A short week was still not short on news affecting debt collection! In our efforts to bring you the information you need to see, we found the most important pieces of news from around the industry. Keep on reading for highlights of what you need to know and why our editorial team thinks you need to know it! 

On Wednesday, we reported on Creager v. Columbia Debt Recovery, in which a district court partially granted the plaintiff’s motion for summary judgment. It ruled that the debt collector violated the FDCPA by attempting to collect an inflated balance, which included a forfeited security deposit. The case arose after the plaintiff moved out of her apartment early, and the creditor assigned the outstanding rent to the defendant for collection. Despite the defendant’s belief that the debt was accurate based on the creditor’s information, the court held the debt collector strictly liable under the FDCPA, rejecting the bona fide error defense. The court emphasized that the debt collector failed to demonstrate that it had procedures in place to avoid the violation, relying solely on the creditor’s representation. Knowing your client is crucial to trust the information they send.  Having procedures in place to flag accounts in question of accuracy or to stop collection efforts when flags pop up, is complicated but necessary to avoid this situation. Rely more on proving you are doing what you can to rely on the information you have.   

On Thursday, we brought you news on congressional developments. GOP members of the House Financial Services Committee sent a letter to CFPB Director Rohit Chopra expressing concerns over the CFPB’s proposed rule to ban the use of medical information for credit eligibility determinations. The members argued that the rule, which would amend the FCRA to limit the reporting of medical debt, could weaken the accuracy of consumer credit reports, increase financial system risks, and negatively impact credit availability. They criticized the CFPB for lacking sufficient data to justify the rule and warned of potential unintended consequences, such as making it harder for low-income borrowers to obtain credit and increasing medical procedure costs. Not allowing CRA’s to use medical debt to determine if a credit should be given to a consumer can cause debt that cannot be paid back to be created, causing the credit granting industry to lose money, making it more difficult and costly to consumers who should be granted credit going forward. This will put more consumers in collections and all that comes along with it.   

Have a question about how your company should react to the news above? We have a group for that! The weekly peer call hosted by insideARM’s Research Assistant is the perfect place to ask a question and get advice from industry colleagues who are facing the same challenges you are. Not sure if it is for you? Try it on for size with our 1-month free trial. Click here to learn more! 

ROCHESTER, N.Y. — Continental Service Group, LLC, operating under the name ConServe, proudly upholds its national A+ Accreditation Standard from the Better Business Bureau (BBB) for more than 10 years. ConServe is dedicated to ethical practices and integrity in accounts receivable management. Their accreditation showcases a commitment to high business standards, building trust with Clients and their Consumers.

Pam Murphy, ConServe’s Vice President, Compliance & Privacy Officer, expressed pride in their BBB Accreditation. She said, “This certification reflects our dedication to integrity, trustworthiness, and honesty and highlights ConServe’s commitment to ethical standards, aligning with the company’s mission, vision, and values.

About ConServe

ConServe is a top-performing accounts receivable management service provider specializing in customized recovery solutions for their Clients.  Anchored in ethics and compliance, and steadfast in their pursuit of excellence, they are a consumer-centric organization that operates as an extension of their Clients’ valued brands. For over 39 years ConServe has collaborated with Clients to achieve their accounts receivable management goals while providing unmatched customer service. Visit us online at: www.conserve-arm.com  

About the Better Business Bureau®

Better Business Bureau is a nonprofit, business-supported organization that sets and upholds high standards for fair and honest business behavior. BBB services to consumers are free of charge.  BBB provides objective advice, BBB Business Profiles on more than 5.3 million companies, 11,000 Charity Reviews, dispute resolution services, alerts, and educational information on topics affecting marketplace trust. Visit them online at:  https://www.bbb.org/

Editor’s Note: This article, authored by Daniel JT McKenna & Jenny N. Perkins of Ballard Spahr, previously appeared on Ballard Spahr’s Consumer Finance Monitor and is re-published here with permission. 

Credit card charge-offs and credit card loan delinquencies continue to be at a more than 12-year high, according to the Federal Reserve’s second-quarter report. 

Second quarter 2024 data reveals that credit card charge-offs increased from 4.16% to 4.38%, a 12.5-year high not seen since Q4 2011. Charge-offs are continuing to increase at a fairly steep slope. With 9–12-month lag time to placements, the volume should continue to increase through at least mid-2025.

Credit card loan delinquencies, a six-to-nine-month early indicator of the charge-off rate, increased from 3.02% to 3.11%, also a 12.5-year high. After the Q1 data release, it appeared that delinquencies might be peaking; however, last quarter’s data shows a possible new increase in velocity.

It is important to note the context of the increasing delinquency rates. Credit card lending and delinquencies both increased year over year: YOY delinquencies increased by about 0.5% from 2.63% to 3.11%, credit card lending increased by 10.8% to $1.142 trillion from $1.031 trillion. A larger lending pool AND a higher percentage of delinquencies mean firms can reasonably anticipate a high workflow level into mid-2025. 

The Federal Reserve’s charts for the data referenced follow and are linked. 

Charge-off Rate on Credit Card Loans

More info here

Delinquency
Rate on Credit Card Loans:

More info here

BUFFALO, N.Y. — Alliant Capital Management is proud to
announce its bronze-level sponsorship of the Sweet Expectations
event to benefit FeedMore WNY. This event is a celebration of community
spirit and a fundraising effort to support the critical mission of FeedMore
WNY, which provides food and resources to individuals and families in need
across the Western New York region.

Hosted at The Show at Shea’s Seneca, Sweet Expectations
brought together community members, businesses, and volunteers for an evening
filled with delicious desserts, entertainment, and a silent auction. The
proceeds from the event go directly towards FeedMore WNY’s programs, including
emergency food assistance, nutrition education, and support for seniors and
children in need.

Ed Lovallo, VP of Operations at Alliant Capital Management,
expressed the company’s enthusiasm for supporting FeedMore WNY through events
like Sweet Expectations. “We are thrilled to sponsor Sweet Expectations
and support FeedMore WNY’s invaluable work in our community. Events like these
are essential in bringing people together to make a positive impact. At Alliant
Capital Management, we believe in the power of community and are committed to
supporting organizations that provide critical services to those in
need.” 

The Importance of FeedMore WNY and Community Events

FeedMore WNY plays a crucial role in the Western New York
region, addressing food insecurity and providing vital resources to the most
vulnerable populations. With a mission to offer dignity and hope through access
to nutritious food, FeedMore WNY supports thousands of individuals and families
who face the challenge of hunger every day.

Events like Sweet Expectations are vital to the success of
FeedMore WNY’s mission. These events bring together community members,
businesses, and volunteers to raise funds and awareness for the organization’s
critical work. The proceeds from these events allow FeedMore WNY to expand its
reach and continue providing essential services to those in need.

Alliant’s Community Commitment 

In addition to financial contributions, Alliant Capital
Management encourages its employees to volunteer and actively engage in
community service. This approach fosters a culture of giving and empathy within
the company, reinforcing the idea that everyone has a role to play in
supporting the less fortunate.

Alliant Capital Management’s involvement with FeedMore WNY
and the Sweet Expectations event is a testament to the company’s belief in the
power of collective action. By joining forces with other businesses and
community members, they hope to inspire more people to get involved and make a
lasting impact.

About Alliant Capital Management

Alliant Capital Management is a professional debt collection
company that provides recovery services for creditors. With decades of
experience in delivering compliant and affordable debt collection services,
Alliant partners with consumers to reach amicable solutions that lead toward
financial wellness. Alliant capitalizes on its role as the intermediary between
clients and delinquent account holders. The team strives to amicably resolve
accounts while creating success for both parties through respectful, transparent,
and honest communication.

As members of both Receivables Management Association
International and ACA International, Alliant is committed to providing the best
possible experience for consumers. Its memberships help Alliant remain current
with the increasingly complex and regulated accounts receivable industry.
Alliant’s corporate values of accountability, integrity, open communication,
service excellence, and teamwork guide its work. Alliant Capital Management is
a solution-focused, goal-directed organization, prioritizing both informed
compliance and strategic performance. 

It can be easy to lose focus in a seemingly never-ending news cycle. Sometimes, especially in the ARM industry, it can feel like we have to know every nuance about everything that’s happening. At insideARM though, we are committed to bringing you only the most relevant news. We’re here to help you elevate the need-to-know over the nice-to-know. Every Monday, we bring you a recap to help you stay informed and let you know why the news we selected should be on your radar.

On Tuesday, we brought you an article explaining a data standardization rule proposed by several federal agencies. Nine agencies were involved in the proposal, including the CFPB and OCC. The rule is intended to establish standards to promote the ability of each of the agencies to exchange and use the data that the other agencies collect. If your organization submits (or might submit) data to any of the agencies involved in the rule making, this is something to follow. Comments will be permitted up to 60 days after the proposal is published in the Federal Register.

On Wednesday, we published a run-down of the White House’s announcement about Consumer Experience Initiatives, that are intended to address everyday hassles and reduce unnecessary burdens in consumers’ lives by regulating certain business practices. The CFPB and FTC are named explicitly as agencies that can take action. Notably, the announcement specifically referenced the CFPB’s interest in issuing a rule regarding chatbots. As the ARM industry adopts technology to allow for self-service, it’s important to test how enhancements actually work for consumers. Keeping tabs on the CFPB and FTC expectations should allow your organization to self-audit the consumer experience to the appropriate standard.   

On Thursday, we brought you news about the CFPB’s comment to the Treasury about uses, opportunities, and risks of artificial intelligence (AI) and the CFPB’s blog post regarding a rise in credit card delinquencies since the Covid-19 pandemic. The CFPB doesn’t operate in a vacuum; those issuing or collecting credit cards should take note that the CFPB is scrutinizing pandemic-era credit. As for the AI piece, even though its AI comments were directed to the Treasury, ARM entities can get insight into the CFPB’s stance on AI products by reviewing the CFPB’s comment.

As always, we thank you for reading the weekly recap to stay on top of this ever-changing industry! For a breakdown of the week of August 12, 2024, click here. 

Have a question about how your company should react to the news above? We have a group for that! The weekly peer call hosted by insideARM’s Research Assistant is the perfect place to ask a question and get advice from industry colleagues who are facing the same challenges you are. Not sure if it is for you? Try it on for size with our 1-month free trial. Click here to learn more!