A Kentucky district court judge recently granted in part and denied in part a defendant’s motion for summary judgment in a Telephone Consumer Protection Act (TCPA) case, Barnett v. First National Bank of Omaha. The court held that the plaintiff’s request to have information sent to him via the mail instead of over the phone, along with the plaintiff’s refusal to talk to a collector when the defendant called after choosing mailed delivery, gave rise to a genuine issue of fact as to whether the plaintiff revoked consent to be contacted, even without explicit revocation. In Barnett v. First National Bank of Omaha, the court examined consent and revocation under the FCC regulations that implement the requirements of the TCPA.

There, the plaintiff obtained a credit card from the defendant, using his cell phone as a way for the defendant to contact him. In 2019, the plaintiff was unable to make his minimal monthly payment, and the defendant started contacting him via its telephone system to discuss his missed payments, eventually contacting the plaintiff 574 times, an average of 3.2 times per day. At some point, the plaintiff requested the defendant to mail him his billing statements and started hanging up the phone on defendant’s representatives.

The plaintiff filed suit in the Western District of Kentucky, alleging the defendant violated the TCPA (47 U.S.C. § 227) and the Kentucky Consumer Protection Act (KCPA) (Ky. Rev. Stat. § 367.170) by contacting him via an automated telephone dialing system before and after he allegedly revoked consent to be contacted. The plaintiff also brought an intrusion upon seclusion claim against the defendant. The defendant filed a motion for summary judgment.

Relying on the Supreme Court’s holding in Facebook v. Duguid to find that the defendant did not use an automated telephone dialing system, the court granted the defendant’s motion on that issue and then focused its analysis on whether the calls made to the plaintiff occurred after consent had been revoked.

The defendant argued that the plaintiff never specifically revoked consent to be contacted after he listed his cell phone number on his credit card application. The plaintiff argued that he revoked consent when he (1) told the defendant not to call him and (2) asked the defendant’s representatives to mail his statements or hung up on them when they called. The defendant countered that the plaintiff had never provided “clear revocation” of his consent.

While the court noted that the TCPA is “silent on whether and how a consumer may revoke previously-granted consent,” the court ultimately, looking at the “totality” of the circumstances, found that the arguments of the parties clearly demonstrated remaining disputed issues of fact for a jury.

The court’s decision in Barnett provides insight into how courts may consider disputes over consent, absent express revocation under the TCPA. Even if a plaintiff does not expressly revoke consent to be contacted, this does not automatically guarantee a defendant will prevail on summary judgment.

PALM SPRINGS, Calif — Provana, provider of the industry’s first unified platform for compliance and performance management, today announced a strategic partnership with TJ44 Consulting LLC, a compliance consultancy founded by Tara Trantham, who was previously Chief Legal Officer and Chief Compliance Officer at Southern Management Corporation, in addition to General Counsel and Senior Vice President at World Acceptance Corporation (WRLD). 

The new solution combines Tara’s legal and compliance acumen, built across years working directly with the Consumer Financial Protection Bureau (CFPB), and Provana’s comprehensive compliance management suite, IPACS. The announcement was made from the American Financial Services Association’s (AFSA) Independents Conference & Expo in La Quinta, California.

Coming at a pivotal moment, on the heels of the CFPB’s announcement that it will exercise its dormant authority to examine non-bank lenders and financial services companies, the joint solution aims to help a broad scope of now regulated organizations achieve compliance rigor.

“In today’s ever-changing regulatory environment, it is incredibly valuable to understand what’s happening with state-level regulators as well as state and national industry associations to stay ahead of impactful law changes,” said Tara Trantham, Founder and CEO of TJ44 Consulting LLC. “I’m thrilled to bring my experiences from working on Capitol Hill to Provana so we can help agencies and fintechs alike establish an effective compliance solution.”

Sean Clark, SVP of Platforms at Provana, added, “Tara’s deep, hands-on experience of working intimately with regulators in Washington, D.C. is invaluable for organizations of all types who are grappling with the regulatory changes coming from the CFPB. We’re excited to incorporate Tara’s knowledge into our tech platforms to help more clients automate and uphold top-notch compliance programs.”

About Provana

Provana’s SaaS-based digital operating platform is the first of its kind, giving leaders control over process-intensive operations. We serve law firms, insurance companies, accounts receivable agencies and networked enterprises in the US market that are tightly regulated by the CFPB and other authorities. Built on decades of experience in machine learning, natural language processing and business process management, Provana helps customers manage sensitive interactions, analyze unstructured data, process personal information, and ensure compliance. Provana is backed by a NYC-based Fintech PE, most recently raising funds in November 2020. Learn more at www.provana.com.

About TJ44 Consulting, LLC

Built on decades of litigation experience with the CFPB, SEC, DOJ, OCC and FBI, TJ44 Consulting LLC – Compliance and More on Demand has established itself as the foremost authority on compliance, risk management and creditors’ rights. With over 50 combined years of experience in financial services, consumer credit and collection, auto and mortgage landing, TJ44 offers complete back-office solutions, risk identification and management services, bankruptcy services, and more.

A New York federal judge on April 28 temporarily enjoined three New York sheriffs from refusing to enforce judgment executions which seek to collect judgment interest “calculated with the interest rate in effect at the time the judgment was obtained.”

The temporary injunction applies to the sheriffs of Chautauqua, Erie, and Niagara counties.

A copy of the opinion in Greater Chautauqua Federal Credit Union et al. v. Marks et al. is here: Link to Opinion.

On Dec. 31, 2021, New York legislation was signed into law lowering judgment interest on “consumer debt” from nine to two percent. The law takes effect on April 30.

While this poses no concern for covered judgments entered after April 29, the law also applies to unsatisfied judgments retroactively “from the date of the entry of judgment on any part of a judgment entered before [April 30, 2022].”

While accrued but unpaid interest at nine percent will have to be recalculated at the new rate of two percent, other interpretations suggest that even paid interest on unsatisfied judgments is subject to reduction.

Three New York credit unions filed an action in federal court alleging the law is an unconstitutional taking and requested a preliminary injunction to prevent its enforcement.

Only Three County Sheriffs Enjoined

There are 62 counties with 62 sheriffs in New York. This order enjoins only three. The enjoined sheriffs are in three contiguous counties in western New York along Lake Erie and includes Buffalo, New York.

With a little over 19 million New Yorkers, the affected counties are home to just over 1.3 million people. The court, though, required that its order be served on all New York sheriffs.

Retroactive Reduction Likely Unconstitutional 

At this stage of the litigation, the court was asked only to determine whether the plaintiffs, the three credit unions, are likely to prevail on their claims. The court found that the retroactive judgment interest reduction is likely an unconstitutional “regulatory taking.”

First, it determined that interest on unsatisfied judgments is the property of the judgment creditor and so it is “constitutionally protected.”

Second, although the law is not akin to a condemnation or appropriation of property, its effect is “so onerous that its effect is tantamount to a direct appropriation. . .”

The case will continue to be litigated and the injunction will continue until the court (or an appellate court) decides otherwise.

A Confusing Law that Deserves Judicial Review 

There are several ways to interpret the retroactive judgment interest reduction under this recently adopted law and judgment creditors are struggling to determine its scope. While covered judgments paid and satisfied prior to April 30 are not subject to adjustment, unpaid judgments present a more complex problem.

The text of the law is subject to at least two conflicting interpretations on how paid interest on unsatisfied judgments must be treated. While the law does not require a creditor to return interest paid at the nine percent rate, new sections (a)(ii) and (c) of CPLR § 5004 are confusing and unclear as to how such paid interest on unsatisfied judgments is to be treated beginning April 30.

BIRMINGHAM, Ala. — ARM Compliance Business Solutions is excited to announce that Tonia Brown has joined the company as a Senior Compliance Advisor. In this role, Tonia will navigate ARM Compliance Business Solutions clients through the ever-changing regulatory compliance requirements of consumer financial laws by enhancing their Compliance Management System through policy development and implementation, training development, service provider oversight, audit controls, and risk assessments. 

Tonia joins the company with over 15 years of industry experience in both first-party and third-party revenue cycle management. Prior to joining ARM Compliance Business Solutions Tonia was the Executive Vice President at Automated Collection Services, Inc. (ACSI), a Tennessee debt collection agency, where she was responsible for Corporate Compliance, Clients Services and Human Resources.

In her 13 years at ACSI she was responsible for all aspects of ACSI’s corporate administration services including higher education, healthcare, government, and financial/private sector including, regulatory compliance and quality control auditing activities, dispute and complaint resolution, Consumer Helpline, training, internal and external audits, and client contract audits. Tonia holds certifications as a Compliance & Ethics Professional (CCEP), Society of Corporate Compliance & Ethics Healthcare Compliance (CHC), and Credit and Collection Compliance Officer (CCCO). She is an active member of ACA International and Receivables Management Association International and currently serves as Middle TN & Southern KY Better Business Bureau Treasurer.

“I am absolutely delighted to have Tonia on my team,” said Sara Woggerman, President of ARM Compliance Business Solutions. “Her experience specifically in the healthcare revenue cycle adds immediate value to our clients in this market at a time when regulatory scrutiny is elevated.” “Tonia has an incredibly calming presence when collaborating with clients to overcome their unique challenges and I am excited to see her grow at ARM Compliance Business Solutions.”

“I have spent the last several years watching and learning from Sara and knew her to be a solid leader with her eyes always on the ever-changing regulations in our industry, said Tonia Brown.” “Working with her through ARM Compliance Business Solutions was a no-brainer for me. “I am thrilled to be a part of her team!”

About ARM Compliance Business Solutions, LLC. 

ARM Compliance Business Solutions, LLC. was formed in 2020 to provide professional advisory services to the accounts receivables management industry through its delivery of compliance risk assessments, outsourced compliance services, service provider oversight, and executive-level training. ARM Compliance Business Solutions is a recognized leader in compliance and operational strategies to improve the consumer experience and enhance business practices for their clients. For more information, visit www.armcbs.com or contact Sara Woggerman at sara@armcbs.com. 

The CFPB has issued its annual Fair Debt Collection Practices Act report covering the CFPB’s debt collection activities in 2021.  The report incorporates information from the FTC’s most recent annual letter to the CFPB describing its 2021 activities in the debt collection market, including information about the FTC’s enforcement actions involving collection practices directed at small businesses.

It is noteworthy that in his blog post about the CFPB report, Director Chopra highlights the FTC’s “multiple actions to combat unlawful collections practices that target small businesses.”  He comments that “[i]t is critical that policymakers pay close attention to wrongdoers targeting small businesses and determine whether there should be additional debt collections rights and protections for small businesses and entrepreneurs to protect them.”  The CFPB also highlights debt collection involving small businesses in a section of the report titled “Small Business Debt Collection.”  In that  section, the CFPB comments that the data it reviewed suggests “a level of resources and expertise for most small businesses on par with consumer borrowers rather than what may be the general perception of commercial enterprises with readily available financial resources and expertise.”  According to the CFPB, “[t]he result is the potential for exploitation comparative to what is encountered by consumers, without any of the protections granted to consumers by the FDCPA.”  The CFPB indicates that it “monitors legal actions of the [FTC] and state agencies regarding abusive practice of some financial institutions towards small businesses.”

CFPB report.  In addition to a description of the FDCPA-related findings from the Bureau’s Summer 2021 and Fall 2021 Supervisory Highlights, the report includes the following information:

• According to the report’s section on complaints, the CFPB received approximately 121,700 debt collection complaints in 2021 (which was 39,000 more than in 2020).  As in all prior years since the Bureau began accepting debt collection complaints in 2013, the most common complaint in 2021 was about attempts to collect a debt that the consumer claimed was not owed.  The second and third most common complaint issues were, respectively, written notifications about the debt, and taking or threatening a negative or legal action.

• In 2021, the CFPB announced one new FDCPA enforcement action.  It resolved two pending lawsuits with FDCPA claims and filed an action to recover a fraudulent transfer to enforce a prior judgment based on FDCPA violations. These actions resulted in judgments for $2,260,000 in consumer redress, which were suspended due to defendants’ demonstrated inability to pay, $882,200 in civil monetary penalties, and permanent bans from the collections industry.   As of the end of 2021, the CFPB had three FDCPA enforcement actions pending in federal district court.  It is also conducting a number of non-public investigations of companies to determine whether they engaged in collection practices that violate the FDCPA or the CFPA.

• In a section of the report that discusses CFPB research projects, the CFPB indicates that in 2021, CFPB economists published an independent research paper that analyzes the effect of changes in state debt collection laws.  Based on recent laws and regulations in four states that instituted debt collection conduct restrictions, they are reported to have found that “such restrictions reduce access to credit card accounts and raise interest rates, but that this effect is very small.”

• The CFPB concludes the report with the statement that in 2022, it “will continue its work to uphold the [FDCPA] through all the tools at its disposal.  These include supervision and enforcement, regulatory and legal action, research and market monitoring activities, and consumer education.”

FTC annual update.  The enforcement activities highlighted by the FTC in its annual letter (and described in the CFPB report) include the following:

• The FTC settled three lawsuits initiated as part of its “Operation Corrupt Collector” nationwide initiative addressing “phantom debt collection” and abusive and threatening debt collection practices.  Phantom debt collection (also known as fake debt collection) covers a range of practices, including attempts to collect on obligations that consumers never took out or received, as well as efforts to recover loans without authorization from the creditor.  In all of the settlements, the defendants were permanently banned from the debt collection industry.

• The FTC filed an amended complaint in a lawsuit filed against two companies engaged in small business financing along with several of their officers and owners.  The FTC’s amended complaint alleges that the defendants deceived small businesses by misrepresenting the terms of merchant cash advances, made unauthorized withdrawals from small businesses’ bank accounts, violated the Gramm-Leach-Bliley Act by making false statements to induce consumers to provide bank account information, and used unfair collection practices, including confessions of judgment that the defendants used unfairly to seize personal and business assets in circumstances not expected by customers and not permitted by the financing contracts.

• The FTC, joined by the Commonwealth of Pennsylvania, filed an amended complaint in a lawsuit filed against the operators of  a telemarketing scheme and a debt collection operation.  The FTC’s amended complaint alleges that the telemarketers billed small businesses for books and newsletter subscriptions they never ordered and sent unpaid bills to the debt collection firm that illegally threatened the businesses if they failed to pay for the unordered items.

Both the CFPB report and FTC letter discuss the FTC’s efforts to advance legislation that would amend Section 13(b) of the FTC Act to expressly give the FTC authority to seek, and a court to award, equitable monetary relief such as restitution or disgorgement.  In 2021, in AMG Capital Management, the U.S. Supreme Court ruled that Section 13(b) does not provide such authority to the FTC.

BUFFALO, N.Y. — Concepts2Code and SMAX Technologies are pleased to announce a partnership that allows Agencies to have a seamless and real-time integration between their Collection Software and their payment portal. The partnership enables both the consumer and the agent to have full visibility of account information including payments, documents, settlement offers and more. Online payments made on the Concepts2Code Web Portal are immediately available in the SCollect system and transactions in the SCollect system are immediately available for the consumer to view on the portal. 

The new integrated APIs eliminate tedious data file transfers and other manual steps that can delay payment processing. Instead of keeping the technology proprietary and making life difficult for clients, Concepts2Code and others are opening up their APIs to provide a more integrated and compliant software solution for far less cost but with more functionality. 

Concepts2Code provides payment portal and email/document services for the ARM industry, and interfaces with multiple Collection Software vendors to give agencies an ADA and PCI compliant solution. SMAX Technologies provides SCollect Collection Software that also provides greater flexibility and compliance options.

Concepts2Code and SMAX have been working together for almost a year. Today their users are finding out what seamless integration really means. The SCollect and Concepts2Code interface, not only integrates payments, but also emails, texts, and account notes in real-time. This advanced technology equips agents with valuable metrics such as when the consumer logged in to view their account, if any payments were made and how much, or when they sent a letter, email, or text message through the Concepts2Code portal. The system seamlessly manages Opt-Outs and Unsubscribes too. 

Sam Galbo, President of SCollect believes that integration is a progression of what clients have wanted all along. “When developing our products, it has always been our goal to truly interface with other software vendors whether it be telephony, payment, email, or texting software. Working with Concepts2Code has been a great experience for us because they share that vision. Together our organizations create and develop solutions to make it easier and less costly for the client. The upside is we have greater service offerings and a larger potential market.”

Mark Reinhard, President of Concepts2Code put it simply: “I always believe we are here to give our clients the tools to succeed. We want to create software that make it easier and more efficient to collect. Sometimes, that means working with other vendors to provide the ultimate flexibility and options to our clients.” 

For more information on what Concepts2Code and their suite of services please visit concepts2code.com. 

For more information on SCollect and their latest product Smax, please visit smaxcollectionsoftware.com.

Medical debt continues to dominate the headlines in 2022 and continues to be an area of significant focus for the Consumer Financial Protection Bureau.

On April 20, the CFPB issued a report examining the financial consequences realized by consumers because of the receipt of medical services, specifically the billing and collections of such debt.

This follows the CFPB’s recent report on medical debt, in which the bureau iterated it will hold the nationwide consumer reporting agencies (“NCRAs”) accountable for the accurate reporting of medical debt, including a duty to act against abusive furnishers who routinely report inaccurate information regarding medical debt. Specifically, the CFPB reported an estimated $88 billion in medical debt reflected on consumer credit reports as of June 2021, the majority of which are debts under $500. In response, the NCRAs began rolling out guidance to data furnishers regarding their responsibilities as it relates to the changes the NCRAs are making in the reflection of medical debt on consumer reports.

The CFPB’s April report is a response to what it identifies as “the rising volume of medical billing and collection complaints submitted” to the bureau. As CFPB Director Rohit Chopra opined in the report:

“Many Americans feel forced to pay medical bills that they have already paid or never owed to begin with. The credit reporting system should not be used as a weapon to coerce patients into paying medical bills they do not owe.”

The report noted several “key findings,” categorizing the complaints submitted to the CFPB regarding medical debt as consumers reporting “not recogniz[ing] or ow[ing] alleged medical bills,” “suspect[ing] unpaid medical bills are being surreptitiously and unlawfully placed on their credit reports,” “experienc[ing] their credit reports being used as weapons to force payments,” and “report[ing] that collection notices contained large amounts of highly sensitive medical information.”

The CFPB’s impression from the consumer complaints is that they “strongly suggest that many medical bills reported on credit reports are disputed, inaccurate, or not owed.” The CFPB went on to reiterate what it articulated in its March 2022 report on medical debt, that medical debt is not an accurate predictor of a consumer’s ability to pay other bills and credit obligations and that its presence on consumer credit reports does little to help a lender determine risk but does a lot to hinder a consumer’s access to credit.

To combat this purported disproportionate effect, the CFPB stated it is “committed” to engaging with the healthcare industry to educate itself on medical billing practices, working with other government agencies to prevent medical debt from preventing consumers from accessing employment, housing, and credit, and further investigating whether medical debt has any practical use in determining consumer creditworthiness. The CFPB also noted that it intends to “hold bad actors in the consumer financial services marketplace accountable.”

Two reports from the CFPB in recent months focusing on medical debt is a clear indication that the bureau is targeting medical debt collection and enforcement actions are forthcoming. The receivables industry has been put on notice.

If your company purchases or collects medical debt, how confident are you in the accuracy of the data you are receiving and what warranties regarding the accuracy are you provided? Relatedly, what protocols do you have in place to confirm the authenticity of amounts alleged to be owed after a consumer disputes a medical debt? After all, medical debt balances often do not remain static and are subject to adjustment sometimes well after the originator has charged the balance to bad debt. Furthermore, what safeguards do you have in place to ensure that your processing of medical debt, including communicating with consumers regarding their debt, maintains in compliance with HIPPA and the necessity to safeguard sensitive medical information?

These are areas of focus for the CFPB and likewise should, as a corollary, be a focus of the industry.

SACRAMENTO, Calif. – Receivables Management Association International (RMAI) is excited to provide a resource for financial success: FinancialLiteracy.Rocks.  RMAI is committed to protecting consumers and helping them reach their financial goals, manage debt, and create a stronger economy one financial decision at a time.  This website gathers helpful resources together for ease of access and discovery.  FinancialLiteracy.Rocks debuted in 2019 and is updated with new resources on an ongoing basis.

Financial literacy includes the education and understanding of financial topics related to managing personal finance, money, and investing.  Financial literacy also encompasses financial principles and concepts such as financial planning, debt management, saving, retirement, and managing expenses.

FinancialLiteracy.Rocks allows everyone from beginning learners through experienced consumers to navigate topics on financial literacy grouped by audience and topic. The website features a variety of tools, guides, videos, instructional programs, interactive games, and comprehensive overviews.

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“RMAI is committed to consumer financial education, during Financial Literacy Month and throughout the year.  We believe in upholding the highest ethical standards for the receivables management industry,” said RMAI Executive Director, Jan Stieger.  “FinancialLiteracy.Rocks is a helpful resource for consumers to learn about managing their money to increase their savings and reduce their debt.”

RMAI recently released another new educational resource as well, Understanding the Receivables Management Industry: A Guide to Key Concepts, Terms and Acronyms.  The introductory guide to the industry can be obtained at https://rmaintl.org/IndustryGuide.

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

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

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

Publishing Supervisory Determinations

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

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

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

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

insideARM Perspective:

This announcement raises several points of concern:

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

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

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

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

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

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

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

In collections, authentication equals friction.

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

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

1. Email Authentication

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

My guess is no.

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

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

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

2. Text Authentication

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

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

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

3. Voice Authentication

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

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

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

Tim Collins is the Chief Customer Officer at InDebted.

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