Archives for November 2021

Jacksonville, Fla. — Frontline Asset Strategies, LLC (“FAST”), a professional collection agency located in Roseville, MN, and Jacksonville, FL, participated in October’s Breast Cancer Awareness Month. On Friday, October 22nd, the “FAST Team” doned their pink to spread awareness and then banded together on Saturday, October 23rd, both in-person and remote, to participate in the Susan G. Komen Race for the Cure.  The activities provided opportunities for fundraising, team participation, and comradery.

Building an Others-Centered Team

The Frontline Jacksonville office opened early in 2021, and the team has been growing its budding culture and is off to a strong start. Frontline Asset Strategies places emphasis on a positive, determined  mindset focused on helping others. The team is proud of the collegiality and friendly collaboration taking place among new friends and coworkers motivated to build on the strong foundation laid by FAST’s long-successful MN headquarters. The FL office is working to develop locally-based ways to continue to lead by example within the community. 

Beginning New Traditions

“We hope to make this an annual tradition. It’s great bringing team spirit and a greater purpose to the office every chance we get. This is a cause that is meaningful and worthwhile, while centered around an opportunity to be out in the community together giving back. We’re thankful for all who were able to participate and we look forward to next year!” said Tom Clement, Chief Sales Officer and Partner at Frontline Asset Strategies.  

Race for the Cure

The Susan G. Komen Race for the Cure is a fundraising arm of the greater Susan G. Komen® organization, founded in 1982 with a mission to end breast cancer. Susan Komen’s sister, Nancy G. Brinker, began the organization based on a promise she made to Susan in 1980 as Susan was losing her battle with breast cancer. According to its website, the organization has now “invested more than $2.9 billion in groundbreaking research, community health outreach, advocacy and programs in more than 60 countries.” Their “efforts helped reduce deaths from breast cancer by 40 percent between 1989-2016.” 

Breast Cancer Awareness Month

Breast Cancer Awareness Month was started by the National Breast Cancer Foundation, Inc. Its mission is prevention-oriented, focused on leveraging the power of increased awareness to help educate women and encourage routine screenings for early detection. This includes increasing affordable access to mammograms and regular checkups. The organization spreads the important message of knowledge and proactive measures to save lives. The wearing of pink truly is an awareness campaign for routinely taking time to remember the importance of keeping up with regular self-exams and doctor’s exams for early detection.

Learn More

To learn more about breast cancer in general, visit breastcancer.org, a nonprofit source for information and community. 

About Frontline Asset Strategies

Founded in 2008, Frontline Asset Strategies is a nationally licensed and bonded full-service collection agency specializing in accounts receivables management solutions that assist clients with maximizing the recovery of delinquent and non-performing accounts. The Frontline Asset Strategies team works with integrity and transparency to deliver positive consumer interactions that exceed expectations. They are headquartered in Roseville, MN with an additional location in Jacksonville, FL.

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On October 29, the New York Department of
Financial Services issued proposed amendments to 23 NYCRR 1, its regulation
titled “Debt Collection by Third-Party Debt Collectors and Debt
Buyers.”  The proposed amendments would make significant
changes to the sections of the current regulation dealing with initial
disclosure requirements, statute of limitations disclosures, substantiation
requirements, and telephone and electronic communications.  They would
also align the DFS regulation with several of the CFPB’s requirements in Regulation
F, set to become effective on November 30, 2021.

Required initial disclosures by debt
collectors

23 NYCRR 1 currently requires debt collectors
to provide certain written information, within five days of the initial
communication (unless the initial communication was in writing and included the
notice).  The proposed amendments revise the information about the debt
that must be included in the initial disclosures.  They require a debt
collector to disclose:

•  Name of the creditor to which the debt was originally owed or alleged to be owed

• Account number or a truncated version of such number

• Merchant brand, affinity brand, or facility name associated with the debt

• Name of the creditor to which the debt is currently owed

• Date of default

• Date of last payment

• For a debt not reduced to judgment, the applicable statute of limitations expressed in years

• Itemized accounting of the debt, including current amount due

Additionally, these amendments require a debt
collector to send, either in the initial notice or within five days of it:

• Information about the debt

• A notice that the debt collector is prohibited from engaging in abusive, deceptive, and unfair debt collection efforts

• A notice that the consumer has the right to dispute the validity of the debt, including instructions on how to dispute

• A notice that some forms of income are protected from debt collection

Disclosures for debts for which the statute of
limitations may be expired

Under the current regulation, a debt collector
must provide specific disclosures to the consumer before it accepts payment
when it knows or has reason to know that the statute of limitations for a debt
may be expired.  The proposed amendments require a debt collector to
include the disclosures in all communications, including the initial
disclosures, when it seeks to collect on a debt for which it has determined
that the statute of limitations has expired.  (The proposal would change
the required disclosures to inform the consumer that the applicable statute of
limitations “has expired” rather than that it “may be expired.”)

The proposed amendments would also add a
prohibition on oral communications—telephone calls or other means—by a debt
collector with a consumer regarding a debt for which the debt collector has
determined that the applicable statute of limitations has expired unless the
debt collector has directly received from the consumer “prior written and
revocable consent” or has the express permission of a court of competent
jurisdiction.

Substantiation of consumer debts

Currently, 23 NYCRR 1 allows debt collectors
60 days to provide written substantiation of a charged-off debt to a consumer
if the consumer disputes the validity of the debt in writing and requests
substantiation documentation.  The proposed amendments reduce this period
to 30 days but would require the dispute to have been made in writing to
trigger the debt collector’s obligation to provide written
substantiation.  The proposed amendments also add the requirement that a
debt collector must provide substantiation by hard copy through the mail. 
If the consumer has consented to receive electronic communications from the
debt collector, the debt collector would be required to provide substantiation
both by mail and electronically.  Debt collectors also currently must
retain any requests for substantiation, as well as all documentation sent to
the consumer, “until the debt is discharged, sold, or transferred.”  The
proposed amendments would require documentation to be retained for the longer
of either seven years, or until the debt is discharged, sold, or transferred.

Communication by telephone or through
electronic mail

The proposed amendments would add significant
limits on both telephone and electronic communications.  The proposed
amendments add requirements that a debt collector must comply with to
correspond with a consumer electronically to collect a debt.  Such requirements
include that the consumer must have voluntarily provided contact information
for electronic communications (e.g., email address, a telephone number for text
messages) and have given written revocable consent for electronic
communications from the debt collector in reference to a specific debt.

With regard to telephone calls, the proposed
amendments cap the number of calls a debt collector can make to a consumer
absent the consumer’s prior written and revocable consent given directly to the
debt collector.  Specifically, the proposed amendments would allow a debt
collector to make no more “than one telephone call and three attempted
telephone calls per seven-day period per consumer.”  (The one phone call
cap can be exceeded in specified circumstances, including when a call is made
in response to the consumer’s request to be contacted.)  Because the
proposed caps apply on a per consumer basis, they are stricter
than those in Regulation F, which allow seven attempts in
seven days per debt.

Comments on the pre-proposed amendments were
due by November 8.  The DFS will next publish the proposed amendments in
the New York State Register, with any changes made based on
comments received on the pre-proposal.

Just before noon today, the Eleventh Circuit Court of appeals issued an order (Order) vacating its opinion in Hunstein vs. Preferred Collection & Management Services, Inc, 994 F.3d 1341 (11th Cir. 2021), which means Hunstein is no longer good law.  

The Order also states that the 11th Circuit will rehear the matter en banc (en banc means the full panel of 11th Circuit Judges will hear the matter).  The rehearing date has not been set yet. 

Brief History:

The Hunstein Opinion created shockwaves throughout the ARM industry in April 2021 when the Eleventh Circuit held transmitting data to a mail vendor is an unauthorized third-party disclosure.  In May 2021, the debt collector defendant, Preferred Collection & Management Services, Inc (Preferred), filed a petition for rehearing en banc. In late May and June 2021, 17 parties with an interest in the outcome, including the Consumer Relations Consortium, filed amicus briefs to ensure all the legal issues surrounding the case were presented to the Eleventh Circuit. 

Later in June 2021, the Supreme Court issued its order in TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2204 (2021).  Preferred immediately filed a notice of supplemental authority arguing that the Transunion opinion supported Preferred’s request for rehearing en banc.  In October 2021, the three-judge panel which issued the April 2021 Hunstein opinion issued a substitute opinion to take the place of its original opinion. 

While the substitute opinion did not change the holding, it included a scathing dissent that included language taken directly from several amicus briefs, including the brief filed by Jessica Klander of Bassford Remele and Brit Suttell of Barron & Newburger, P.C. on behalf of the Consumer Relations Consortium. Their brief argued in part that the CFPB has authorized the use of mail vendors since Regulation F (Reg F) specifically discusses letter vendors as part of the collections ecosystem. This argument made it directly into footnote 13 of the dissent in the October 2021 substitute Hunstein opinion.

Brit Suttell stated that today’s developments are “an interesting turn of events and should get the attention of everyone in the industry.  We still need to understand what exactly the Court is going to want to be briefed – are they going to take a closer look at the standing argument or the underlying substantive argument regarding § 1692c(b)?”

insideARM Perspective:

This is big news for the ARM industry. The Hunstein opinion has done little for consumer protection while creating a windfall for consumer attorneys. While we have no way of knowing how the Eleventh Circuit will decide after rehearing the matter, courts outside the Eleventh Circuit have already suggested that that the Transunion decision calls Hunstein’s viability into question.  We will continue to provide updates as they unfold.

ST. GEORGE, UT — TCN, Inc., a global provider of a comprehensive cloud-based call center platform for enterprises, contact centers, BPOs, and collection agencies, today announced the launch of “A Comprehensive Guide to Regulation F and How It Impacts Debt Collection,” an online guide that details the new rules announced by the Consumer Financial Protection Bureau (CFPB) in its interpretation of the Fair Debt Collections Practices Act (FDCPA), which takes effect on Nov. 30, 2021.

“Regulation F has caused collections and call centers to step back and take a hard look at their compliance with national standards. It can be difficult to understand exactly where your company falls in terms of the newest compliance regulations,” said McKay Bird, chief marketing officer at TCN. “At TCN, we strive to make the implementation of Regulation F as seamless and carefree as possible for our customers with this new, robust library of resources and compliance best practices.”

Enforced by the CFPB, Regulation F is a rule of the FDCPA, which significantly impacts the overall debt collection process. The regulation outlines prohibitions on harassment or abuse, false or misleading representations and unfair practices by debt collectors. The new regulation applies to collection agencies, debt buyers, collection law firms and loan servicers. It will create the need for them to make significant changes on how and when they can communicate with debtors.

The CFPB’s July 2021 interpretation of Regulation F clarified several rules about communications with debtors, including telephone calls, emails and text messages. The main requirements and contact restrictions include the 7-in-7 rule, which stipulates that no more than seven calls may be made in seven days, time of day, place of employment, reasonable procedure rules, limited content messages, itemization dates, model validation notices and retaining records.

TCN’s new online guide offers a variety of tools that serve as a way for call centers to educate themselves about the parameters of Regulation F and how to better manage compliance, such as:

• An overview of Regulation F compliance
• A guide to understanding the CFPB, FDCPA, and Regulation F
• Tools to avoid Regulation F penalties and methods to stay compliant
• A how-to guide on how call centers can best follow Regulation F practices
• Regulation F frequently asked questions

In addition to the services available to aid in the implementation of Regulation F, TCN also offers a resource library that includes a catalog of current challenges for Regulation F, a directory of the latest updates and rules announced by the CFPB, and several webinars and articles to help applicable users navigate the change.

To explore TCN’s Regulation F resources, or to request a demo of their services, visit https://www.tcn.com/a-comprehensive-guide-to-regulation-f-and-how-it-impacts-debt-collection/

About TCN

TCN is a global provider of a comprehensive, cloud-based call center platform for enterprises, contact centers, business process outsourcing firms (BPOs) and collection agencies. Founded in 1999, TCN combines a deep understanding of the needs of call centers with a unique approach to pricing – no contracts, monthly minimums or maintenance fees – that supports rapid scaling and instant flexibility to changing business needs. TCN’s contact center platform features a holistic set of easy-to-use, automated agent tools and advanced apps for omnichannel communications, workforce engagement, compliance & data management, integration & automation, intelligence, reporting & analytics and collaboration & accessibility. Its suite of compliance tools helps businesses meet the requirements of the Telephone Consumer Protection Act (TCPA) and other state and federal regulations, including new and updated debt collection rules issued by the Consumer Financial Protection Bureau. TCN’s secure platform integrates seamlessly with leading APIs and is accessible to agents with visual impairments. TCN is trusted by Fortune 500 companies and enterprises of all sizes in multiple industries in many countries. For more information, visit https://www.tcn.com/ and follow on Twitter, @tcn.

We’re witnessing a digital shift in the ARM industry. So, how might you need to staff differently to make sure you can keep up? Jim Beck, COO of MRS BPO, discusses that with Erin Kerr, plus:

• How allowing employees to innovate can lead to big wins in your organization
  
• Where to look for what’s coming next in collections
• What the increased focus on compliance from 2008-2009 can teach us about the current digital transformation

Watch Erin’s interview with Jim here, or read it below.

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Erin:

Hi everyone. And thank you so much for joining me today for another edition of Think Differently. Think Differently is a feature of the IA Innovation Council. I’m Erin Kerr. I’m the Executive Director of the Innovation Council. And I’m here today with Jim Beck from MRS. Jim, how are you?

Jim:

I’m doing well. How about yourself?

Erin:

I am doing really well. Thank you so much for being here with me today. So, Think Differently, as you know, is a series that we produce that features our Innovation Council members. So I’d like for you to introduce yourself and tell us a little bit about yourself before we get into some of the questions.

Jim:

Sounds great. I’m Jim Beck, I’m the Chief Operating Officer at MRS BPO located in Cherry hill, New Jersey. I am a long-term employee of the financial services industry. I think I’ve been in the financial services industry for a little over 20 years now with around 15, 16 years working in collection agencies. And,  I’m excited to be here.

Erin:

Great. And like I said, so happy to have you here, and I think you bring a wealth of information and knowledge, so let’s get into some of these questions. So, if you didn’t have any search engines, how would you research an obscure topic?

Jim:

Well, since I’ve already dated myself, once I’ll date myself again, that I am old enough to have lived before search engines, and before the internet. But you know, historically what I would have said is, you know, I’m a big reader. And so I would do a ton of research on, you know, what has been written about that topic. The great thing about search engines is, you know, whatever was written and published becomes dated very, very quickly. So then, you know, also talk to people and interview people. I think that doing that today is where you can get more current written information, being able to speak to people and get their perspectives is equally important. And I still do that today and would still do that if there were many search engines, but I do remember doing research projects with microfiche and things like that shows that I might be a little bit older than most of our audience today.

Erin:

I wouldn’t be so sure about that, but maybe. So, another question, just generally speaking, is what’s the most innovative decision that you’ve made or your company has made. Can you tell me a little bit about it?

Jim:

Yeah. I feel very lucky to be part of a very innovative organization. So I’ll start with the organization. And I think sometimes when people think through innovation, that it’s like one of those very big words and people really try to think that it has to be something completely groundbreaking. I’d say one of the more innovative things that MRS has done as an organization really comes down to a risk analysis and I’ll explain what that means in a minute. But, you know, we have been for years texting to a large portion of our customer base. And so many people have said, you know, how can you do that? Is there a risk? And we really took the time to analyze what that risk was and come up with solutions that mitigated that risk. And it really boiled down to TCPA and FDCPA risks.

And what could we come up with a solution that mitigated both of those risks and that really, if you think about it in that way, it makes innovation seem a little less daunting. And so I thought that was a great example at the organization. Some other good examples from our organization is our conversational IVR Adam that was kind of spurred from a developer taking a class and learning about creating an Alexa type product. And he brought it into the office and now it’s his full-time job. And he has another developer who works with him and they work on it full-time, but that really came from an employee thinking this would be a neat product for the workspace. And then the last example I’ll give is our agent portal, or I’m sorry, our customer portal that kind of spurred from another employee buying a hot water heater and the experience he had buying that hot water heater and said, well, that would be great for our customers.

And he brought that into the organization and pitched it. And so, you know, none of those were innovative ideas that I personally had, but they came up through the organization and then, you know, I had a part in listening to those ideas and trying to understand what the vision that they were painting and as an executive, helping give them that space to sell that idea and get it through the organization and then champion it once I bought into it and believed in it. And that’s an equally important part  of innovation as well. So none of those three examples, I was the creative mindset behind, but in some of those examples I have helped and then further helped development down the line and, and creating that space was my part in it. And which I think is important for, you know, probably a lot of your audience.

Erin:

Yeah. And that reminds me a lot of the interview that I did a couple of months ago with Michael Meyer. Who’s also at MRS. We talked through how a company can innovate and how important that listening to its employees is through that process. And what you’ve just given us are concrete examples of allowing your employees to innovate and, you know, trusting them enough to run with their innovations. So that’s a great example. So thank you for that answer.

Jim:

Yeah. It’s hard to, you know, just kind of adding onto it, you know, that time in that space, you know, when we have a lot going on, you know, kind of making sure you go back to those roots and, and create. It’s a good reminder for me and for everybody. So, you know, with Reg F coming up right around the corner, and I don’t mean to date your video, but with that coming up very, very quickly, you know, making sure we take a step back to, to also think how we can innovate, um, within our organization, outside of just getting the, the things accomplished for Reg F or whatever projects we have coming up is important. 

Erin:

I think it’s a good reminder for a lot of our audience. You know, we become singularly focused a lot in this industry because of the regulations, but, you know, there’s always that technology solution to a lot of those and keep your eyes open for them. So that’s great. Great advice. Along the same lines, how do you know when it’s time to innovate your business model versus your core products?

Jim:

And I think this is really, you know, so many of these questions can seem so big, you know, especially when you say the term like your business model. Wow. Well, you know, my business is successful today. I don’t need to go and innovate to change my entire business model, but I think you should have a process in place where you’re finding areas where you can pick up efficiencies, where you can, you know, look at things really through two lenses. One, how do you run a better organization and a better business, and can you pick up efficiencies there and then two, where can you make it better for the customers? 

Where can it be easier for them to complete, you know, paying their bill or, you know, making whatever they’re trying to accomplish with their account easier for them to complete. And I think if you really look at your business through those two lenses, you should always be innovating rather than having to make it something so daunting that you need to change your entire business model. And some projects are that big, that will require years of innovation and years of development and work, but some pieces of innovation or making incremental progress and saying, okay, I want to find some way to contact people better. What can that be? It can be, you know, differences in your work schedules. It can be differences in, you know, data you buy. All of that can be, you know, small steps of innovation that I’m a big believer in.

Erin:

Yeah, that’s great. And, not to mention Michael Meyer again, but he had a similar philosophy, so that’s, it’s great to see that the whole organization is thinking in that way. So that’s great. So along similar lines, what current industry problems do you think will require the most innovative solutions?

Jim:

I don’t know if it is a new problem, but you know, the usage of phone has decreased over time, you know, Reg F right here around the corner. So you limit the number of attempts per account very quickly to seven in seven days. And so I do think that how we get more information to our customers and to our clients’ customers than we do today and how we can have that information at the customer’s fingertips is good. The importance of that is just going to keep increasing. I think it has been there and has increased over time, but I think that that’s going to keep increasing as we go. So whether it’s self-service portals, whether it’s the ability for customers to receive information via email or text message and what that information is and the content of those messages, I really think that that is an immediate need.

And then I also think that as these new channels become, you know, and it’s, it’s silly to call them new, we’re talking about innovation and email’s been around for 35 years, but as these channels become more a part of our customer outreach, how do you connect them all and make it really a truly seamless experience for the customer and not just seem like disparate outreaches from, you know, a text message, an email, a call that, that are all different in maybe the person making the phone call doesn’t know that that email happened and what the content is there. So making sure you tie them all together, so it’s one seamless message I think, is critically important and something that, you know, I think in this industry. I’m not positive anybody’s tackled it exactly the way that they want to, but I think it needs to be tackled.

Erin:

Yeah. I think that’s a challenge that many agencies are facing. And even beyond that, some of the collections branches of some of the creditors are facing that as well. So I agree with you. I think that’s going to require a lot of  innovation and brain power.

Jim:

I agree. And I think we need to look at some other industries that have done well, whether it’s marketing, whether it’s in retail, you know, who has done a really good job of you kind of a full end to end marketing or outreach to customers. And, you know, I’m really, really interested in spending a lot of time looking at what’s, you know, what companies have been successful in that, in that way. I know we all have stories where we have pulled up other social media or Amazon and seen that exact product we were thinking about. And how did you know, how did that happen and how do we take some of those learnings into our industry? I really think that that’s what’s next.

Erin:

Yeah. I think you know, none of the problems that the industry faces are necessarily unique. So, you know, I think that’s a great piece of advice. So during the iA Strategy and Tech conference earlier this year in 2021, you said you think the future looks like an investment in your operators, changing from managing output to managing strategic, strategic workflows, being able to analyze data and to turn that into a work strategy that is efficient, strategic and smart. And I want to break that down a little bit further with some more specific questions. So does this shift in mindset that you’re describing change how agencies are hiring and should it, if it hasn’t yet?

Jim:

Absolutely. I mean, at a time where we now have been able to expand our workforce from just where our physical locations are you know, I see you’re at home right now, I’m actually in the office or in one of our offices, but you know, I’m at home, you know, working often and we have the ability to expand that workforce and then also expect get different sets of skills introduced into our organizations. So, you know, it’s starting now. I think our workforce management, our analytics, you know, in that area is going to look very different. You know, some of the things we talked about before. We may be hiring people that are more into marketing than traditional collections. As you know, our number of attempts will decrease. We need to start thinking and investing in different outreach people that specialize in email people that specialize in text delivery.

So I think a lot of the skills that we’re bringing into our organizations will change. I think on the agent side it’ll change as well. I think our agents will go from being just, you know, great negotiators, great follow follow-up, to also having different written skills, different technical skills, working across multiple platforms. You know, you may see an agent that may communicate via email, may communicate verbally and then may follow up with an automatic text sent out. And so there, the agent workforce, I think, is going to change over time. I think we, as an organization have, you know, kind of started on the prior discussion points. And I think we know that the agent piece will change pretty quickly here, but we haven’t mapped out exactly what that looks like yet.

Erin:

Okay. So you covered a lot of ground there. And I just want to make sure that, you know, everyone’s clear. Are there new roles and personnel that agencies need to consider integrating into their operations departments? I know you mentioned workforce management and some of the analytics and marketing, anything else?

Jim:

I think also some BA functions. You know, I think really understanding what the operation is trying to accomplish and making sure that you have the right technical support to do that. And that translation really seems to present itself as a need. I think as an organization, we’re trying to figure out exactly that right setup. You know, there’s a lot of communication between myself and it and our operators and it, and I think really us being able to put those into true requirements, so it’s easier for our IT team to accomplish exactly what we’re looking for is something that we can grow as an organization. I’m sure many in the industry are thinking the same thing as I say it. So, you know, maybe that BA type function in the organization, I think is another one that comes to mind off the top of my head.

Erin:

Okay. Yeah. I think that’s super important as well. You know, as the technical challenges grow and technology becomes more necessary to function, really, especially in light of Reg F, you need people who can speak that language. So, that’s a great point there. And nd then I know you said that you guys have sort of started with the workforce management and the BAs and the PMs. Does it change how you’re training your agents and what new types of training needs to be available?

Jim:

 Yes. And, you know, again,  a lot of the learnings that we had from the pandemic can be translated. We started training or we had a long period of time where we were training people remotely and changing some of what that training looked like, where it was less of a trainer standing right in front of an agent explaining some of those things and more modules that they would take on their own, like some self learning, portions. And I think that that changed our workforce a little bit, in terms of who we’ve hired over the last 18 months or so. And I think that will continue to change. So as we train them, we will start training them on, you know, how, how do you follow up with an email professional, you know, professionally, what can you say in writing that’s different than what you can say, verbally, and in some cases there’s not much many things that are are different.

And then, you know, how do we script most of a written communication that still answers, you know, customer’s questions, whether that’s a chat, whether that’s a text, whether that’s via email. And so I think a lot of training will go into how to use those types of tools and how to use them in a professional and compliant environment.  I think that a lot of it will look very similar, but there’ll be some very, very specific differences there. So I’m excited about it. Like I said, at the beginning of this, I’ve been in this industry for a long time. And, you know, some of the times it’s invigorating to do something different. You know, I’ve been guilty of calling this a horse and buggy industry and I’m excited that that may not be the case, over the next X number of years. So it’s, the agent changes are going to be one of the more exciting ones because we get to even our existing staff, we get to really invest in some different skills for them. And I’m excited about that as well.

Erin:

It certainly seems like we’re in the midst of a pretty big shift in that regard. So it is exciting to watch that happen. And looking into the future a little further, where do you see this convergence of regulations like Regulation F and changing customer behavior leading?

Jim:

In 2008, 2009, you saw a lot of agencies by necessity have to really invest in compliance. And that they did not have a choice but to make that investment. I think reg F is going to almost be the same thing, but for technology and changes in how we contact customers, where agencies will be forced and have no other choice, but to really invest in different outreach, in different staffing and to be able to do that, they know they’re going to have to hire some different people. So I think it all kind of converges where I think that a lot of agencies that have been reluctant to innovate or reluctant to invest in technology will be forced to be successful in the future. And I think that that point is coming right around now. So again, that will force some of the excitement because I think that there are some tools that we could have used in this industry for many years that we didn’t by and large. And I think we will now, and I’m excited about that.

Erin:

And kind of circling back to what we said earlier, none of the problems that this industry is facing are new, and they’re not necessarily specific to the collections industry. So where should agencies look to find what’s coming next in the ARM industry?

Jim:

Yeah. And you can take that question a couple of ways. I mean, I think one thing that I will say is that this industry, when I first got into it, I mean, it’s always been very competitive and still is to this day. But I do think that there are people in this industry that really want to see the industry evolve over time. And there was some, you know, a large list of companies that are open to discussion and, and talking about what they’re doing as an organization. And MRS is definitely one of those. So I would definitely encourage people to look within their peer groups, to find out what’s happening and, and ask some questions there. And then I would also encourage people to look outside of this industry and say, how are other industries, other companies successful in contacting people, in understanding customer behavior and, and really ensuring that they’re doing what they can to, you know, have the most effective outreach that they can. And so, you know, I would ask, I guess, people to look at their peer groups, look at a lot of organizations like yours, then also look outside of this industry and say, okay, how are they doing it? So kind of three spots that I think people should be looking. Not just one of them, but all three.

[Erin]:

I think you’re absolutely right about that. And just a little plug for the Innovation Council since this is Think Differently. If you’re interested in more information about that, I’d be happy to hear from you. So thank you so much, Jim, for all of that. Any kind of final thoughts before we close out? 

Jim:

No, I think we’ve covered a lot and I enjoyed our discussion and it’s always great talking to you.

Erin:

Thanks so much for joining me today. Again, this was an edition of Think differently, and this is a feature of the iA Innovation Council, and it’s been great to have you today, Jim. Thanks so much.

iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders at the forefront of analytics, communications, payments, and compliance technology. Group members meet in person (and lately, virtually) several times each year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking. 

2021 members include:

Regulation F (Reg F) is the most significant change to the ARM industry in over 40 years and the Reg F effective date is coming up in just 15 days. In addition to the regulatory issues created by Reg F, you can also expect that consumer attorneys will file a landslide of lawsuits to test Reg F’s limits.

By now, you should already understand how your operations will be affected by every section of the new rule, including the model validation notice, communicating with consumers, call volume / the 7-in-7 rule, limited content messages, text and email, credit reporting, disputes / requests for validation, and more. But, the rule is really big and complicated and not every company is ready for the implementation deadline.

Are you ready for the Reg F final rule deadline? If not, you can still take these critical last-minute steps to help minimize your risk and safeguard your operation. 

Let’s get right to it. Here are the top 3 things you can do to prepare for Reg F quickly and protect your company from regulatory actions and lawsuits:

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1. Triage Your Plan

There is almost no time left to get ready for Reg F, so at this point, you should be in triage mode, taking care of what is most important for your company’s safety.  Look at your business model. Which parts of Reg F apply to your business today and which don’t. Decide what needs to be addressed right now and what can wait. Where does your company face the most exposure, where is it limited? This should not be a prolonged exercise; truly treat it like triage. Some Examples:

• Are you texting and emailing today? If not, don’t start until after you have the rest of your compliance for Reg F in effect. 

• Are you making outbound calls or credit reporting? If not, don’t start until you can be Reg F compliant (note: credit reporting and outbound calling are addressed below). 

2. The Model Validation Notice:

Reg F provides a model validation notice and states that if you include all of the items required by the Model Validation Notice (MVN), your company will have a “safe harbor” indicating compliance with the rule. The word version and other formats available are here. To use the safe harbor protection of Reg F, initial notices should be updated to mirror the MVN (yes, including the tear-off portion and the state disclosures on the back).  While the rule says that “substantially similar” modifications will receive safe harbor protection, “substantially similar” is a nebulous term. Rest assured, if consumer attorneys receive a letter that doesn’t match the MVN, suits will be filed. 

All of the requirements for the MVN are set out in Reg F. Some of the more prominent examples of information required by the MVN are as follows: 

• The Itemization Date.  As we explained in this article a few weeks ago, this is one of 5 specific dates that will come from your client in most circumstances. Note that “other” is not part of the allowable dates; the Itemization date is these five dates, and these five dates only. Thus, regardless of any rumors you’ve heard, you cannot use the placement date or any other date you may think may apply.  

• Note: I heard anecdotally last week that someone was planning on using the effective date of Reg F as the itemization date. This is an extremely dangerous suggestion, and this approach could not possibly be less compliant with Reg F. I have no idea where this idea originated, but if you want to avoid class-action lawsuits, do not do this.

• The Itemization of the Debt: this must run from the itemization date. Your client should provide you with a complete itemization of all transactions since the itemization date.

• The Validation Period. The Model Validation Notice requires you to notify the consumer of the date the Validation period will end. Per Reg F, this is considered to be five days, excluding weekends and holidays plus the 30-day dispute period. 

Need examples or more details on any-of-the-above? Get them in How to Implement Reg F in a (Very) Short Timeframe – a Roadmap from iA.

3. Procedures to capture inconvenient time/place notifications:

This applies to all entities which speak to consumers, regardless of whether they make outbound calls. Reg F highlights that consumers can designate a time or place as inconvenient or even go so far a’s to say, “I can only accept calls between 2-3 pm on a Tuesday.” Any entity that speaks to consumers via inbound or outbound calling should be prepared to capture and abide by calling time requests made by consumers.

Honorable Mention:

Credit Reporting: if your agency is credit reporting and you are not ready to comply with Reg F’s notice requirements, this should go in the #3 spot above. Reg F prohibits debt parking, meaning delinquent debt cannot be reported unless specific criteria are followed. If your company isn’t prepared to comply, legal advice should be sought immediately. 

7-in-7 rule: If your company makes outbound calls, it should have measures in place to abide by this rule. If your technology vendor isn’t prepared to handle this yet, consider manually tracking via status code. 

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Looking for more details on the 7-in-7 rule, credit reporting or any other aspect of Reg F? Get them in How to Implement Reg F in a (Very) Short Timeframe – a Roadmap from iA.

Do you feel like you’re managing this Reg F implementation on an island all by yourself? Get the insight, interaction, feedback, and answers you need to make your compliance efforts much stronger with Research Assistant. Learn more.

The California Department of Financial Protection and Innovation has published a fourth
round of modifications to implement SB 1235,
the bill signed into law on September 30, 2018 that requires consumer-like
disclosures to be made for certain commercial financing products, including
small business loans and merchant cash advances.  The law contains
exemptions and carve-outs for, among other things, depository institutions,
financings of more than $500,000, closed-end loans with a principal amount of
less than $5,000, and transactions secured by real property.  Compliance
with the new disclosure requirements is not required until the DFPI’s final
regulations become effective.

The small number of changes made by the DFPI in the fourth
modifications suggests that the DFPI is close to finalizing its proposal. 
The most significant changes in the fourth modifications concern the
definitions of  “Average monthly cost” and “Estimated monthly cost,” items
which must be included in the disclosures for certain products.

Comments on the fourth modifications are due by November 22,
2021.