscape. The compliance experts at Maurice Wutscher will continue to monitor the spotlighted issue of medical debt and will be prepared to provide guidance as the landscape changes regarding how medical debt is being regulated.

SANTA ROSA, Calif. — StopLitigators.com is a new, free, crowdsourced database of Telephone Consumer Protection Act (TCPA) litigators compiled from demand letters submitted by industry users. StopLitigators.com is offering free access to check phone numbers against the database in exchange for signing up. Marketers can sign up at StopLitigators.com, submit their demand letters and lawsuits to the crowdsourced litigator list, help contribute to an industry-wide resource to eliminate predatory litigators from the marketing ecosystem, and receive free access to check their calling lists against the database. 

“The abusive act of predatory litigation presents a significant challenge even for those that make every effort to manage their compliance properly,” said Ron Allen, creator of StopLitigators.com. He continues, “Many repeat litigators find ways to intentionally ‘trick’ legitimate entities into making a call that is a violation and then prey upon the company by demanding money, under threat of a class action suit. Further, we often find that no call was ever placed, and the demand is simply sent to many entities in an effort to get money from companies that do not reject the demands out of fear. StopLitigators.com is a way for the contact center industry to cooperatively work together and fight back. I have spent over 30 years in this industry and believe strongly in helping protect it.”

Predatory TCPA litigators are a threat to all legitimate telemarketers. While multiple compliance providers—including Contact Center Compliance, the business behind StopLitigators.com—offer litigator scrub lists based on court filings, not every TCPA plaintiff and litigator shows up in those filings. Sometimes, litigators simply send demand letters, hoping for a settlement, without ever pursuing the sorts of legal action that shows up in court record databases. These demand letters fall through the cracks of the existing systems for cataloging dangerous TCPA litigators. But StopLitigators.com allows call centers and defense lawyers the opportunity to build a better database that includes the litigators and plaintiffs who merely send demand letters.

Call center-related businesses and law firms are allowed to register for free. Access to the free list-scrubbing is given as soon as the registrant’s information is verified. For more information about this database, visit StopLitigators.com and for additional information about and services for TCPA compliance, visit DNC.com.

Stop Litigators & Contact Center Compliance

StopLitigators.com is a crowdsourced database of predatory TCPA litigators. Call centers can utilize this database to eliminate those litigators from their data. It is a new endeavor from Contact Center Compliance, one of the industry leaders in TCPA and DNC compliance solutions for more than 20 years. 

Engaging with customers can be challenging during times of financial concern, but SMS gives businesses and users a mutually beneficial platform to communicate.

Tax returns are days away from being due, with the IRS facing an overload of unprocessed returns delaying payments. Inflation is at a 40-year high reaching 7.9% at the end of February. These current events are making headlines in our country right now, and consumers are starting to feel the effects.

Engaging with customers can be challenging during times of financial concern, but SMS gives businesses and users a mutually beneficial platform to communicate. Companies can reach customers during a season with overwhelming news unfolding on the global stage and here at home with the right tools at your fingertips. SMS is a quick, reliable method for getting information where it needs to go in a highly engaging format. Its benefits extend to almost any industry and businesses of all sizes. SMS for business has countless benefits, and here are seven that your business could start seeing once you integrate this tool into your strategy.

7 Benefits Of Implementing An SMS Plan This Spring

1. SMS has a large audience within reach. 

From ordering groceries and checking in at the doctor to keeping in touch with family long distance and documenting life’s greatest moments, smartphones have become a vital tool in our daily lives. Over 272 million Americans own a smartphone¹ with native messaging capabilities, giving SMS marketers the benefit of direct access to a large audience within seconds. The average screen time is over three hours daily, and users check their phones 58 times per day¹. 40% of millennials look at their devices every 20 minutes¹. An SMS message is hard to miss with statistics like that.

2. SMS is fast.

Large quantities of SMS messages can be delivered within seconds, getting your message into customers’ hands when it’s most critical. Fast delivery rates make SMS one of the most reliable communication channels available between businesses and consumers. Not only are the delivery rates fast, but consumers engage more quickly with SMS than other channels. 95% of SMS messages are read and responded to within three minutes¹! When you have a message that needs to get in front of consumers’ eyes, SMS can be trusted to do so promptly.

3. Consumers engage with SMS.

SMS has limited characters but still blows other popular marketing channels out of the water with its 19% click-through rate. Email (4%) and Facebook (1%) fail to offer what SMS can regarding engagement¹. SMS messages must be clear, to the point, and enticing to customers. Offer a relevant SmartURL™ to valuable content, seasonal promotions, and customized deals and watch customer engagement grow.

4. Customers want to Two-Way Text with businesses.

Customers want a direct line to businesses, so much so that nearly half of all branded messages are responded to by consumers. SMS can make communication quick and convenient for both parties. Whether initiated by the customer or the business, it’s crucial to have Two-Way Texting capabilities open to your team. 45% of consumers proactively reach out to companies via text, and 1-in-3 said they reached out without a response¹. Lack of communication on a business’ part is a frustrating experience for customers and will likely result in parting ways. An easy solution is the make SMS an integral part of your communication efforts and service teams. Learn more about creating an SMS-based customer service team.

5. SMS offers a high ROI.

Retail businesses increased their SMS spending by 56% in 2020¹ and knowing the ROI of your SMS efforts can pave the way for a larger budget. Marketers who track the ROI of their campaigns are more than 1.6 times more likely to receive higher budgets². Tack SMS ROI through opt-out, growth, click-through, and conversion rates. The cost per redeeming subscriber is also an effective tool for gauging campaign performance. Learn more about determining ROI in part two of our SMS Campaign Analytics Guide.

6. Create a loyal following with SMS.

Inflation has shoppers looking for the best bang for their buck. Now more than ever, customers are open to new brands and working with businesses that offer affordable, quality products and services. Reward your customer base and prospects with an SMS exclusive loyalty program. Over half of all consumers said they would opt-in to loyalty programs if offered. In 2020 alone, 50 million customers opted-in to text messages from businesses¹.

7. SMS is cost-effective and accessible for all sizes of businesses.

A successful campaign can outweigh the cost of sending bulk SMS messages to clients. Cut print and postage costs associated with traditional media when sending your campaign through SMS instead. SMS is also accessible to businesses of all sizes. Companies with smaller budgets and teams can communicate with audiences in the thousands or more thanks to the low costs of SMS, sometimes costing as little as a few cents.

Solutions by Text offers a scalable SMS solution that seamlessly fits your current marketing and communication strategy. The team at Solutions by Text understands that your business is unique and will customize a process designed just for your customer base. It’s simple to get started; talk with our team today to get started.

Sources:

¹SMS Comparison

²Hubspot State of Marketing

The CFPB has entered into a consent order with Edfinancial Services, a student loan servicer, to settle the Bureau’s allegations that Edfinancial engaged in deceptive acts and practices in violation of the CFPA UDAAP prohibition.  The consent order requires Edfinancial to pay a $1 million civil money penalty.

According to the Bureau’s findings set forth in the consent order (which Edfinancial neither admits nor denies), Edfinancial made various misrepresentations to borrowers with Federal Family Education Loan Program (FFELP) loans about their eligibility for Public Service Loan Forgiveness (PSLF).  Under the PSLF program, established in 2007, student loan borrowers with qualifying loans who work in public service jobs or for certain nonprofits are eligible for loan forgiveness if they make 120 qualifying payments under a permissible repayment plan.  Unless a FFELP borrower can take advantage of the PSLF limited waiver that was announced by the Department of Education in October 2021 and that expires on October 31, 2022, FFELP borrowers must consolidate their FFELP loans into Direct Loans to be eligible for PSLF and any payments made before consolidating a FFELP loan into a Direct Loan do not count toward PSLF.

The Bureau’s findings in the consent order identify various misrepresentations made by Edfinancial customer service representatives to FFELP borrowers.  Such misrepresentations concerned FFELP borrowers’ eligibility for PSLF, the ability of FFELP borrowers to consolidate their loans, whether payments on FFELP loans would count towards PSLF, whether certain jobs were eligible for PSLF, and the availability of PSLF to FFELP borrowers.

In addition to payment of the $1 million civil monetary penalty, the consent order requires Edfinancial to take various actions including: contacting FFELP borrowers about the PSLF limited waiver; communicating certain information about the limited waiver in incoming calls from FFELP borrowers and through its interactive voice response system: developing and implementing a call script for its customer service representatives to use when speaking with FFELP borrowers, a training program for customer service representatives, and a call monitoring program; and updating its website to provide information about eligibility of FFELP borrowers for PSLF.

In response to the CFPB’s press release about the consent order, Edfinancial released a statement that included the following:

“Edfinancial Services has been providing loan servicing to our clients, including the U.S. Department of Education, for more than 25 years.  We were recently ranked the No. 1 federal student loan servicer by the Department of Education as a result of our commitment to quality.  The Consumer Financial Protection Bureau reviewed loans in our Federal Family Education Loan Program (FFELP) and alleged that our company had deceived or misled some of our borrowers about eligibility in a public service loan forgiveness program, an allegation we strenuously reject.  However, facing protracted and costly litigation that would have distracted us from our day-to-day responsibilities to our clients, borrowers and staff, we have settled the case with the CFPB with a payment of $1 million and agreed to update our training for staff servicing FFELP loans.”

Concurrently with the CFPB’s announcement of the consent order, the Department of Education sent a letter to FFELP servicers in which it described the CFPB’s settlement with Edfinancial and expressed concern that the issues involved in the settlement are not unique to Edfinancial.  The letter reminds servicers that their responsibilities include “actively informing borrowers about available programs for debt relief, any changes to these programs, and providing complete information in response to inquiries and complaints.”  In the letter, ED warns that “[Federal Student Aid] and CFPB can be expected to pursue further oversight of these issues, and every company should take pains to address them at once, so as to avoid penalties or other consequences.”