The COVID-19 pandemic created unprecedented challenges for the debt collections industry, including new regulatory rules, changing consumer demands, and a potential uptick in activity as forbearance nears an end and deferments fall off. The pandemic continues to affect everyone’s lives, and — along with inflation and market fluctuations — the only thing that’s certain is continued uncertainty. As lenders and third-party collections agencies plan their next steps, a robust evaluation of debt-recovery processes should be a required starting place.

In such uncharted territory, the more tools you can deploy and optimize, the greater your chances for high rates of return. Therefore, leveraging the best data and analytics on the market — paired with innovative solutions — are essential for your collections roadmap. Using data to automate and streamline — while strengthening your risk-identification and mitigation approach — can set you on the right path.

Your comprehensive strategy should focus on the following areas: 

• Leveraging the best data and digital solutions available
• Increasing agility in your end-to-end debt management process
• Using tools and services that keep you abreast of regulatory developments 

Customizing your approach can help minimize loss, optimize resources and maintain relationships, so you can collect debts faster and improve cash flow. Superior data and analytics provide a more comprehensive consumer view, which can lead to higher recovery rates, when deployed tactically across the collections lifecycle. To do that, let’s expand on the concepts above.

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Access the best data and digital technology

Data providers have a broad range of digital solutions created exclusively for the collections industry and its unique needs at every phase of the collections journey. For instance, collection-management software, skip-tracing and contact-information tools using advanced analytics can help identify, prioritize and assist with contacting and communicating with consumers. Pair these with other digital options that help treat and monitor, and you can evolve your collections processes to be as frictionless as possible for both your staff and consumers. 

Solutions that provide optimum visibility into consumers’ overall financial picture can bolster risk-management efforts. The deeper your consumer view, the stronger your prioritization insights. When you better understand and meet consumer needs, you can intervene earlier to prevent delinquency and collect greater amounts. 

With the proliferation of digital devices, contacting consumers at the right time, through the right channel, can improve their experience and increase likelihood of cooperation. Collections should be viewed as an omnichannel opportunity that can result in better return rates and less stress for the consumer. 

Increased agility in end-to-end debt management brings value

A lack of investment in the latest solutions can leave your business grappling with technology and processes that are severely outdated and leave little room for customization or optimization. Suppose you need to develop new payment or forbearance tools? Or perhaps you need options to help you respond fast to fluctuating market conditions? There are solutions that will help you stay agile and profitable in the face of these variables. 

Solutions that use machine learning and artificial intelligence are transforming how debt is collected, and effectively harnessing these tools is crucial. These technologies can analyze massive amounts of data from diverse sources and deploy algorithms to improve existing processes and capture new insights about delinquency risk and manage vulnerable accounts. Leveraging every advantage available can differentiate you from your competition.

Find options to meet and manage regulatory developments 

One of the greatest challenges for collections is adapting to an ever-evolving regulatory framework. When you can assess emerging vulnerabilities and update policies, you can better respond to market shifts and changing regulatory requirements. Ensure your debt-management strategies are fair and compliant with all regulations and policies in place through the latest solutions. 

From superior data through innovative compliance solutions, an industry partner that provides a range of options across the debt-management lifecycle can help you strengthen your bottom line.

Connect with a partner with best-in-industry data, technology, and in-depth industry experience

The uncertain economic environment continues to impact the collections industry. In the face of continued compliance requirements, changing consumer demands, and an expected uptick in collections volumes, debt-collection departments and agencies are navigating an industry in constant flux. Fortunately, there are opportunities as never before to tap into innovative solutions to minimize challenges and reap advantages as we move into the next phase of our global economy. 

Experian is committed to providing its partners the best solutions available and personalized customer service to optimize your efforts at every phase of the collections lifecycle. Retool your strategies with a trusted, best-in-industry data and analytics partner today to prepare for tomorrow.

ROCHESTER, N.Y. –Continental Service Group, Inc., d/b/a ConServe, is pleased to announce that Michelle Hartmann, Vice President of Sales was awarded the 2021 COHEAO Commercial Member of the Year award by the Coalition of Higher Education Assistance Organizations (COHEAO) at their 2022 Annual Conference held in Washington, DC in July.

Michelle was appointed the Internal Operations Co-Chair, Communication Chair in 2021.

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ConServe is a long-time member of COHEAO and strongly believes in COHEAO’s advocacies to preserve and improve campus-based programs, thereby providing students with access to Federal campus-based programs to help them achieve their higher education goals. Kevin Gelabert,

ConServe Chief Marketing Officer said, “ConServe’s involvement with National and Regional organizations provides us with immediate access to the latest information regarding Federal and state regulatory rules and updates. Michelle’s board position and dedication to her responsibilities reinforces ConServe’s position as a leading industry resource for our valued Clients and I commend her tenacity to always exceed expectations.”

Michelle oversees the training and management of ConServe’s Sales Team while exceeding Client expectations. Additionally, she has played an active role in supporting COHEAO’s efforts to improve networking and professional development through its conferences, webinars and task forces with a focus and has played an active role in growing membership. Michelle said, “It’s been gratifying to join the COHEAO Board of Directors to represent ConServe, campus business officers and finance professionals nationwide. I’m honored to have received this recognition from the COHEAO Board, and I take pride in supporting COHEAO’s many advocacies that influence positive change for their members, institutions and valued students.”

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 36 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 COHEAO

Since 1981, COHEAO has served as a partnership of colleges, universities, and organizations dedicated to promoting student friendly, efficient operated campus-based loan and tuition payment programs. COHEAO members are dedicated to the preservation and improvement of the Federal Perkins Loan and HHS Loan Programs. COHEAO is an advocate for the sound regulation of student financial services operations and campus accounts-receivable manage practices. Visit COHEAO online at: www.coheao.com

A new report by the CFPB uses over five million credit records from one of the three nationwide consumer reporting agencies to examine how credit card companies have used credit line decreases throughout the Great Recession and the early stages of the COVID-19 pandemic.  As a general trend, the report found issuers used credit line decreases during broad economic downturns as a way to decrease overall risk.

The report’s discussion of the underlying data included the following:

• While credit line decreases were four times as common if a consumer had a recent credit card delinquency, 67 percent of consumers whose credit lines were decreased had no recent credit card delinquency.

• Of the consumers who received a credit line decrease, the median decrease was 75 percent of their total credit line.

• Given the substantial decreases in credit lines, credit utilization concomitantly spiked with median deep subprime, subprime, near-prime, and prime consumers, topping out at 94 percent of their available credit.  Even super-prime consumers doubled their utilization rate from 37 percent to 78 percent. The result of these credit line decreases and credit utilization increases was consumer credit scores decreasing—between the median range of 33 and 87 points for consumers with a recent card delinquency and between the median range of 1 and 12 points for consumers with no recent card delinquency.

The report concludes by stating that although prime consumers have been able to compensate for these credit line decreases by using other credit cards or opening new accounts, subprime and deep subprime consumers have been unable to return to previous credit card usage rates.  While the report takes no position on how the CFPB should approach credit card line decreases, in the past similar reports presaged heightened regulatory scrutiny of the issues that were the subject of the report, such as overdraft fees and credit card penalty fees.

Indeed, it is possible that the CFPB will use the report as the basis for seeking additional limits on the circumstances under which credit issuers can reduce credit limits on credit cards.  For example, Regulation Z already specifies the circumstances under which creditors can reduce the credit limit on home equity lines of credit.  One of these circumstances is where the creditor has a reasonable belief that the consumer will be unable to pay because of a material change in the consumer’s circumstances.  If the CFPB were to promulgate a regulation imposing a similar limit on the ability of credit card issuers to decrease credit limits, card issuers would not be able to use a general economic downturn as a basis for decreasing a credit limit on a credit card.

TREVOSE, Pa. — NCB Management Services, Inc., recently announced the addition of Jason Shinkunas to the NCB Executive Leadership Team as the Vice President of Finance.

Jason comes to NCB with 18 years of deep operational experience in reporting, advanced modeling, and financial planning. He has a demonstrated track record of helping shape corporate strategy, and brings seasoned expertise in building dynamic finance functions within high-growth companies. Prior to joining NCB, Jason was the Vice President of Financial Planning & Analysis for Marlin Capital Solutions, and played a key role in the public company’s successful strategic exit in Q1 of 2022. During his career, he has also held various finance roles at Lockheed Martin, Fiserv, and Rydex Investments.

“I am excited to welcome Jason to the senior executive leadership team at NCB”, stated Ralph Liberio, President & CEO. “Jason is a talented finance executive who will be an invaluable addition to NCB’s leadership team. He has demonstrated a proven track record of success with automating financial and accounting reporting systems and has excellent communication and leadership skills. The executive team and myself are excited to work closely with him as we execute the next phase of NCB’s journey”.

Commenting on his appointment, Jason said, “I am thrilled to be taking on this role at such an exciting time for the company. NCB has rightfully earned a reputation as a respected, top-notch team in the Accounts Receivable Management industry, and I can’t wait to contribute to the future that NCB is building.”

Jason holds a Bachelor of Science degree and a Master of Business degree, both from the Robert H. Smith School of Business at the University of Maryland.

About NCB Management Services

NCB Management Services, Inc. was established in 1994 and is headquartered in Trevose, PA with satellite offices in Jacksonville, FL, Sioux Falls, SD, and Lincoln, NE. NCB is a well- respected Debt Buyer of Unsecured Consumer Credit Products and an admired, well- recognized Accounts Receivable Management (ARM) industry leader. NCB is a customer- centric, regulatory compliant organization with a robust infrastructure, who has blended many years of ARM experience with the latest in new information systems and communication technology. NCB has developed a reputation as consistently being a valued business partner and performer in a wide variety of applications. Providing superior customer interaction and achieving maximum results, while protecting our clients valued reputation, are among our highest priorities.

Starting in late 2020, the national media and consumer advocates published panicked warnings about debt collectors flooding consumers with unwanted text messages, emails and messages on social media in attempting to collect debts after implementation of Regulation F:

• Debt collectors will soon be allowed to reach you by text or on Facebook – CBS News

• Debt collectors can now text you, email you and DM you on social media : NPR

One of the articles cited above and published by NPR even opens with a following fallacious scenario that would NEVER occur at any professional debt collection agency in the United States today and is clearly prohibited by Regulation F: 

“The next time someone tries to friend you on Facebook or follow you on Instagram, it could be a debt collector.”

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CFPB Leadership Won’t Comment on its Own Rules? 

Despite these seemingly dire warnings from our most trusted media outlets, the anticipated flood of unwanted electronic debt collection communications has apparently not yet arrived.  The reality is that the Regulation F guidance from the CFPB on electronic communications is unnecessarily restrictive and primarily focused on emails, whereas most consumers seek open and secure communications via text messaging or SMS.  

Unfortunately, the false media coverage asserting that Regulation F will result in a flood of unwanted debt collection communications has frightened leadership at the CFPB into silence, apparently fearing further negative media reaction by NPR, CBS and others if the CFPB clarifies its own muddled rules on texting.  Here once again, CFPB leadership is noticeably absent when needed most. (see also Hunstein: Does CFPB Leadership Lack Courage and Vision?) Where is the bold and decisive leadership at the CFPB that can rise above false media coverage and provide the real protection and guidance that consumers in the United States demand?  

Court Holds Text Message not Subject to Bona Fide Error Defense

The lack of practical clarity from the CFPB on the use of text messages for debt collection has directly resulted in an increased caseload for the Federal Courts to determine the rules.  In one recent case, a Federal Court held that a debt collection text message was not subject to the bona fide error defense under the Fair Debt Collection Practices Act, writing:

“However, [the debt collector’s] procedure of relying exclusively on [the creditor] – with no internal controls – is not “reasonably adapted to avoid the specific error at issue.” In Owen, the debt collector contracted with the creditor to assign accounts that are “validly due and owing.” Owen, 629 F.3d at 1275. In holding that the debt collector was not entitled to the bona fide error defense, the Eleventh Circuit stated: 

[M]ost notably, [the debt collector] has not
indicated any internal, error correction procedures to avoid miscalculations of
debt amounts, such as interest on past-due interest or extra fees beyond the
debtor’s unambiguous written agreement. [The debt collector] has not offered
evidence of any training techniques it employs to foster FDCPA compliance. For
example, [the debt collector] cited no evidence that it trains its employees to
examine principal and interest to avoid compound interest errors, much less any
internal procedures to segregate principal and interest to avoid collection
errors. . . . In sum, [the debt collector] cited no internal controls it
employs to reduce the incidence of improper debt collection. Rather, [the debt
collector’s] procedure is to outsource its oversight task to its creditor [],
which must report only debts that are ‘validly due and owing.’” 

Owen, 629 F.3d at 1276 (internal footnote omitted). The same is true here. [Defendant debt collector], like the debt collector in Owen, “cited no internal controls it employs to reduce the incidence of improper debt collection,” choosing instead to outsource its entire oversight operation to its creditor, [debt buyer].  Carter v. Capital Link Management 21-cv-00088 (N.D. AL 2022).”

The above excerpt from the July 12, 2022 Court decision in Carter details the present expectations of that Court for a debt collector to establish a bona fide error defense when sending text messages.  

The Carter case perfectly demonstrates the type of detailed practical guidance that the CFPB could provide to debt collectors such as specific procedures with examples for communicating with consumers via text message.  Unfortunately, the CFPB guidance on electronic communications to date through Regulation F has primary focused on avoiding third party disclosures when using email, a harm that is rarely (if ever) asserted.   Further, the CFPB’s tortured guidance on how a debt collector may issue the validation notice by electronic means is so convoluted that it is impossible to implement in most every instance. 

It is further perplexing that the CFPB chooses to spend considerable taxpayer resources on issuing advisory opinions on certain issues while it is silent on others.  For instance, on June 30, 2022, the CFPB issued a 10 page advisory opinion reiterating its position on convenience fees that it had previously published on August 2, 2017. FDCPA Advisory Opinion; Pay-to-Pay Fees (consumerfinance.gov)

The 2022 advisory opinion above is not materially different from the CFPB published 2017 opinion on the exact same topic.  Why would be CFPB choose to reiterate its position on a long ago settled concern such as convenience fees when issues involving debt collectors using text messages and letter vendors remain unsettled?  Unfortunately, in the absence of relevant guidance from the CFPB, we can expect the Federal Courts to fill the void and continue to define the procedures for how debt collectors may communicate via text with consumers.  

See the complete Order in  Carter v. Capital Link Management here. 

SACRAMENTO, Calif. — On April 29, 2021, the Department of Financial Protection and Innovation announced the formal creation of its inaugural debt collection advisory committee, a seven-member board that will provide critical feedback to the Department as it stands up its debt collection licensing program. The committee will advise Commissioner Clothilde V. Hewlett on matters related to the debt collection business, including proposed fee schedules and other requirements.

The committee members were appointed by former Commissioner Alvarez for two-year terms pursuant to Financial Code section 100025 of the Debt Collection Licensing Act (DCLA).

The committee members represent a diverse cross-section of stakeholders; five are industry representatives, one is a consumer advocate, and one is a law and economics professor who studies the industry. The committee includes the following members:

• Elizabeth Gonzalez, Public Counsel

• Scott Hyman, Severson & Werson

• Mark Naiman, ITP MDR, LLC

• Cindy Yaklin, States Recovery Systems Inc.

• Tamar Yudenfreund, Midland Credit Management

• Ohad Samet, TrueAccord Corporation

• Prasad Krishnamurthy, UC Berkeley School of Law

The next meeting of the committee will take place virtually on July 27th, 2022, at 2:00 PM PST This meeting will be open to the public and led by Senior Deputy Commissioner Suzanne Martindale and Deputy Commissioner Melinda Lee.

Meeting Agenda:

Introductions

1. Program Update

2. Regulations*

3. Roundtable

4. Public Comment 

*DFPI will be restricted from commenting on current pending regulations but appreciates feedback and encourages discussion on potential future rulemakings as well.

Zoom Webinar Information

To join from PC, Mac, Linux, iOS, or Android please click the link below:

https://us06web.zoom.us/webinar/register/WN_JEDkeAEDR6Kqx4f6EVI3Ng

Dial-in audio information will be made available on the DFPI Debt Collector Advisory page (https://dfpi.ca.gov/debt-collection-advisory-committee/) when the webinar goes live at 2:00 PM as well as being displayed during the event.

If you have any questions or need to request reasonable disability-related modifications or accommodations, please contact Ryan Rodriguez at ryan.rodriguez@dfpi.ca.gov. 

On July 5, 2022, the Consumer Relations Consortium (CRC) submitted comments to the California Department of Financial Protection and Innovation (DFPI) regarding its proposed consumer complaint and inquiry regulations.  The proposed regulations seek to establish complaint filing processes for consumers as well as investigation, response, reporting, and tracking procedures for covered entities.

The CRC’s comments were prepared by Legal Advisory Board (LAB) members Joann Needleman and Leslie Bender of Clark Hill, and Brit Suttell of Barron and Newburger.

In its comments, the CRC asked the DFPI to modify its proposed regulation as follows: 

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• Require appropriate verification as a prerequisite to filing a complaint on behalf of a third party due to the growing number of credit repair and debt management companies that seek extensive information by filing generic and duplicate complaints.

• Provide clarification to the definition of “complaint” to make it clear that a dispute made pursuant to the Fair Credit Reporting Act (FCRA) is not a complaint. 

• Allow covered entities to seek proof of authority to act on a consumer’s behalf to prevent covered entities from exposing consumers’ sensitive data to third parties. 

• Automate and standardize the inquiry and complaint process, including reporting and retention requirements to include a web portal. Standardization will increase efficiency. 

The complete comment filed by the CRC 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.

On July 5, 2022, the Consumer Relations Consortium (CRC) submitted comments to the California Department of Financial Protection and Innovation (DFPI) regarding its proposed consumer complaint and inquiry regulations.  The proposed regulations seek to establish complaint filing processes for consumers as well as investigation, response, reporting, and tracking procedures for covered entities.

The CRC’s comments were prepared by Legal Advisory Board (LAB) members Joann Needleman and Leslie Bender of Clark Hill, and Brit Suttell of Barron and Newburger.

In its comments, the CRC asked the DFPI to modify its proposed regulation as follows: 

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• Require appropriate verification as a prerequisite to filing a complaint on behalf of a third party due to the growing number of credit repair and debt management companies that seek extensive information by filing generic and duplicate complaints.

• Provide clarification to the definition of “complaint” to make it clear that a dispute made pursuant to the Fair Credit Reporting Act (FCRA) is not a complaint. 

• Allow covered entities to seek proof of authority to act on a consumer’s behalf to prevent covered entities from exposing consumers’ sensitive data to third parties. 

• Automate and standardize the inquiry and complaint process, including reporting and retention requirements to include a web portal. Standardization will increase efficiency. 

The complete comment filed by the CRC 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.

Show Notes:

In the last decade, the CFPB has tried to tackle the question of innovation through partnerships and No-Action Letters. First, there was Project Catalyst which resulted in very few collaborations and a small amount of No-Action Letters. Then there was the Office of Innovation which stood up the Compliance Assistance Sandbox which approved only 3 applications. Now the newly re-tooled Office of Competition and Innovation looks to continue these innovation partnerships but will it succeed? Nat Hoopes, VP and Head of Public Policy and Regulatory Affairs at Upstart stops by #creditecotogo to talk about the challenges of a regulatory partnership. While a No-Action Letter can offer a fintech or financial services entity an opportunity to “innovate in plain sight”, the time and available resources may not be attractive to many companies. For Upstart, the experience and collaboration with the CFPB was very positive but others may see that the juice is not worth the squeeze. 

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DISCLAIMER – No information contained in this Podcast or on this Website shall constitute financial, investment, legal and/or other professional advice and that no professional relationship of any kind is created between you and podcast host, the guests or Clark Hill PLC. You are urged to speak with your financial, investment, or legal advisors before making any investment or legal decisions.

CHESAPEAKE, Va. — Spring Oaks Capital continues to expand its team of industry leaders. Susan Richards recently joined the group, as Director of Business Development, to strengthen our Portfolio Acquisitions team lead by Keith Walch, Chief Acquisitions Officer. Susan has significant industry experience, particularly in sales and operations previously serving as COO for a national debt buyer.

“I’ve been in the industry for 30 plus years and haven’t seen this level of managed growth anywhere. Not only is the company growing but it’s doing it by attracting top talent,” stated Richards, “It’s clear why this company is considered one of the Top10 debt buyers in the industry.”

Marcelo Aita, Executive Chairman, added, “Sue is one of the most driven executives I’ve had the pleasure to work with over the years. Goal oriented and results driven but uniquely qualified for business development. She uses her operations background and industry expertise to help lenders through the debt sales process.”

Spring Oaks Capital is also excited to announce that it has hired Yardley Klinger as Compliance Manager. In this role, Yardley will be responsible for managing the portfolio due diligence process for the organization as well as overseeing regulatory examinations, licensing, and other compliance related matters. Yardley joins Spring Oaks Capital with extensive experience in several different areas of the debt purchasing space.

“I am very excited to join the compliance team at Spring Oaks Capital. I look forward to helping this company maintain its best-in-class compliance management system,” stated Ms. Klinger. Andrew Blady, Spring Oaks Capital’s General Counsel stated, “I had the pleasure of working with Yardley previously for several years. Her work ethic, talent, and experience is second to none. I am very excited to get a chance to work with her again at Spring Oaks Capital. Adding, “Yardley demonstrates our company’s continued commitment to superior compliance. We are very excited to have her on our team.”

About Spring Oaks Capital, LLC

Spring Oaks Capital is a national financial technology company, focused on the acquisition of credit portfolios. The Company subscribes to an employee and consumer-centric operating philosophy that creates high-value jobs, a significant performance lift, and the highest standards of compliance. Spring Oaks’ business strategy is rooted in innovative data-driven technology to maximize collection results and a contact platform that offers multi-channel options to meet each consumer’s communication preference. Spring Oaks has the management vision and experience to nurture a culture and DNA that is unique in the space. The executive team maintains deep experience end-to-end across the consumer finance lifecycle with some of the largest global banks and innovative FinTech platforms. To learn more about Spring Oaks and our revolutionary FinTech platform, please visit www.springoakscapital.com.