This article is part of the iA Think Differently series. Written by members of the iA Innovation Council, the series showcases thought leadership in analytics, communications, payments, and compliance technology for the accounts receivable management industry.

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“Uber your business before it gets Kodak-ed.”-ANONYMOUS”

Here is what we know for sure, the collection agency of the future will not look like today’s collection agency. Heck, it won’t look like the collection agency of 2019 thanks to COVID-19. Who knew we could effectively have collection agents work from home? There will be short-term and long-term changes like the ones mentioned in Amy Perkin’s article “Immediate Collection Strategy Solutions for the Impacts of COVID-19“. Change is nothing new for debt collection agencies because we have always been evolving. Looking at the history of debt collection shows us this is true.

Collection agencies used to be local with door to door collection agents and most used index cards to track their accounts. Once American households readily adopted landlines, we saw a change from local collections to regional call centers and the use of phone calls as the primary way of communicating with consumers. We evolved once again by using computer collection systems, dialers, analytics, and the explosion of mega call centers. So, you see, the collection industry has always been changing and evolving and now is no different. What has changed is the speed of change, an unwillingness to act without certainty (regulatory approval), and consumers now controlling their communication preferences.

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There are countless articles about right party contacts dropping, price compression, increasing litigation costs, and regulatory changes driving market uncertainty. These are real, and they are our reality. What we don’t see in debt collection are a lot of articles on listening to what consumers are telling us and then giving consumers what they want. This consumer focus is happening in every industry, but not ours. Other industries have figured it out, “All things being equal, the customer will gravitate toward the option that is easiest to use.”^[1]. 

In debt collection, if you say you are an organization that embraces technology and you are comparing yourself to your competitors, you are missing most of the technology that consumers are demanding. The technology that makes it easy for them. Some of these include, in no particular order:

• 24/7 365 days responses to their inquiries
• The ability to communicate on a channel of their choice
• The ability to switch channels multiple times during the same conversation
• Authentication that happens only once, ever, for that consumer
• Self-service for everything;
  • Payments including the ability to change payment dates and amounts
  • Dispute handling including validation within seconds
  • Updating information especially communication preferences
  • The ability to tie a payment account to their account where the payment will not run until the money is available, and
• Continually updating information.

In other words, they want everything that makes it convenient for them to do business with you. “People are more powerful, skeptical, and impatient today than they’ve ever been. They want what they want now through the device they have at hand now. People are extremely demanding these days, and it’s only going to get worse.”^[2] We have not given the consumer a reason to engage with us in a meaningful way because our communications tend to be one-way. Therefore, we need to start thinking about engaging in a two-way conversation that is no longer dependent on the consumer either answering our call or forcing them to call us.

Nowhere on the list above do you see consumers asking for a better way to be called. If you call a consumer and they do not want to talk to you, they not only have the option of sending you directly to voicemail, they can block your phone number forever and report it to their phone carrier as a robocall. This is assuming that your incoming call is not labeled or blocked as spam. How is that for consumer control, as in the consumer has the control, not the other way around. Yet the industry still believes that this is the best way to collect. We have to change, and we have to change today.

For years we have been afraid to take risks. We have become so fearful of losing what we have that we continue to hold on to the ever-shrinking piece of the pie. COIVD-19 is going to put some agencies out of business, which should be a wakeup call that it is time to do something different, rather than continue to do what we have always done. What we need to do today is fundamentally shift our business to be more consumer-focused. We can do this if we choose. Look what we did to get our employees the ability to work from home. Talk about risk-taking! It was also innovating and problem-solving like we have not seen for a very long time. We need to take this experience and now focus it on being consumer-driven with real innovation. This will not be easy.

We will get sued. We will have regulatory scrutiny. This is nothing new, and we are already well equipped to deal with it. We may, however, get sued less because a consumer does not go searching for a way to stop the calls and ultimately finds a plaintiff lawyer instead. We may also have fewer consumer complaints because they were able to solve their financial problem on their own. If we treat consumers the way they want to be treated and engage with them the way they want to be engaged with, then they will have less of a reason to want to sue us or file a complaint.

Today, more than ever, we have a chance to change and become consumer-focused before we cannot reverse the decline, and nothing can save us. The good news is we are not alone, and we do not have to do this by ourselves. We have thought leaders like those found at insideARM and its very fortunate members, like Joann Needleman, who is freely providing her time and thoughts on next steps with content like “Your Website, Your New Normal.” There are countless others out there that can help us, but we also need to be listening to our consumers and be willing to take risks for them.

The wave of accounts that are coming cannot be serviced by debt collectors alone, and consumers today will not pay you if you don’t engage with them the way they want to be engaged with. The organizations that will not only survive but thrive will be the ones that take risks to give consumers what they want. Those will be the organizations with a long-term future.

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^[1] The Convenience Revolution: How to Deliver a Customer Service Experience that Disrupts the Competition and Creates Fierce Loyalty by Shep Hyken

https://a.co/31gJlsh

^[2] https://gerrymcgovern.com/books/top-tasks-a-how-to-guide/read-the-first-chapter/

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

2020 members include:

Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved.

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In Stewart v. Credit Control, LLC, 2020 U.S. Dist. LEXIS 81332, the Northern District of Illinois dismissed a pro se claim against a debt collector. The plaintiff claimed that the debt collector, who pulled the plaintiff’s credit information to facilitate collection of a debt, lacked a “permissible purpose” for obtaining his information.

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In addressing the defendant’s motion to dismiss, the court noted an inescapable truth of the Fair Credit Reporting Act: it is a complete defense to an FCRA claim if a party has a permissible purpose for obtaining a consumer’s credit report. Plaintiff readily admitted that the defendant was a debt collector, but argued that the only permissible purpose for obtaining his information was to offer him credit. However, the court held, in accordance with multiple other courts, that debt collection is a permissible purpose for obtaining a consumer’s information under the FCRA, and rejected this argument.

Plaintiff also argued that the debt collector’s use of a “soft pull” to obtain his information, which would not show up on his credit report should another third party seek his information, was not included in the definition of “permissible purpose” under the FCRA. The court again disposed of this argument, as “permissible purpose” means exactly that—a purpose that’s permissible, regardless of the method.

Plaintiff’s claims against various furnishers and a credit reporting agency are still pending, and we’ll keep an eye on this as it develops.

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Want to track current FCRA court decisions and trends? The iA Case Law Tracker does that in less time than it takes to pour your morning cup of coffee.

Today, the Consumer Financial Protection Bureau (CFPB) announced that it will once again extend the comment period to the Supplemental Notice of Proposed Rulemaking (SNPRM) for time-barred debts. The new deadline for comments is now August 4, 2020. 

Originally, SNPRM comments were due on May 4, 2020. The CFPB issued a notice extending the deadline to June 5 due to concerns that the COVID-19 pandemic would prevent stakeholders from providing meaningful comments. Similar reasoning was used for the most recent extension.

The SNPRM—which was predicted due to the CFPB’s placeholder in the time-barred debt section of the Notice of Proposed Rulemaking and the disclosure survey conducted by the CFPB in 2019—lays out requirements for debt collectors who are collecting on accounts that are barred by the applicable statute of limitations. In other words, these proposed rules would control accounts for which the creditor’s time period to sue the consumer to collect the debt has passed.

The requirements include prohibitions on filing suit on time-barred debt accounts and certain disclosures that a debt collector must make depending on the laws of the applicable jurisdiction.

COLLINGSWOOD, N.J. — Are you a debt collection company or call center with underutilized staff due to restrictions related to the Coronavirus pandemic?  The skills your employees already have match the current, immediate need governments at all levels now have for contact tracers. As the nation moves towards re-opening and recovering from the pandemic, contact tracing efforts will be key in responding to new outbreaks and aiding in mitigation efforts.  If you see the value in shifting your company focus to include call center and contact tracing, sign up to get free call center and contract tracing leads today at MyGovWatch.com.

These RFPs are in response to government agencies and health departments across the nation urgently trying to hire contact tracers. As a debt collector or call center, your employees already know how to handle the key components of contact tracing; problem solving, respecting the privacy of the individual and responding with patience and compassion in a time of crisis. 

Companies like yours can use MyGovWatch.com to hear about new call center and contract tracing leads (plus debt collection leads, too) once per week for free via our Weekly Lead Digest.  For a small monthly spend, you can hear about these leads daily instead of weekly and receive other benefits. Companies of significant size have access to premium tools to include:

• Open procurement tracking services to ensure users hear about every addendum and procurement change in real time.

• The ability to submit questions to buyers anonymously through the site.

• Contract award announcements as they become known.

• Access to hard-to-obtain government documents like contracts, evaluations, and winning proposals to enable users to see detailed information showing why specific companies won specific procurements and – as important – why others did not.

• Search tools to let users research competitor pricing and winning proposals by buyer type, region, and other attributes.

• Advanced notice of upcoming procurements to kick start the sales cycle.

About MyGovWatch.com

MyGovWatch.com, the government contract intelligence website offering users more than just leads for public sector procurements since 2008, lets users access unlimited “Premium” data in industries to include Debt Collection, Call Center, and EMS Billing. Since its 2018 relaunch, the site now enables anyone to specify their particular interests from among ten top-level industries, from professional services to construction to finance and technology and beyond.  Users can set preferences to be notified about leads in nearly sixty sub-industries, such as collections, billing, systems development, business services, and others, covering every conceivable type of government purchase. Learn more at www.mygovwatch.com.

SYRACUSE, N.Y. — Capital Collection Management (CCM), a provider of first-party and third-party collections, debt purchasing, and litigation services, hired Corinne Galavitz as its Controller. In this role, she is responsible for managing cash flow, ensuring proper accounting for all collections, maintaining the accounting software, and working with leadership to ensure the company’s financial health.

“We’re thrilled to welcome Corinne as she brings over a decade of experience in financials and accounting to CCM,” said Jacob Corlyon, Co-Founder and CEO of CCM. “Her expertise will be essential as the company continues to grow in the rapidly evolving collections industry.”

Before joining CCM, Corinne was the Affiliate Accounting Manager at Bankers Healthcare Group, where she was responsible for maintaining the financial records for BHG and its sister companies. She became a Certified Public Accountant in 2010 and her experience also includes 10 years in public accounting at two different regional CPA firms, where many of her clients were small businesses. 

Corinne earned a bachelor’s degree in Public Accounting from the State University of New York at Oswego and is a member of the AICPA and NYSSCPA.

About Capital Collection Management

Capital Collection Management (CCM) provides modern, technology-driven collections, debt purchasing, and litigation services for enterprises that need engagement with empathy, experience with compliance, and excellence in debt recovery. Leveraging state-of-the-art analytics and machine learning combined with a service-focused approach, CCM helps organizations from a variety of industries protect their brands and improve their bottom lines. To learn more, visit www.capitalcollect.com and follow us on LinkedIn.

Following in step with the extensions of its governor’s peacetime emergency declaration, Minnesota’s Commerce Department has yet again extended its allowance for debt collectors to work from home without branch licensing for the home locations. This is the second extension of the work-from-home guidance, which was originally issued on March 13 and extended for the first time on April 24. 

Like the initial guidance and first extension, the most recent extension—issued on Friday, May 15—reiterates the four criteria required in order to receive the benefit of the Department’s decision to take no action against agencies who temporarily allow their collectors to work from home. The criteria are:

1. The activity is conducted from the home location of an individual working on behalf of a Minnesota licensee;
2. The individual is working from home due to a reason relating to the COVID-19 outbreak and has informed the licensee of such reason.
3. None of the activity will be conducted in person with members of the public from the home location; and
4. The licensee shall, at all times, exercise supervision of the activity being performed at the home office and ensure that appropriate safeguards and controls are in place to protect consumer information and data.

The notice states:

The Commissioner recognizes that because of the concern surrounding the COVID‐19 outbreak, and in light of the Governor’s Executive Orders, individual collectors should be working from home temporarily to protect themselves and others, even though their home location is not currently licensed as a branch office.   

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Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved.

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As noted earlier, a 1,815-page House bill has just been introduced that affords $3 trillion in relief to consumers and businesses impacted by COVID 19.  The bill (official title: the Health and Economic Recovery Omnibus Emergency Solutions Act, or “HEROES Act”) addresses numerous topics, but I’d like to focus on one: amendments to the Fair Credit Reporting Act (“FCRA”) designed to prevent reporting of adverse information arising out of a national emergency.

However well-intentioned these provisions may be, they work an extreme—some might say unworkable and crazy— shift to the credit reporting landscape. If implemented, these changes would have significant negative impact on the financial services industry and consumers’ ability to get credit at rates reflecting their true repayment risk.

The House votes on and passed the Act on Friday but—unsurprisingly given the bill’s drawbacks— the odds of it passing the Senate and being signed by the President in its current form lie somewhere between very unlikely and a snowball’s chance in Hell.

Calling out a handful of the troublesome amendments to the FCRA proposed by the HEROES Act:

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All Adverse Information Arising from “Major Disaster” Must Be Excluded from Consumer Reports

Under the HEROES Act, consumer reporting agencies (“CRAs”) are prohibited from including “an adverse item of information” (other than a felony conviction) that was the result of “any action or inaction that occurred” during a period declared to be a “major disaster” by the President. There is a similar prohibition on furnishers furnishing such adverse information to CRAs. Think about that. But when is an adverse fact “the result of” an action or inaction that occurred during an emergency?  Some cases are easy – I’ve been in the hospital for two months with COVID-19, couldn’t work and so missed payments on my credit cards and mortgage. Fine. But if I’m a CRA and two years from now I want to include a bankruptcy in a consumer report, how could I possibly know if there was some action or inaction that took place during the pandemic such that the bankruptcy could be said to have “resulted” from such action or inaction? It’s an impossible standard.

A Catalog of Consumer Woe? HEROES Would Create CFPB Website to Track Consumers’ Economic Hardships

The HEROES Act requires the Consumer Financial Production Bureau (“CFPB”) to establish a website where consumers can report “economic hardship” as a result of a major disaster, including the current COVID-19 pandemic. It does not state that specified events resulting from such hardship (liens, bankruptcies, missed loan payments, etc.) are to be reported or otherwise elaborate on what constitutes an “economic hardship” for purposes of this website. It does, however, require the three credit bureaus and CRAs that qualify as “nationwide specialty consumer reporting agencies” to check this CFPB website weekly and delete from their databases “adverse items of information as soon as practicable after information that is reported appears in the database.” But how will a CRA know what to delete if consumers are not required to be specific about what events are a product of their “economic hardship”?  Oh, and the HEROES Act prohibits the CFPB from requiring any consumer to produce any documentation substantiating their claim of economic hardship.  Makes sense! Then there are the privacy implications of allowing/encouraging/requiring consumers to catalog their hardships in a centralized government database.

Guidance Regarding the Treatment of Missed Payments Is Insufficient

As noted above, the HEROES Act prohibits CRAs from reporting adverse items of information. That leads to some tricky situations. For instance, suppose a bank’s records show that in some months during the pandemic the consumer made payments on his outstanding credit card balance and in some months he did not. Under the HEROES Act, CRAs are not allowed to report the missed payments because they are “adverse items of information.”  So the bank will furnish CRAs with payment history for only the months in which he made payments.  How does the CRA then report that information without signaling that the consumer didn’t make the payment during the months not reported?

Debt Collection

Debt collectors routinely obtain consumer reports prior to attempting to collect a debt in order to confirm that debtors have not declared bankruptcy. If a consumer declares bankruptcy during a pandemic but CRAs can’t notify debt collectors of such bankruptcy, then debt collectors either run the risk of violating the law by attempting to collect debt from a bankrupt debtor or it has to stand up internal processes to check relevant sources to determine whether the debtor is bankrupt, adding significant cost to the collection effort.  This will be an unfair burden for debt collectors and increase the cost of credit for consumers.

Making credit more expensive

While the HEREOES Act raises many questions regarding reporting adverse information during an emergency, one thing is clear—the cost of credit is going up if the HEREOES Act becomes law. When lenders have more information about consumers, they can make finer distinctions among consumers about their relative default risks, which leads to better terms for many consumers.  This is the main driver behind the push towards “alternative credit data”:  it allows lenders to identify potential borrowers that are a good credit risk in a pool of consumers that don’t have much of a footprint in the traditional credit universe because, g., they lease an apartment, do not use credit cards or don’t have checking accounts.  To the extent regulatory prohibitions limit what data lenders are allowed to use in underwriting, the less lenders are able to offer loan terms that match a consumer’s true credit risk, making credit more expensive for everyone.  This would undoubtedly happen if the HEROES Act were to pass in its current form.

The HEROES Act is not workable in its current format as it pertains to the FCRA.  We will monitoring developments with the HEROES Act and blog about it as it develops.

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Want to track current FCRA court decisions and trends? The iA Case Law Tracker does that in less time than it takes to pour your morning cup of coffee.

Editor’s Note: This article originally appeared as an Alert on ClarkHill.com, and is republished here with permission.

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Since the beginning of the COVID-19 crisis, Democrats have been anxious to put forth their proposals and priorities for coronavirus relief. For the most part, those proposals were shut out of the CARES Act. On Tuesday, the Democrats unveiled their latest legislative proposal: The “Health and Economic Recovery Omnibus Emergency Solutions Act” or “HEROES Act.” The official summary of the bill calls it “transformative legislation to meet the challenges of the coronavirus pandemic, increase aid for state, local and tribal governments,” to extend unemployment insurance, and to provide direct aid to Americans. 

For the consumer financial services industry — particularly the credit reporting and debt collection sectors — the HEROES Act looks to amend  certain  consumer protection laws while at the same time applying a one-size fits all solution for every consumer regardless of circumstance. 

The details of the proposed legislation are as follows: 

Credit Reporting During Major Disasters

• Negative consumer credit reporting would be suspended during the COVID­19 pandemic, other declared major disasters, and for 120 days thereafter; 
• New credit scoring models that would lower existing consumer credit scores during the COVID­19 pandemic or during other major disaster periods would be banned; 
• Prohibit the reporting of medical debt arising out of COVID­19 treatments; and 
• Expand rights for consumers in order to delete negative tradelines. 

Restriction on the Collection of Consumer Debt During Major Disasters

• Create a temporary moratorium on consumer debt collection during this COVID­19 crisis and for 120 days thereafter (covered period); 
• Amending the Fair Debt Collection Practices Act (FDCPA) to include creditors under these provisions during the covered period;  
• Prohibited debt collection conduct would include legal action, enforcement of security interests, termination of utilities and threatening to do any of these activities. Non-legal activity would be permitted but will be limited by repayment and forbearance restrictions; and
• Determination that pre-dispute arbitration provisions are invalid and unenforceable during the covered period. 

Mandated Repayment and Forbearance 

• The FDCPA would be amended to require debt collectors to extend the time period for the repayment of a debt arising from credit within a defined repayment term by one payment period for each payment that a consumer missed plus one additional payment period; 

• For credit-card debt or open-ended credit, a consumer could repay the past due balance in a manner that does not exceed repayment options described in TILA; and 

• For all other debts, the consumer could pay in equal monthly installments, but only within a predefined time period depending on the amount owed, which can extend into a longer time period for repayment; 

• Upon request from the consumer, debt collectors must offer a forbearance program upon the request and attestation of financial hardship, directly or indirectly related to COVID-19, until the end of the covered periods. The consumer does not have to supply any documentation in support of the hardship; and 

• The Federal Reserve will establish a credit facility to make low-cost and long-term loans available to debt collectors to temporarily compensate them for the financial losses caused by the forbearance program. 

Government Payments for Private Student Loans 

• Extend existing CARES Act student loan payment and consumer protections (such as debt collection prohibitions) to private loan borrowers who are currently not covered by the CARES Act;
• Provide up to $10,000 in debt relief to be applied to a private student loan with the Treasury Department making monthly payments on behalf of the borrower up to $10,000 until September 2021. The borrower is not obligated to use that money to pay off any private student loan; 
• A debt collector could not pressure a borrower to elect to apply any amount received from the Treasury to any private student loan. Such conduct would be considered an unfair and deceptive act under Dodd-Frank as well as a violation of the FDCPA; and
• Private education loan holders must modify all existing loan contacts to provide for the same repayment plan and forgiveness programs that are available under the Federal Direct Loan Plan. 

Mortarium on Small Business Collections  

• Amend the FDCPA to include a temporary moratorium on small business debt collection during the same covered period; 
• Repayment and forbearance proposals applicable to consumer debtor would be applicable to small business debt; and 
• The Federal Reserve will establish a credit facility to make low-cost and long-term loans available to small business debt collectors to temporarily compensate them for the financial losses caused by the forbearance. 

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The financial services industry is sure to object to those proposals that attempt to re-write existing student loan contracts, eliminate arbitrations provisions that have been previously agreed to by consenting parties. The proposed amendments to the FDCPA will be a concern to creditors who never were covered under the statute.  Further the proposal to offer low-cost loans to the debt collection industry for “documented losses as the resulted of a forbearance” need to be carefully considered.  How is the loss documented? What happens if the consumer never pays or files bankruptcy? This is not a bailout rather a tenuous proposal which would require the debt collection industry to take on additional debt of their own, so that consumers can eliminate theirs.  

This video is part of the iA Think Differently series. Written by members of the iA Innovation Council, the series showcases thought leadership in analytics, communications, payments, and compliance technology for the accounts receivable management industry.

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Today I’m joined by Scott Ferris and Rob Nadler, the CEO and VP Sales of Attunely. This relatively new company to the industry (they launched in early 2019) has brought the principles of the digital ad industry to the collections industry. What’s the cornerstone? Testing. You’ve got to be able to test scenarios and quickly deploy strategies based on data from that testing. 

[Editor’s note: If you are interested in topics like strategy, testing and scenario planning, you should not miss insideARM’s next conference, iA Strategy & Tech – a completely virtual event – July 21-23. It’s a masterclass in collections strategy.]

Transcript

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

2020 members include:

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