Archives for March 2021

Whether a mistake of law that results in the filing of a lawsuit after the expiration of the applicable statute of limitations is a bona fide error under the Fair Debt Collection Practices Act (FDCPA)¹ has been hotly debated since the United States Supreme Court held in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA² that the bona fide error defense does not apply to a mistake in interpreting the FDCPA. In an issue of first impression, the United States Court of Appeals for the Ninth Circuit answered in the affirmative, holding that the defense could apply to a mistake of law in determining the appropriate state statute of limitations. See Kaiser v. Cascade Capital, LLC et al., No 19-35151 (March 9, 2021).

Statutes of limitation (how much time you have to file your claim in court) are relatively straightforward on one level. They tell you precisely how many years you have to file your claim in court. That’s where the simplicity ends and the complexity begins, however. For example, determining the statute of limitations for a breach of contract claim for an unpaid credit card debt typically requires a plaintiff to first assess which state’s statute of limitations governs. This assessment includes a complex workflow/waterfall approach that considers many factors, including whether the contract contains a governing or choice of law provision, whether that provision incorporates procedural law (many states consider statute of limitations procedural), and if the state in which you intend to file suit has a statute that requires another state’s shorter statute of limitations to apply if the cause of action occurred in that state. And, even if you know which state’s law applies, the law in that state could be unsettled about which of two different statutes of limitation – one shorter than the other – applies.

For many plaintiffs a ruling that it filed suit after the expiration of the statute of limitations means the litigation is over. For plaintiffs regulated either by the FDCPA, or state statutes akin to the FDCPA, a dismissal based on the statute of limitations often means the next phase of litigation in which they become the defendant is about to begin. The Ninth Circuit’s decision in Kaiser offers the perfect illustration.

In Kaiser, a deficiency balance remained on the debtor’s automobile retail installment contract after the car was repossessed and sold. The creditor sought to collect the debt first through a letter sent by its attorneys and then a state court lawsuit filed in Oregon by the same attorneys. Kaiser moved to dismiss the lawsuit, claiming it was filed after the four-year statute of limitations in the Uniform Commercial Code for the sale of goods, as adopted in Oregon. The creditor argued the suit was timely under Oregon’s six-year catch-all contract statute of limitations. The state court agreed with the debtor and dismissed the lawsuit.

Kaiser wasted no time in filing a class action lawsuit in federal court accusing the creditor and its attorneys of threatening to sue and suing on time-barred debt in violation of the FDCPA. The district court dismissed the case for failure to state a claim, finding that the law was unsettled in Oregon regarding which statute of limitations applied, and thus there was no improper, unfair or misleading collection attempt. The Ninth Circuit reversed, holding that: (i) the FDCPA prohibits filing suit on a time-barred debt; and (ii) consistent with the recent publication of Regulation F by the CFPB, a plaintiff does not have to prove the debt collector “knew or should have known” that the statute of limitations had expired when the lawsuit was filed because strict liability applies under the FDCPA.

Although the 9th Circuit reversed, it gave defendants a potential defense on remand. The Court ruled that Jerman did not prohibit debt collectors from using the bona fide error defense to raise a mistake in determining the appropriate state statute of limitations. It limited Jerman to prohibiting the use of that defense only when claiming a mistake in interpreting the requirements of the FDCPA.³ To avoid liability under the FDCPA’s bona fide error defense, the defendants in Kaiser must show they mistakenly applied the wrong statute of limitations and maintained procedures (preferably written) to determine the right statute of limitations and avoid filing lawsuits after it expired. Kaiser appropriately recognizes the difficulties inherent in determining the correct statute of limitations and the unfairness of a Congressional scheme that would impose strict liability without the ability to excuse good faith mistakes in legal judgment.

The ability to raise the bona fide defense to a mistake in determining the appropriate statute of limitations does not mean it should always be pled as an affirmative defense. Before pleading the defense, consideration should be given to understanding the evidence supporting each element of the defense. For example, did the debt collector conduct a legal analysis to decide which statute of limitations to use before filing the underlying lawsuit or at least that type of lawsuit?  Does the legal analysis support or contradict the defense?  Is there a written policy or procedure requiring an attorney to evaluate that the right statute of limitations is applied to the debt and that the claim is not stale under that statute of limitations? Is there a written policy prohibiting the filing of lawsuits after the expiration of the statute of limitations? And, perhaps most critically, a debt collector should assume that if it raises the defense it will be considered to have waived the attorney-client privilege for all communications with counsel on the issue before it filed the underlying suit by placing the advice at issue in the FDCPA case. If those communications do not support the defense, the defense should not be raised because the communications will likely have to be produced.

Please contact Robert Horwitz at rhorwitz@maddinhauser.com or visit the Financial Services and Real Property Litigation practice group page for additional information and articles.

¹ The bona fide error defense excuses liability under the FDCPA “if the debt collector shows by a preponderance of evidence 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.” See 15 U.S.C. § 1692k(c).

² 559 U.S. 573, 604–05 (2010).

³ The Ninth Circuit is not the first court to limit the holding in Jerman. See Abdollahzadeh v Mandrich Law Group, LLP, 922 F.3d 810 (7^th Cir. 2019) (applying bona fide error defense to defendant law firm’s mistake of fact in filing a lawsuit after the expiration of the statute of limitations based on an incorrect payment date supplied by the creditor to the law firm’s debt buyer client); Gray v. Suttell & Assocs., 123 F.Supp.3d 1283 (Ed. Wash. 2015) (bona fide error defense applied to excuse the filing of lawsuit after the four-year statute of limitations in the Uniform Commercial Code); Hare v. Hosto and Buchan, PLLC, 774 F.Supp.2d (2011) (S.D. Texas 2011) (bona fide error defense applied to excuse filing a lawsuit to confirm an arbitration aware more than one year after issuance of the award).

ROCKVILLE, Md — Greenberg Advisors (“GA”) is pleased to announce the acquisition of ARMC Financial Services (“ARMC”) by Revco Solutions (“Revco”), which is a portfolio company of Longshore Capital Partners (“Longshore”). GA initiated the transaction for Revco and Longshore.

Based in Oradell, New Jersey, ARMC is a healthcare revenue cycle management company that specializes in denials management.

Brian Greenberg, CEO of GA, commented, “The denials management sector is a hotbed of M&A activity, as specialists can significantly ease the cash flow issues faced by providers. In fact, this is one of a few transactions that we’ve completed in the denials space since last summer. In the case of ARMC, the owners built a solid business with marquee clients and great brand recognition.”

Revco’s CEO, Geoff Miller, commented, “ARMC’s denials management expertise allows Revco to enter a highly attractive niche of the revenue cycle to better serve its existing clients.”

For more information regarding investment and M&A activity, read GA’s 2020 M&A Updates for ARM and RCM & HCIT, which offers insight and trend analysis.

About Greenberg Advisors

Greenberg Advisors, LLC is an independent investment bank providing world-class M&A and strategic advisory solutions to Business Services and Technology companies in the Accounts Receivable Management (ARM), Revenue Cycle Management (RCM), Healthcare Information Technology (HCIT), and Business Process Outsourcing (BPO) sectors.

Focused on these sectors for over 25 years, the firm’s professionals offer a comprehensive, yet highly specialized perspective from which to advise clients, which has resulted in the completion of over 135 M&A, capital raising, valuation, and strategic advisory engagements. These client successes reflect Greenberg’s distinct client-first approach, deep sector expertise, objective point of view, and work ethic.

CHESAPEAKE, Va. — Spring Oaks Capital, LLC has hired Michael Cheng as Controller for the various legal entities that make up the Spring Oaks Capital group. In this role, Cheng will be responsible for all accounting functions across the operating company and its affiliates. Cheng, a CPA with both public accounting and industry experience, also holds a Bachelor of Business Administration from James Madison University and a Master of Science in Accountancy from Old Dominion University.

“It is very rare you find such an energetic and supporting company. From the first day I walked in I could tell Spring Oaks has a special culture. I am beyond excited to bring my skillset to the table while also growing and learning alongside my new teammates.” stated Cheng. Tim Stapleford, Spring Oaks Capital’s President and CEO stated, “Michael is exactly the type of individual we are looking to add to our team. He is an expert in his field, shows great interpersonal skills, and has the energy level we need to help us drive our vision forward.” Cheng will report directly to the incoming CFO that will be announced in the coming weeks.

Spring Oaks Capital continues to expand across the organization adding staff and executives in key positions to support its growth and strategic objectives. Marcelo Aita, Spring Oaks Capital’s Executive Chairman added, “We are thrilled to have Michael on our team. In the short time he has been with us he has already proven to be a great fit.” Mr. Aita went on to say, “We have hired some great people so far and will be announcing three key additions to our executive team in the coming weeks.”

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About Spring Oaks Capital, LLC

Since 2019, Spring Oaks Capital has been buying portfolios from several sellers and creditors that want better pricing for their accounts without compromising on compliance or their brand. Building an innovative, refreshing and equitable vision that provides positive optionality around consumer debt obligations has been key to their success. Spring Oaks Capital leverages a differentiated culture and leading-edge technology to offer more competitive pricing. Spring Oaks Capital is an innovative and technology-focused consumer debt purchasing company spearheaded by a group of well-known and respected industry executives, who hold decades of experience at some of the largest banks, debt buyers, and collection firms in the United States.

On March 11, 2021, American Medical Collection Agency (AMCA) settled with 40 states and the District of Columbia regarding its 2018/2019 data breach.  AMCA specializes in collecting small-dollar medical debt. Between August 1, 2018, and March 30, 2019, a hacker compromised AMCA’s web payment page, exposing the personal information of at least 21 million individuals across the country.

AMCA first learned of the issue when it started receiving a disproportionate number of notices suggesting credit cards that had interacted with AMCA’s web portal were later associated with fraudulent activity. Outside consultants ultimately confirmed the breach, and in June 2019, AMCA reported the breach to 40 states and the District of Columbia.

As a direct result of the data breach, AMCA suffered a severe drop in business and filed for Chapter 11 Bankruptcy protection. AMCA received permission from the bankruptcy court to settle with the multi-state coalition and, on December 9, 2020, filed for dismissal of the bankruptcy action.  

Per the terms of the settlement agreement, the 21-million-dollar payment to the states will be deferred so long as AMCA complies with the other terms of the settlement agreement. Included among these requirements, AMCA must create and implement an information security program, employ a chief information security officer, hire a third-party assessor to perform a security assessment, and cooperate with attorneys general from the 40 states which are part of the settlement and District of Columbia.

insideARM Perspective

As insideARM previously mentioned, this is a sobering story.  AMCA’s well-intentioned decision to provide consumers a web portal for payment ultimately led to a significant data breach harming both consumers and AMCA.   This is a stark reminder that technology platforms cannot be updated or added in a vacuum. Any entity handling consumer data needs to take appropriate steps to assess new technology’s vulnerability before implementation.

In tandem with federal and state regulators and attorneys general, On September 29, 2020, the FTC launched Operation Corrupt Collector to target collectors who engage in unauthorized and abusive collection practices. Simultaneously, the FTC announced it filed suit and had obtained temporary restraining orders against National Landmark Logistics (National) and Absolute Financial Services (Absolute).

Wasting no time in showing they mean business, on March 15, 2021, the FTC announced that, through a settlement, both National and Absolute have been permanently banned from the debt collection industry. The FTC did not mince words, stating the following actions led to these results:

National Landmark Logistics and Absolute Financial Services [used] illegal robocalls to leave messages with consumers that threatened outcomes from lawsuits to arrest. The messages didn’t identify the caller as a debt collector, and when consumers would return the calls, the defendants would present themselves as mediators or attorneys.

In most cases, the debts being collected by National Landmark and Absolute Financial were not actually owed by the consumers, either because they never existed in the first place or had been previously paid off.

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In addition to being permanently banned from the collections industry, in their respective settlement agreements, National agreed to a monetary judgment of $16,418,306.00, and Absolute agreed to a monetary judgment of $11,281,993.00.  Although these judgments are partially suspended due to National and Absolute’s inability to pay, if either entity misrepresented its financial status, the entire judgment will be due immediately.  Further, both National and Absolute agreed to cooperate with the FTC in ongoing law enforcement actions.

The settlements also permanently banned National’s affiliated entities from the collections industry: Liberty Solutions & Associates, LLC and LSA Processing Systems, LLC, as well as James Dennison and Eric Dennison.  Absolute’s affiliates Absolute Financial Services, LLC, Absolute Financial Services Recovery, LLC, and AFSR Global Logistics, LLC, were included in the Absolute settlement LLC as well as Lashone Elam and Talesia Neely.  

insideARM Perspective

In addition to harming consumers, bad actors can tarnish the accounts receivable industry’s reputation. Those entities that spend enormous amounts of time, energy, and financial resources to comply with applicable laws and regulations should welcome oversight to eradicate bad actors from our space. Further, legitimate businesses may be the first to learn about scammers targeting consumers; initiatives like Operation Corrupt Collector may provide a resource for good actors to report scams that cross their desks.

Show Notes: 

Ralph Liberio, President and CEO of NCB Management Services, Inc. stopped by Clark Hill’s Credit Eco to Go to discuss the CFPB’s new debt collection rules and the power consumers now have to resolve their debts on their own. NCB’s self-service web-based portal allows consumers to make payments on their own terms and to set their preferences of when and how they want to be communicated with, including opting-in to receiving emails and texts. Ralph tells us that consumers are more responsive and engaging when they have control over the rhythm, flow, and “beat” of the communication.  When it comes to debt collections, consumers like to dance on their own. 

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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.

Funk Game Loop by Kevin MacLeodLink: https://incompetech.filmmusic.io/song/3787-funk-game-loopLicense: http://creativecommons.org/licenses/by/4.0/

ROCKVILLE, Md. — iA Strategy & Tech – a conference for executives in receivables strategy – returns in 2021 with a focused, cutting-edge agenda entirely focused on the latest trends, data and tech behind receivables strategy. 

Key sessions will zero in on the future of channel optimization, consumer preference, data management for strategic flexibility, optimizing inbound call handling, new trends and strategies for consumer outreach, and much more. See the full agenda here.

“iA Strategy & Tech is really designed to give executives in receivables – both creditors and agencies – a critical look at the ways sharp companies are revolutionizing strategy,” said Stephanie Edelman, CEO of insideARM. “The strongest companies are looking to maximize ROI with sophisticated tactics and by choosing and implementing the right new tech. That’s what we’ll dig into at iAST this year.”  

iA Strategy & Tech runs July 13-15, 2021 and is an entirely digital event – no travel required. 

Registration is now open and double-early-bird pricing is in effect. Find out more here.

Interested in speaking? We have a few open spots. See our full agenda and apply here.

Interested in sponsorship or demoing at iAST? Learn more here.

FRANKLIN, Mass. — Interactions, one of the world’s largest standalone conversational artificial intelligence (AI) companies, today announced that NRA Group, a leading accounts receivable management (ARM) company, has deployed a sophisticated Interactions Virtual Collection Agent (VCA) in record time. Progressing from contract signature to the first call in a few months, NRA Group is accelerating the impact of its REV-TECH™ channels using the VCA for dramatic improvements in efficiency and profitability.

NRA Group (formed by the acquisition of Credit Plus Solutions Group est. 1922 & National Recovery Agency Inc. est. 1976) has successfully provided extended business office services such as revenue cycle, debt collection, skip tracing, payment processing, early out and credit bureau reporting to some of America’s leading companies for decades. As consumer debt continues to rise, the company strives to manage unprecedented call volume while balancing both the agent and customer experience. Interactions’ OmniChannel VCA was the only solution purpose-built for collections that could quickly and effectively help them meet their unique needs. 

“This year, the need for an AI-powered virtual assistant in our contact centers became more urgent than ever. We needed a solution that could quickly support both our agents and our customers, and successfully automate the sensitive, complex and compliant process of collecting payments and negotiating debt recovery plans,” said Steve Kusic, CEO, NRA Group. “By getting our VCA up and running so quickly, we’re setting ourselves up to see measurable results faster than we ever anticipated.”

Interactions VCA combines conversational AI with human understanding in real-time to behave like a company’s best agent, at scale. VCA seamlessly integrates into current tech ecosystems, including telephony dialers, knowledge bases, CRMs, and billing and payment systems to deliver a personalized and consistent experience across channels. With its market-leading proprietary technology, VCA is uniquely poised to increase revenue recovery at a reduced operational cost and do so in a conversational, human-like, and judgment-free manner.

NRA Group is implementing voice and Interactions’ Rich Text capabilities into its VCA. The text features make it possible to embed forms, maps, or images directly into text-based channels, creating interactive, efficient, and conversational experiences for customers. The addition of web chat and SMS with Interactions voice solution creates a best-in-class and cohesive customer experience for customers regardless of their channel preferences.

“COVID-19 has greatly increased the need to digitally transform collections contact centers, and Interactions is uniquely-equipped to help agencies expedite this transition,” said Mike Iacobucci, CEO of Interactions. “By using both voice and text channels to automate transactional conversations and sort out wrong party contacts, our VCA is successfully boosting agent productivity and reducing churn, while increasing debt recovery and easing consumer financial pressures. With NRA Group getting its VCA deployed in just a few months, we’re seeing how quickly we can make a tangible impact on the industry at large.”

To learn more about the unique benefits that Interactions Virtual Collection Agent brings to ARM agencies, please visit www.interactions.com/industries/collections/.

About Interactions

Interactions provides Intelligent Virtual Assistants that seamlessly assimilate conversational AI and human understanding to enable businesses to engage with their customers in highly productive and satisfying conversations. With flexible products and solutions designed to meet the growing demand for unified, omnichannel customer care, Interactions delivers unprecedented improvements in the customer experience and significant cost savings for some of the world’s largest brands. Founded in 2004, Interactions is headquartered in Franklin, Massachusetts, with additional offices worldwide. For more information, visit www.interactions.com.

About NRA Group and National Recovery Agency

NRA Group is a nationally ranked – ACA Certified agency that has evolved from a high-quality performing call center into an advanced technological contact center. We are proud of our past and excited about our future. Due to NRA’s extensive utilization of the OmniChannel technologies, we are experiencing exceptional growth in reaching consumers who truly appreciate our assistance in improving their financial health. As a Responsible Revenue Recovery Company™ company, we partner with reputable publicly traded and private business organizations to better serve them and their valued customers. Our talented and well-trained staff is committed to serve and assist our clients in a way that enhances their revenue resources and cash flow needs on a fast-track basis. NRA – Discover How We Recover™for you and achieve our mission of 100% Client Satisfaction

The practice of using a mail house to send demand letters to consumers is up for debate in the 11^th Circuit Court of Appeals. In 2019 insideARM first brought you the case of Hunstein v. Preferred Collection & Mgmt. Servs., No. 8:19-cv-983 (M.D. Fla. Oct. 29, 2019) upon its dismissal with prejudice by the Middle District of Florida. The consumer appealed the District Court’s decision, and on March 10, 2021, the 11^th Circuit heard oral arguments.

In Hunstein, the parties are squabbling over whether supplying a data file with consumer information to a mail house to prepare and mail a collection letter “relates to” the collection of a debt or whether sending such a file is “in connection with” the collection of a debt.  While this may seem like the splitting of proverbial hairs, this distinction is significant: if providing consumer data to a mail house merely “relates to” the collection of a debt as argued by counsel for Preferred Collection and Management Services, Inc. (Preferred), then the act of conveying this data does not violate the FDCPA. However, if delivering a data file is “in connection with” the collection of debt as argued by Mr. Hunstein’s counsel, this action may violate the FDCPA’s prohibition on third-party disclosure.

Mr. Hunstein’s counsel began his argument by comparing the mail house letter process to the act of making a peanut butter and jelly sandwich. Seriously.  Specifically, he opined that sending a letter template and separate data file to a mail house to merge is analogous to putting peanut butter on one piece of bread, jelly on another, and handing the two slices off to be put together by someone else. Using this comparison as a starting point, he explained to the court that the crucial factor is the intent of the action.  In the case of the two-part handoff of the PB & J, the goal is to make the sandwich for someone to eat; with the mail house, the objective is to have a third party merge and send a collection letter.  Thus, argued Mr. Hunstein’s counsel, since Preferred intended for the mail house to send a collection letter to the consumer, transmitting the data file is an act “in connection with” the collection of a debt.

The creative analogy used by Mr. Hunstein’s counsel appeared to make an impact.  Through a series of questions, Preferred’s counsel ultimately admitted the point of engaging the mail house was to generate and mail a collection letter, and it didn’t get any easier from there.   In response to Preferred’s contention that sending the data file was not “in connection with” the collection of a debt because it did not include a demand for payment, the panel pointedly asked whether this theory would render the exceptions found in 15 USCA 1692c(b) superfluous notably stating that under preferred’s theory these exceptions “no longer make sense.”  

The oral argument then shifted to a standing issue, which is also up for decision in the appeal.  There is no clear indication regarding how the panel will decide these issues; either one could influence the panel’s decision in its own right. 

insideARM Perspective:

This case is undoubtedly one to watch.  Anything other than a solid rejection of the consumer’s argument by the 11^th Circuit may induce copy-cat cases, or in a worst-case scenario, might cause many in the debt collection industry to rethink certain policies and procedures.  

In this episode, Amy Perkins, insideARM President, interviews Brad McCurnin, President of Harvest Strategy Group. Watch Amy’s conversation with Brad, or read it below.

Amy Perkins:

Thank you for joining us for today’s executive Q & A. We’re really excited to have Brad McCurnin, President at Harvest Strategy Group, with us today to talk about what’s going on in the litigation industry. Brad, I’m so happy to be here talking with you today. Let’s jump right in. What has Harvest Strategy Group been up to and what do you guys do?

Brad McCurnin:

Thank you. We were formed in 2007 with the idea of being an accounts receivable management company. We had a real emphasis from the beginning on the management part of that name because we really saw an opportunity in the marketplace to emphasize meaningful engagement in the whole process from beginning with our clients to the ending results of the portfolios that we manage. And we really had a unique offering at the time. And it’s still unique today in that we outsource 100% percent of our recovery to third-party collection agencies and third-party law firms. So we’re able to pick the best in the industry to develop, deliver the best results and really produce superior results for our clients. We also had a focus from the beginning on compliance and accountability. So, we knew with delivering outsourced providers and working with so many outsource providers who really had to document those results and report on them and have everything written so that we could monitor and manage the compliance of those results back to our clients.

Amy Perkins:

Yeah, absolutely. And I know compliance is such a huge part and has evolved a lot over the last few years in the litigation space. Can you update us on where that stands and how Harvest Strategy Group has adapted through the years to the change in regulation around litigation and other aspects?

Brad McCurnin:

It’s a really dynamic area, a changing area. When you look back to 2007, when we started, it’s an entirely different business, it’s an entirely different compliance perspective. I mean, today we have three certified compliance officers on our staff. It’s a critical component of the services that we deliver. And the CFPB really helped drive all that. I mean, it was 10 years ago that they were formed and really for the better. Our mission is zero defects compliance, delivering results for our clients. And, one other unique part of how we put that together is that we are focused on just management. We’re not a debt buyer. We weren’t from the beginning, and we still are not today.

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Brad McCurnin:

We’re not an agency and we’re not a law firm where we’re trying to serve certain footprint states and outsource the other. We’re offering end-to-end compliance management, where we can really come up with the best solution for our clients to have zero defects in compliance and maximum results. And it’s really compliance which has now become the number one focus of our clients and has been for years now, whereas prior it was recovering. So this remains our most important objective today.

Amy Perkins:

It’s hard to believe it’s been 10 years since a lot of that started. I said a few years, but wow. I guess time really does fly by! So I know, from my years of leading strategies, when we thought about litigation, we always seemed to think of it as litigation or sell. And sometimes we would have a blended strategy, but certainly, there were a lot of internal conversations and debates about the pros and cons of going down either of those routes. So how do you advise your clients in that area when they’re debating between those two strategies?

Brad McCurnin:

Yeah, we have those conversations a lot and it’s interesting to me. We’re, frankly, agnostic as to which of the strategies that we would employ, whether it’s agency litigation or debt sale. Not that we would employ…that our clients employ, and how we advise them on that. What we have is 13 years of data and 13 years of experience to work with our clients to come up with a unique strategy that is best suited to their objectives and to be compliant. And really when I look back on everybody we’ve worked with, there are no two strategies that are the same. No two scenarios are the same. Everyone has unique objectives, unique inventory. And since we’re not debt buyers and we don’t fall into these other categories, we’re truly portfolio managers. We’re able to help them come up with a strategy that meets their overall objective. And often wind up with a strategy that starts with a few agencies that are post-charge-off, then splits into a second tier, some going to litigation strategy, some going to an agency, and some of our clients also integrated debt sale at that point. So it really depends on their needs and objectives.

Amy Perkins:

Absolutely. I know when we would have those conversations internally, one aspect of looking at litigation versus sale is the timing of when you see something back, and that doesn’t necessarily equate to the overall value. If you look at the big picture, short-term versus long-term. But one thing we did get hung up on is really looking at how we picked the right accounts to go through potentially the litigation process or the sales process, or any of the other processes post charge-off for that matter. But litigation was always a little bit trickier. And at the time it was because we had a lot of judgmental overlays that we would put on top of the things we were able to know with data. And so it just became costly sometimes to even figure out who is the best choice to potentially go down that route. How do you help your clients? Or how do you advise them in that area?

Brad McCurnin:

Yeah, we have a product called ProScore, and it is designed to help identify the accounts that are best suited to go through a litigation strategy. That question was the first question on our minds 13 years ago, because you have to pick the right accounts. Putting the wrong accounts into a litigation strategy can be incredibly costly and, really damaging to the consumer relationship. The accounts that are best suited for litigation in our view are those that have gone through an agency strategy. They have been unwilling to pay and we want to pick those accounts that do have the ability to pay. Unwilling and the ability to pay are two critical factors there. Having gone through the financial crisis, and now the COVID crisis, there needs to be a strong element of listening to consumers, of being respectful of consumers who have a hardship or have a difficult situation.

And that all has to be part of the compliance and oversight process. ProScore is designed to identify those accounts that go into that right strategy. And what we’re trying to do is improve the net lift to our clients by using this technology and continuing with zero defect compliance as well. And it’s been a core part of our business. It’s a free scoring solution offered to all of our clients. And it’s been critical to navigating those very decisions that you just talked about.

Amy Perkins:

It sounds like you nailed both sides of that equation. You’re really figuring out who’s best to go through that process and how to make sure that you’re picking the accounts in a way that is compliant. So certainly lots of great things are happening across all the different channels, but you definitely have some great tools that have solved some challenges that I know have been out there for a while. So what now? What’s on the horizon for Harvest Strategy Group?

Brad McCurnin:

Well, we’re growing, we’re investing. We’re really looking for 2021 to be a very interesting year after an interesting year. Lots of challenges I think are ahead. You know, just a few months ago, we were looking at perhaps an explosion of charge-offs coming around the corner. I tell you looking at the data today, I think charge-offs might remain low for the rest of the year. We’ve got the new stimulus package just approved. I think those stimulus checks are going to be hitting consumer accounts as early as this weekend.

A lot of consumers are going to use those funds to pay off debt. We’re seeing it not only on the charge-off recovery side, but overall credit card balances are going down and that’s a counter-trend. Usually, credit card bills are going up as a whole, but now they’re going down. So we’re looking for an interesting year in that regard. We’re just having to monitor it and work with our clients to advise them on what we’re seeing on the recovery front, monitoring closely bankruptcy rates and foreclosure rates as those will inevitably start to come back at some level. It’s just going to be, I think another challenging year to be in touch with what’s actually happening in the marketplace.

Amy Perkins:

Absolutely. It should be interesting. It’s been a wild 12 months and I could see another 12 months, as you said. Well, thank you so much again for being here. Is there anything you would like to add that we didn’t touch on throughout our conversation?

Brad McCurnin:

I would just invite any creditors, banks, debt buyers that want to contact us to talk about their strategy and just get our input. We’re always open to discussing those and providing our input on how results and compliance can be improved.

Amy Perkins:

Very good. All right. Well, thank you again.