The Middle District of Florida rounded out 2022 by ruling in conformance with Eleventh Circuit precedent that plaintiffs must have a factual, rather than legal, dispute to bring suit against a credit furnisher under §1681s-2b of the Fair Credit Reporting Act (FCRA).

In Belair v. Holiday Inn Club Vacations Inc., the plaintiffs contracted to purchase a timeshare from the defendant, Holiday Inn Club Vacations Inc. (Holiday Inn), with a promissory note requiring monthly installment payments secured by a deed of trust. The plaintiffs later requested rescission of the contract, cancellation of the loan, and tradeline deletion so the loan would not appear on their consumer reports. The plaintiffs’ requests for rescission, cancellation, and tradeline deletion were denied and the timeshare’s special warranty deed was recorded.

Later, when the plaintiffs stopped making payments on the loan, Holiday Inn allegedly reported the delinquency to a consumer reporting agency (CRA). The plaintiffs disputed this information with the CRA, but the dispute did not result in a change in how the loan was reported. The plaintiffs sued for violations of the Florida Consumer Collection Practices Act (FCCPA) and the FCRA.

In its summary judgment opinion, the court addressed only the FCRA claim, holding the plaintiffs’ dispute was inherently a legal one that was not actionable under section 1681s-2(b).

The court rejected the plaintiffs’ contention that their credit dispute involved a factual issue based on an unpublished Eleventh Circuit decision, which stands for the position that “[a] plaintiff must show a factual inaccuracy rather than the existence of disputed legal questions to bring suit against a furnisher under § 1681s-2(b) [of the FCRA].” The court was not persuaded by nonbinding, out-of-circuit authority and amicus briefs cited by the plaintiffs which were submitted by the Consumer Financial Protection Bureau and Federal Trade Commission to the Second and Ninth Circuit Courts of Appeals in separate litigation involving this issue. 

The court declined the opportunity to contradict the Eleventh Circuit’s unpublished precedent ruling that a furnisher’s duty to investigate under the FCRA does not apply to legal disputes. The court explained that because the plaintiffs had stopped making payments on the loan and Holiday Inn could verify the plaintiffs’ missed payments, the accuracy of Holiday Inn’s reporting and reasonableness of its investigation of the disputed information, traditionally factual issues, were not at issue. Therefore, all that was left for the court to resolve was the legality and enforceability of the loan contract. But these issues are not actionable under a FCRA claim analysis.

The court also provided its views on how to decipher whether future claims under section 1681s-2(b) involve legal versus factual issues. In this court’s view, if there is formal confirmation of the validity of an underlying debt, such as a determination that the debt was discharged in bankruptcy, then the debt may present a factual issue for courts to consider, such as whether a furnisher’s credit investigation was reasonable, and plaintiffs may be able to bring a suit against a furnisher. However, at least in the Eleventh Circuit, when both parties and courts disagree over the legal precedent and analysis of how a debt is characterized and whether it remains valid, the issue will likely be considered legal in nature and cannot provide a basis for a FCRA claim.

Read the Opinion here. 

ROCHESTER, N.Y. — Continental Service Group, Inc., d/b/a ConServe, announces that they have once again earned a spot on Training magazine’s, 2023 Training APEX Awards.  The Training APEX Awards ranking is determined by assessing a range of qualitative and quantitative factors, including financial investment in employee development, the scope of development programs, how closely such development efforts are linked to business goals and objectives, and their effectiveness in terms of business impact.

“The passion for learning and development burns brightly in the 2023 Training APEX Awards organizations,” notes Training Editor/Publisher Lorri Freifeld. “We salute these best-in-class organizations for their ability to consistently and agilely deliver stellar training in an ever-changing world while providing a culture that allows their people to grow and thrive at work.”

“ConServe is exceptionally proud to be recognized as a Training APEX Award winner for the ninth consecutive year,” said George Huyler, VP of Human Resources.  He continues, “at ConServe, we remain advocates of lifelong learning and it is an honor to be among the 2023 Training APEX Awards winners.”  David Bucciarelli, ConServe’s Director of Organizational Development adds, “This designation recognizes ConServe as a top training organization and as one of the most successful learning and development programs in the world.  This reinforces our commitment to continuous improvement and to our comprehensive training program.”

Training magazine recognized the 2023 APEX Award winners and revealed their rankings at the Training APEX Awards Gala on February 13, 2023 in Orlando, Florida.

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 37 years, they have partnered with their Clients to provide unmatched customer service while simultaneously helping them achieve their accounts receivable management goals.  Visit us online at: www.conserve-arm.com

About Training magazine

Training magazine is the leading business publication for learning and development and HR professionals. It has been the ultimate resource for innovative learning and development—in print, in person, and online—over the last 55-plus years. Training magazine and Training magazine Events are produced by Lakewood Media Group. For more information about the 2023 Training Conference & Expo, please visit: www.trainingconference.com

GENESEO, N.Y. — Coast Professional, Inc. (Coast) is excited to announce the promotion of Mr. Samuel A. Thelen to Vice President of Information Technology. In his new role, Mr. Thelen will be responsible for guided implementation of company-wide enterprise security strategy for network and hardware, disaster recovery, data protection, and endpoint protection. His experience and deep understanding of industry best practices will enable him to identify, recommend, develop, implement, and support new processes, tools, and solutions to achieve better business results.

Mr. Thelen has 23 years of Information Technology experience. He began his career in 1995 as a UNIX Systems Administrator in the United States Marine Corps where he was awarded a Navy and Marine Corps Commendation Medal for Outstanding Service. After five years of military service, Mr. Thelen held IT supervisory positions including Infrastructure Manager/Senior Systems Engineer, Team Lead, and IT Architect. He has been responsible for network infrastructures, enterprise messaging and archiving, database deployment, data backup systems, and project management methodologies.

Mr. Thelen joined Coast in 2019 as Director of Information Technology and Architecture. He was later promoted to Senior Director of Information Technology where he has proven to be an inspiring leader who thrives in challenging, complex computing environments delivering high level design. He has instituted policy and standards, and improved Architecture’s overall capabilities.

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“I would like to personally congratulate Samuel on this well-deserved promotion,” said Annmarie Buchanan, Chief Information Officer & Chief Information Security Officer. “Since joining Coast, he has demonstrated exemplary leadership skills and consistent success. His ability to overcome obstacles and develop comprehensive solutions to complex problems are second to none.”

Mr. Thelen resides in the Niagara Falls area in upstate New York. In his personal time, he enjoys volunteering with the Boy Scouts of America where he serves as Scout Master.

About Coast Professional, Inc.:

Coast Professional, Inc. is a full-service accounts receivable management and contact center company dedicated to respectful and ethical communication with consumers. Coast provides essential call center services to hundreds of clients including federal, state, and county governments; higher education institutions; municipalities; and courts. Coast is an eight-time honoree on the Inc. 5000 list for America’s Fastest-Growing Private Companies provided by Inc. Magazine and in 2021, was recognized for the sixth time as one of the “Best Places to Work In Collections” by insideARM.com and Best Companies Group. Since 1976, Coast has worked closely with clients to increase recoveries by assisting consumers in resolving their financial obligations. Coast’s success is exemplified by exceptional recoveries, superior service, and dedication to the highest levels of compliance. More information about Coast can be found at www.coastprofessional.com.

The CFPB issued a new report, “Market Snapshot: An Update on Third-Party Debt Collections Tradelines Reporting,” that looks at trends in credit reporting of debt in collections from 2018 to 2022.  It also published a new blog post, “Debt collectors re-evaluate medical debt furnishing in light of data integrity issues,” that looks at factors that create challenges for medical collections reporting.

Report   

The report’s key findings include:

• The total number of collections tradelines on credit reports declined by 33% in 2022, from 261 million tradelines in 2018 to 175 million tradelines.  The share of consumers with a collection tradeline on their credit report decreased by 20% in the same timeframe.  The decline in collections tradelines was driven by fewer reports by contingency-fee-based (non-buyer) debt collectors.  Contingency-fee-based debt collectors reported 38% fewer collections tradelines from Q1 2018 to Q1 2022, while the number of collections reported by the debt buyers increased by 9% over the same period.  The number of unique contingency-fee-based debt collectors also declined by 18% (from 815 to 672).  Medical bills account for 68.9% of furnished collections by contingency-fee-based debt collectors.

• While the diverging trend between contingency-fee-based collectors and debt buyers could indicate an increasing market share for debt buyers in the overall debt collection market, it could also indicate diverging furnishing practices by debt buyers and non-buyer debt collectors, with non-buyer debt collectors becoming less likely to furnish information to consumer reporting agencies while debt buyers maintained or increased their furnishing rates.

• In conversations with the CFPB, debt buyers and non-buyer debt collectors indicated that some collectors have stopped furnishing due to concerns about data integrity and their ability to comply with the Fair Credit Reporting Act, particularly handling disputes.  

• Despite the decline in collections reporting, medical collections tradelines continue to constitute a majority (57%) of all collections on consumer credit reports.  Upcoming changes to medical collections reporting announced by the nationwide consumer reporting agencies will remove small dollar (less than $500) and paid medical collection tradelines from consumer credit reports.  While these changes will reduce the total number of medical collections tradelines, an estimated half of all consumers with medical collections tradelines will still have them on their credit reports, with larger collection amounts (representing a majority of the outstanding dollar amount of medical collections) remaining on credit reports.

Blog post  

The blog post discusses the following key issues relating to medical debt reporting:

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• Debt collectors typically lack timely access to healthcare providers’ billing and payment information.  As a result, debt collectors may be unable to verify whether the medical bills they are collecting on are consistent with healthcare providers’ records or whether the underlying bill is accurate.  A complicating factor is that unpaid balances on medical bills often change as a result of insurance adjustments or financial assistance.

• These structural barriers to accurate billing, collections, and reporting of medical bills contribute to the higher rates at which medical bills are disputed and make it harder and more expensive for debt collectors to accurately furnish medical tradelines, thereby exposing them to greater litigation and compliance risks.  Concerns about potential Fair Debt Collection Practices Act and Fair Credit Reporting Act liability resulting from a lack of data integrity in medical billing “may well have played a role in the significant reduction in the furnishing of medical bills to consumer reporting agencies in recent years.”

In 2022, the CFPB issued three reports on medical debt.  In the new blog post, the CFPB states that it is continuing to closely examine medical billings and collections practice. It also notes that “the Federal Housing Finance Authority, other federal agencies , and the White House, as well as the largest nationwide credit reporting companies and VantageScore all took recent actions to reduce the role of medical debt in determining credit access” but states that “[t]hese changes are important steps, but they won’t solve the structural data integrity issues affecting remaining medical debt tradelines.”  Previous CFPB comments strongly suggested that the agency was headed in the direction of taking steps to block or limit the reporting of medical debt.  While that suggestion is not made again in the new blog post, it seems clear that the CFPB is not satisfied that enough has been done to address “the consumer harms presented by furnishing medical debt information and considering medical debt when determining someone’s credit risk.”

GENESEO, N.Y. — Coast Professional, Inc. (Coast) is pleased to announce the promotion of Mr. William Washburn to Vice President of Operations. As Vice President of Operations, Mr. Washburn will be responsible for managing Coast’s collection departments across all locations and overseeing operational activities of the company in accordance with company policies, goals, and objectives. Mr. Washburn is an experienced leader who will manage the operations of the company’s large collection contracts, including achieving performance targets, identifying areas for process improvement, and team performance.  He will oversee approximately 200 operational staff and five directors. 

Mr. Washburn has worked in the collection industry for 20 years. He began his career in 2003 as a Collector. He quickly demonstrated leadership qualities and was promoted several times, eventually becoming a Senior Collections Manager. Mr. Washburn joined Coast in 2017 as Manager of Operations and advanced to Senior Director of Operations in 2020. 

“Bill is a solution-oriented, ambitious leader with a strong work ethic. His drive to succeed is second to none,” stated Jonathan Prince, Chief Executive Officer. “Bill has proven his ability to manage top-performing, compliant teams, while building strong bonds with staff and clients, and effectively adapting to change. Over his six years with the company, Bill has become an integral member of our executive team. Congratulations, Bill, on this outstanding accomplishment.”

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Mr. Washburn resides in Rushford Lake, NY and enjoys spending his spare time out on the water with his family.

About Coast Professional, Inc.:

Coast Professional, Inc. is a full-service accounts receivable management and contact center company dedicated to respectful and ethical communication with consumers. Coast provides essential call center services to hundreds of clients including federal, state, and county governments; higher education institutions; municipalities; and courts. Coast is an eight-time honoree on the Inc. 5000 list for America’s Fastest-Growing Private Companies provided by Inc. Magazine and in 2021, was recognized for the sixth time as one of the “Best Places to Work In Collections” by insideARM.com and Best Companies Group. Since 1976, Coast has worked closely with clients to increase recoveries by assisting consumers in resolving their financial obligations. Coast’s success is exemplified by exceptional recoveries, superior service, and dedication to the highest levels of compliance. More information about Coast can be found at www.coastprofessional.com.

CHICAGO, Ill. — Markoff Law is a law firm with a
first-class reputation founded on quality services and results. During the
holiday season, the Markoff Law team decided to show its support for the Anti-Cruelty Society located in
Chicago. 

 

Founded in 1899, The Anti-Cruelty Society is a comprehensive
animal welfare organization whose mission is to build a community of caring by
helping pets and educating people through adoption and clinic programs. 

“Each year around the
holidays, Markoff Law contributes to organizations near and dear to the hearts
of our team members,” says Markoff Law partner Steven Markoff. “This year, one
of those organizations we decided to support was the Anti-Cruelty Society. Many
of us at the firm have pets that come from shelters or rescue centers and this
donation is a small way to give back to the community of volunteers and
professionals that ensure that every pet in every shelter is taken care of
before finding their forever home.” 

The Anti-Cruelty Society

From what started as four compassionate women from Chicago meeting
on January 19, 1899 to discuss Chicago’s forgotten animal population, The
Anti-Cruelty Society has emerged as a society of devoted and caring people
helping animals. In 1904, The Anti-Cruelty Society opened the doors of its
first small animal shelter. The shelter provided refuge and adoption services
for Chicago’s unhoused domestic animal population.

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After 124 years in service to the pet community across the
country, the Anti-Cruelty Society now has programs from pet adoptions to
low-cost spay and neuter services to humane education, cruelty investigations
and rescue. The Anti-Cruelty Society works to raise awareness about the needs
of animals. They provide rehabilitation and treatment, as well as classes and programs
from pet loss to pet first aid, not to mention a free behavior helpline to
provide access to information about pet care. As a community of caring, The
Anti-Cruelty Society promotes responsible pet ownership and works together with
the communities they service to help animals find “peace, comfort, and
happiness.”

A Culture for Change

Markoff Law is a
well-respected creditors’ rights law firm with offices across the Midwest. Our
team is made up of dedicated attorneys and professionals who commit to setting
and achieving the highest standards of excellence. This dedication extends
beyond the office and our clients, as members of our team focus on providing
the same level of attention and service in our communities. 

Donate This Winter

Every gift, every volunteer and foster, and every open heart makes
a difference. The Anti-Cruelty Society has many ways to give back to animals across the country. With ways to give through events,
naming tributes, events, and partnerships, combined with volunteer and foster
opportunities, the Anti-Cruelty Society has over 100 individual ways to give
back. 

About The Anti-Cruelty Society

The Anti-Cruelty
Society has been on the forefront of animal welfare and
humane education since it was founded in 1899. As one of Chicago’s oldest
animal welfare organizations, our history is as large as our hearts. What started
with just a single meeting would grow to be an entire community selflessly
committed to helping pets and educating people.

About Markoff Law

Markoff Law LLC is a forward-thinking
firm with a history of experience and success representing creditors throughout
the Midwest. Established on April 1, 1980, our focus is the practice of
creditors’ rights, debt collection, and enforcement of judgments. Through the
decades, Markoff Law has earned and maintained a reputation for excellence,
honesty, and integrity. Our thought leadership and adherence to industry best
practices have established us as a leader within the accounts receivable
management industry. We firmly commit to setting and achieving the highest
standards of excellence.

An airtight credit dispute management process is key to avoiding scrutiny and hefty fines from the CFPB, but that’s not the only reason it’s critical.

“[A]ccurate data is at the heart of the credit reporting ecosystem, which is a key part of lending,” says Michelle Macartney, Managing Partner at Bridgeforce.  And not all furnishers are doing a good job of managing their disputes. 

According to Macartney, there are four major (and avoidable) mistakes furnishers make when it comes to dispute management:

Insufficient documentation of the dispute review. Most furnishers perform a decent dispute investigation, but they can’t prove it. Without documentation of your dispute review, it didn’t happen, no matter how thorough it was. Furnishers must “retain enough information to evidence that they really did take the appropriate steps and performed a searching inquiry as part of the investigation,” says Macartney.

Inadequate procedural documentation. “Honestly, through a regulatory examiner’s eyes, if it’s not documented, it doesn’t exist,” explains Macartney. Your process could be robust and meet all of the expectations of the regulators, but, just like documenting the dispute review, if the process isn’t clearly written and mapped out, it might as well not exist.

Inconsistent dispute handling. Some furnishers are “handling direct disputes in a manner that’s slightly different than how they handle indirect disputes, or perhaps differences and how they handle disputes across multiple product types,” adds Macartney. This isn’t just bad practice, it can cause potential consumer harm, especially if the consumer has multiple accounts with the same lender.

Inability to integrate controls. Maybe your organization has done a great job of documenting your dispute review policy & procedure. Is it performing as expected? “Furnishers are sometimes challenged to implement appropriate controls, including those needed to ensure that they’re meeting the regulatory SLAs for completing the investigations, and also to ensure that they are appropriately monitoring effectiveness and quality of investigations,” according to Macartney. She encourages furnishers to perform a root cause analysis when they’ve had to make a furnishing correction in order to determine whether the process is working as intended, and if not, where a change could be made.

Read or listen to all of Macartney’s insight into how furnishers can ensure their dispute process is operating at the level it needs to be to protect them from regulatory action or consumer complaints in our full interview below:

Click here to download a demo of Case Central, which uses its all-in-one portal and integrations to each customer’s unique set of financial systems to maximize efficiency for reasonable credit report dispute investigation practices and drives value with workflow automation and intelligent analytics.

Below is the full text of our interview with Michelle Macartney:

[Erin Kerr]: Hi everyone, and thank you for joining me for this session of Solve It Strategically. I’m Erin Kerr, the director of Operations for The iA Institute, and I’m here today with Michelle Macartney, Managing Partner at Bridgeforce. Michelle, why don’t you introduce yourself for the folks who don’t know you

[Michelle Macartney]: Well, thank you Erin. And thank you for having me. I’m one of the managing partners at Bridgeforce, as you noted. We’re a management consulting firm that supports our clients in consumer and small business lending payments and deposits across the whole lifecycle. At Bridgeforce, I jointly oversee our US consulting practice and lead our consumer reporting compliance practice. I’ve done something with consumer reporting data for over 30 years now and have worked on the compliance side of consumer reporting for a little over 10 years.

[EK]: Great. Well thank you for that introduction, Michelle. Today we’re going to talk about credit dispute management and how you can solve that challenge strategically. Why don’t we start by explaining why we’re talking about the credit dispute management process now. Can you explain why it’s such a pressing topic?

[MM]: Sure. Credit reporting and disputes has really been a pressing topic, I think, for about over 10 years for several reasons. One is that accurate data is at the heart of the credit reporting ecosystem, which is a key part of lending. So appropriate handling of consumer disputes related to data accuracy can alert a furnisher such as a bank or a collection agency to potential inaccuracies. Dispute volumes are continuing to grow. If you think about the current economic environment, we’ve seen an explosion in the Buy Now, Pay Later types of products, combined with consumers who are increasingly struggling to make their debt payments. All of this puts pressure on the consumer reporting process and the accuracy of information. 

Add to that, the CFPB is taking a very pro-consumer view toward enforcement of the Fair Credit Reporting Act and continues to shine a really big spotlight on FCRA’s reporting and disputes practices. Anyone who reads industry news knows that they are not shy about issuing directives and consent orders when they examine a furnisher and identify data inaccuracies and inappropriate data handling or dispute handling.  Furnishers are in a position where they need to figure out how to handle increased dispute volume during a time when there’s also a lot of pressure to reduce operating expenses, while continuing to meet compliance expectations. All of these factors are contributing to a lot of activity in this area right now.

[EK]: Thanks so much for explaining why we need to talk about credit dispute management right now, Michelle. I want to talk a little bit about some of the trends that you’re seeing. What kind of trends are you seeing with respect to the FCRA?

[MM]: One [trend] is that medical collections have received a lot of press because of complexities involved with the multiple billings and insurance questions that sometimes result in collections appearing in a credit report erroneously. The CFPB has received a tremendous number of complaints about that process along with other consumer reporting concerns. Those complaints and their observations from previous examinations makes this a very aggressive consumer protection issue for the CFPB. I’d say they are laser focused on ensuring that furnishers provide accurate data, and that consumer reporting agencies also take appropriate measures to produce accurate consumer reports. 

With all of that furnishing comes disputes, and the CFPB wants to ensure that all parties that are involved in furnishing [data], are investigating disputes in a sufficiently comprehensive manner and acting upon the outcomes of the investigation when those indicate that the trade line correction is warranted. So lots of focus in this space.

[EK]: Excellent. Thanks for breaking that down. What are some of the biggest risks that you’ve identified with regulatory examinations?

[MM]: When we’re talking about disputes, we see that most furnishers perform a decent disputes investigation, but they can’t prove it. So one of the biggest challenges that we see is that furnishers don’t retain enough information to evidence that they really did take the appropriate steps and performed a searching inquiry as part of the investigation.  

For example, if a consumer has filed a dispute of a 30 day late payment, they see on their credit report and they think they paid that their bill that month, a dispute specialist may go through the process and find every step of the way that their records are correct and the consumer really didn’t make a payment. But when a regulatory examiner, or even an external auditor, comes in and looks at that dispute and says, can you tell me what steps you took to arrive at that conclusion?

Our clients will describe what they did and perhaps point to comments that they even made about their investigation in a system of record. But they often cannot show the data used as the basis for how they adjudicated the dispute. I really think that’s one of the biggest areas of exposure for most of the organizations we work with.

A related area is inadequate procedural documentation. I see a lot of furnishers who truly are doing an excellent job of handling disputes, but their procedures don’t illustrate the nature of the ‘reasonable’ investigation. Honestly, through a regulatory examiner’s eyes, if it’s not documented, it doesn’t exist. 

One other area where we see risk is handling direct disputes in a manner that’s slightly different than how they handle indirect disputes, or perhaps differences and how they handle disputes across multiple product types. Not only is that a regulatory risk, but it can lead to a less than satisfactory experience for a consumer who may have multiple accounts with the same lender. 

Finally, the other risk that we see is furnishers are sometimes challenged to implement appropriate controls, including those needed to ensure that they’re meeting the regulatory SLAs for completing the investigations, and also to ensure that they are appropriately monitoring effectiveness and quality of investigations. Performing sufficient root cause analysis when they’ve had to make a furnishing correction is also another gap that we sometimes see.

[EK]: It sounds like the biggest risks from your perspective are a lack of documentation, lack of controls or insufficient controls, and a lack of root cause analysis, and then also some inconsistency with how some of these disputes are handled. Is that accurate?

[MM]: Yes, I think those are the ones that we see most often that are a regulatory point of exposure.

[EK]: All right. Well thank you so much for explaining those. I know one of the other hot topics around credit reporting is credit hygiene. The CFPB has released multiple advisory opinions recently, basically saying to clean up your act when it comes to data hygiene and credit reporting. What are the industry trends that you’re seeing around credit hygiene right now?

[MM]: We’ve been seeing furnishers really take heed of the CFPB’s public expectations, and they’re being more proactive to establish controls around data accuracy. When we look at that, we consider it in three different pillars. 

One is to proactively self-identify issues in the Metro2 file, such as missing and illogical data, preferably with an automated tool that can examine all the trade lines in the file versus only doing a sample and examine not only individual monthly files, but also do some evaluation of how data progresses month over month. By doing this, furnishers can identify and correct potentially serious issues. 

The second is to take a deep dive into the systems that generate the Metro2 files to review and document the logic and data used to produce the file. We refer to this as detailed Metro2 data mapping and conversion documentation. By going through the process to generate that documentation, the furnisher can identify any potential inaccuracies with the technical generation of the furnishing file. 

Third, we’re seeing more awareness of how the upstream operational processes affect consumer reporting accuracy. For example, a change in collections treatment options could affect the data that ends up in a Metro2 file. I often advise our clients that the furnishing owners must always have a seat at the table when we’re talking about change management, and that applies to both technology and operational changes.

[EK]: Well, thank you for outlining those trends, Michelle, and for answering all of my questions about credit dispute management. Do you have any closing thoughts for this session of Solve It Strategically?

[MM]: I’d say establishing appropriate procedures and controls, ensuring consistent and comprehensive investigations, and having the ability to evidence reasonable investigations really equates to your ‘get out of jail free card’. 

When we’re talking about regulatory examinations, being able to prove that you’re doing what you say you do is really critical for furnishing. It’s critically important that furnishers are investing time and using technology to ensure that the data they’re sending to the consumer reporting agencies is as accurate as possible. The logic to generate Metro2 files can become complex and it’s easy to see how errors can creep into the process. So investing time upfront, along with taking a holistic view of the end-to-end furnishing process, should save some time on the backend that would otherwise be needed to fix issues. And a bonus is fewer furnishing inaccuracies should help drive down dispute volume.

[EK]:

That’s an excellent point, Michelle. Thank you so much for breaking that down. And thank you so much for joining me today, Michelle. 

Folks, if you’re interested, you can download a demo for a solution that Bridgeforce together with PMG can offer to you to solve this challenge strategically in a similar way that Michelle just outlined. It’s called Case Central and you can get a demo following this video. 

Thanks a lot, Michelle, for your time today, and thanks everyone for watching.

[MM]:

Thank you, Erin.

Inflation is causing a “personal recession” for many American consumers. The Fed continues to raise interest rates, making the cost to borrow too high for some. Unemployment is at a 50 year low, but consumers don’t feel like their household finances are better off than they were a year ago.

These macroeconomic trends should inform collections & recovery executives’ strategy decisions for the next year and beyond.

To get a better understanding of consumer sentiment, spending, and other key trends, let’s break down three critical takeaways from TransUnion’s Q4 2022 Consumer Pulse Survey:

Spending is down, but there is some optimism.

In Q4 2022, 46% of consumers reported their household finances were worse than planned, a full 16 percentage points higher than Q1 2022. Fewer consumers reported increased wages in Q4 2022, and more consumers reported wage decreases compared to Q3 2022. Reductions in wages and worse-than-planned household finances are driving more consumers to make cuts to discretionary spending and reduce their savings.

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Consumers decreasing discretionary spending doesn’t necessarily mean they will have the ability to pay their current bills, though. 29% of consumers report that they expect to be unable to pay at least one of their current bills in full; a 1% increase from Q3 2022. That isn’t a significant increase, but this is a trend to watch as consumers run out of their pandemic cash and battle increased costs of necessities.

Despite those challenges, optimistic consumers report plans to increase discretionary spending and savings, with 20% of optimists planning to increase spending compared to only 7% of pessimistic consumers. The higher the consumer’s income, the more optimism they reported; those who have a reported income of at least $110,000 annually are most likely to report optimism.

Age affects optimism, too. As Millennials and Gen Z enter their prime earning years and gain more spending power, and Gen X and Baby Boomers approach retirement, 64% of Millennials and 61% of Gen Z consumers reported being optimistic about their finances in the next year, compared to 48% of Gen X and 43% of Baby Boomers. Baby Boomers and Gen X reported being less likely to seek new credit, as well.

The average American consumer is changing, which means collections strategies must change, too. Customer experience should be a top priority, and empathy will be critical, especially as consumers continue to battle inflation.

Credit applications are down slightly due to concerns about cost to borrow.

At 26%, the overall number of consumers who plan to apply for new credit or refinance existing credit within the next 12 months is down 3 percentage points from Q3 2022. Most of those consumers plan to apply for a new credit card, which is roughly the same as Q3 2022 at 53%. The number of consumers looking for new mortgages or to refinance their existing mortgages dropped off significantly (11% and 8%, respectively).

More consumers also reported abandoning a plan to apply for new credit or refinancing, and 32% of consumers did so because the cost was too high. As the Fed continues to consider interest rate hikes in order to work towards the goal of 2% inflation, consumers will likely continue to avoid new and refinanced mortgages. 26% of consumers reported that they abandoned their plan for new credit due to their credit history, which is the same number as Q3 2022.

If interest rates continue to rise, and originations continue to dip, collecting on existing debt should become a focus for lenders, especially those who are newer to lending. Check out my interview with Dave Hanrahan from Kredit for some tips for lenders who haven’t explored collections & recovery strategies yet, or if it’s been a while.

Consumers continue to prioritize credit report monitoring, and want to see changes to what’s reported.

Almost all of the consumers surveyed believe that monitoring their credit report is at least slightly important, with half reporting that they monitor their credit report at least monthly. Credit reporting continues to be an excellent way of reaching consumers about their accounts, despite the risks involved.

The number of consumers who monitor their credit report daily or weekly did drop from Q3 2022, which could signal that consumers who don’t rely on traditional credit (those who use Buy Now, Pay Later loans in lieu of traditional credit cards, or those don’t have a mortgage or car payment, for example) don’t see value in monitoring their credit report outside of checking for fraud.

In fact, 78% of consumers believe that their credit scores would either increase or stay the same if new information was reported, like rent payments or Buy Now, Pay Later loans. This follows a year in which the CFPB instructed BNPL servicers to prepare to report positive information about consumer payments.

Reminder: The CFPB has hinted at making changes to the FCRA in 2023.

Non-standard information on credit reports will result in a much better picture of consumer financial health for underwriters. If consumers are right about their scores staying the same or increasing, it will mean credit score increases and more credit availability. If they’re not, though, it could mean consumers have had artificially inflated credit scores, and it will mean even tighter underwriting standards and credit availability shrinking.

These macroeconomic trends should inform collections & recovery executives’ strategy decisions for the next year and beyond.

Consumer spending and credit behaviors make it clear: we might not have entered a disastrous recession as some predicted, but we’re not out of the woods yet. Read more about consumer trends from Q4 2022 in TransUnion’s full Consumer Pulse Survey from Q4 2022 here.

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ST. PAUL, Minn. — February 9, 2023 – IC System is pleased to announce that the Best Companies Group has named our company one of the 2022 Best Places to Work in Collections for the second year in a row.

Best Companies Group administers the “Best Places to Work in Collections” program, conducting more than 70 local, national, and industry “Best Places” programs annually for approximately 6,000 companies and their 1,000,000+ employees. The employee survey and award program are designed to identify, recognize, and honor the best places of employment in the collections industry.

The Best Places to Work in Collections list is divided into three size categories: Small (15-49 employees), Medium (50-149 employees), and Large (150+ employees). IC System ranked 9th in the Large category.

To be considered for participation, companies must fulfill the following eligibility requirements:

• Be a for-profit or not-for-profit business or government entity
• Be a publicly or privately held business
• Have a facility in the United States
• Have a minimum of 15 employees in the United States
• Must be in business a minimum of 1 year
• Must be a Collection Agency, Collection Law Firm, Debt Buyer, or Creditor Recovery Operation

Companies from across the U.S. entered the rigorous two-part survey process to determine the Best Places to Work in Collections. The first part evaluated each nominated company’s workplace policies, practices, philosophy, systems, and demographics. The second part consisted of an employee survey to measure the employee experience. The combined scores determined the top companies and the final ranking.

“This is an award that we strive for,” said John Erickson, President and CEO of IC System, which earned the 2021 Best Places to Work in Collections as well.

“It’s great to get this for a second year in a row,” John added. “The reason we do this is that we want to be a good place to work. We want our staff to enjoy their jobs. So it means a lot in terms of validation that we’re doing the right thing for our employees.”

For more information on the Best Places to Work in Collections program, visit: 2022 Best Places to Work in Collections – Best Places to Work in Collections (bestcompaniesgroup.com)

About IC System

IC System is one of the largest receivables management companies in the United States. Founded in 1938, IC System is a privately held accounts receivable management firm in its third generation of family ownership. IC System provides customized, tailor-made debt recovery solutions for healthcare, dental, small business, government, utilities, and telecommunications industries nationwide. Follow IC System on Twitter or LinkedIn.

The Consumer Financial Protection Bureau (CFPB) wants financial institutions to provide consumers with expanded access to their financial records. To that end, in October of 2022, the CFPB published an Outline of Proposals (Outline) detailing how a future rulemaking on this topic might look. The impact of the CFPB’s proposal goes well beyond the subset of data providers that meet the definition of a “financial institution.” Further, if left unchanged, the Proposals would put consumers’ privacy at greater risk and force small businesses out of the market. 

To highlight these unintended consequences, on January 25, 2023, the Consumer Relations Consortium (CRC)  submitted a comment prepared by Legal Advisory Board Members Joann Needleman of Clark Hill and Jessica Klander of Bassford Remele. 

The CRC’s comment raised the following concerns:

Regulatory Overlap: The scope of the proposed rulemaking is expansive and will significantly impact all aspects of the financial services industries. The industry is already significantly regulated by a myriad of regulations and laws implemented by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Trade Commission. To best serve the consumers and respective stakeholders, the CFPB should partner with the regulatory agencies already tasked with this oversight to devise, vet, and implement a broad set of principles that can work in tandem rather than taking a siloed approach that will ultimately be unworkable.  

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Data Security: The Outline does not clearly address processes or procedures for how personal financial data will be delivered to the consumer; however, it implies that such data must be delivered directly to the consumer. This is problematic because most consumers do not have the infrastructure or wherewithal to implement the safety precautions necessary to maintain the privacy of their data. As a result, sensitive consumer information will have a greater risk of exposure. Any proposed rule should focus on enhancing the authorization process rather than ensuring the direct delivery of data to the consumer.

Competition: The CFPB stated part of the reason for its proposal was to foster competition. However, the complexity of the Outline and proposed rulemaking will not foster competition because the barrier to entry is simply too great. Instead, it will drive small businesses which lack the resources necessary to comply out of the market and therefore decrease fair market participation. 

The full comment can be found here. 

About the Consumer Relations Consortium 

The Consumer Relations Consortium (CRC) is an organization comprised of more than 60 national companies representing the diverse ecosystem of debt collection including creditors, data/technology providers and compliance-oriented debt collectors that are larger market participants. Established in 2013, CRC is evolving the debt collection paradigm by engaging stakeholders—including consumer advocates, Federal and State regulators, academic and industry thought leaders, creditors and debt collectors—and challenging them to move beyond talking points and focus on fashioning real-world solutions that actually improve the consumer experience. CRC’s collaborative and candid approach is unique in the market.  CRC is managed by The iA Institute.

About the Legal Advisory Board

The Legal Advisory Board (LAB) is an exclusive membership group of outside counsel with expertise in the accounts receivable industry who have each pledged their time and resources to support the mission of the CRC. The LAB is limited to ten law firms and is comprised of fourteen total attorneys. Throughout the year, the LAB serves as a legal resource to the CRC membership and assists in fulfilling the mission of promoting forward-thinking approaches to the issues raised by regulatory policy and technology innovation in the accounts receivable industry.