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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It’s always interesting to see the way the web of federal statutes fit together (or don’t) when regulating certain conduct.

Take debt collection calls for instance. It has long been held that a consumer that provides their phone number directly to a caller consents to receive automated informational calls from that caller in connection with the purpose for which the number was provided. That’s just common sense.

Further, it has been held that providing a phone number to a creditor operates as consent for calls by third-parties such as debt collectors. So far so good.

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And it has even been held that providing a number at time of admission to a hospital operates as consent for service providers working at that hospital—such as doctors—to call to collect debts from that hospital stay, including through third-party debt collection companies. Ok.

But just because consent for TCPA purposes can be so conveyed does not mean that consent for purposes of other statutes is equally durable or presumed.

In Russo v. POM Recoveries, Inc., 18-cv-5472 (JMA) (AKT), 2020 U.S. Dist. LEXIS 61949 (E.D.N.Y. April 8, 2020), for instance, a defendant is stuck in a suit for placing a telephone call directly to a number supplied by a consumer as part of a hospital visit under the Fair Debt Collection Practices Act, and not under the TCPA. Under the FDCPA it is unlawful to communicate with any third party regarding a consumer’s debt unless the consumer has provided their consent to such contact directly to the debt collector.

In Russo, however, the consent to call the number at issue—which turned out not to be the plaintiff’s number—was provided at time of admission to the hospital and not directly to the collection company. So whereas the collector had Plaintiff’s consent to call the number under the TCPA the call was yet not valid because consent to contact the number had been supplied through an intermediary and not directly as the law requires.

Notice all the little wrinkles here. In the first place, the caller presumably did not know it was contacting a third-party at all; it was merely trying to contact the consumer at the number provided. Yet the leaving of a voicemail at the subject phone number resulted in a communication with a non-debtor in violation of the FDCPA because the number turned out not to be the consumer’s number after all.

This means that a collector is at a double risk from wrong number calling using pre-recorded voice messages or ATDS: i) direct liability to the called party for making calls without consent under the TCPA; and ii) liability to the debtor for communicating without the specific consent required by the FDCPA. This is true although the FCC’s reassigned number database is still some months away.

Watch out!

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Want to see how the FDCPA, TCPA, and FCRA play together? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.

Here’s a quick little case law hit for you. Consumer attorneys are grasping at straws, and the courts are having none of it. Take, for example, a case out of the Middle District of Florida.

In Lorenzo v. Durham v. Durham, LLP, No. 2:20-cv-109 (M.D. Fla. Apr. 6, 2020), a consumer—represented by one of those “frequent filer” attorneys based in New York—filed an FDCPA lawsuit alleging that a collection letter is misleading. Why? Because in the validation notice, it stated that unless the consumer disputes the validity of the debt in 30 days, “the debt will be assumed to be valid by the creditor and by this Firm.” (Emphasis added.)

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According to the consumer, the FDCPA only allows the debt collector to assume the validity of an undisputed debt. Stating that the creditor may do so as well allegedly goes too far.

The court put a hard stop to this case by granting the defendant debt collection law firm’s motion to dismiss—essentially cutting the case off before it gets to the costly litigation stage of discovery.

According to the court, the letter would not mislead the least sophisticated consumer. Specifically, the court calls out an old Eleventh Circuit from 2014—Caceres v. McCalla Raymer, LLC— which already addressed and disposed of this type of claim. In Caceres, the allegation was identical: the consumer claimed that a collection letter that stated the creditor will assume an undisputed debt is valid.

The Eleventh Circuit sided with the debt collector, stating that the “debt collector is obviously the agent of the creditor…the least sophisticated consumer would think that if the debt collector was entitled to assume the debt is valid, the creditor would have the right to do the same.”

Following the Eleventh Circuit’s logic, the court here dismissed the claim.

insideARM Perspective

Are we surprised to see the resurgence of a claim that has already been decided by a binding appellate court decision? No. It’s happened many times before, most recently in the Second Circuit on the whole interest disclosure issue. The Second Circuit had to issue several decisions on the issue siding with debt collectors and even that didn’t stop the claims being filed by the many “frequent filers” within that jurisdiction.

It’s time that debt collectors strike back. Rule 11 of the Federal Rules of Civil Procedure calls for sanctions against an attorney if they file a claim that is not warranted under existing law or if they file a claim for an improper purpose, such as “to harass, cause unnecessary delay, or needlessly increase the cost of litigation.” Motions for sanctions should be filed liberally.

With this particular case, for example, directly on-point, binding circuit precedent already said that this claim doesn’t hold water and there is no FDCPA violation. A simple legal research query that even a law student could do would have disclosed that. Despite this, the claim was filed anyways—likely in an effort strong-arm settlements out of debt collectors who simply cannot afford to defend each and every claim that comes through their door since they won’t recover their legal fees even if they win on the merits. If that doesn’t violate Rule 11, I don’t know what does.

Remember the Department of Education’s NextGen project? Well, it’s been canceled. At least, part of it has.

I know.

Let’s go back to the beginning for a minute and cover a few of the big contributors to how we got here.

Dr. A. Wayne Johnson

In June 2017 Education Secretary Betsy DeVos announced her intent to appoint Wayne Johnson as Chief Operating Officer for Federal Student Aid. Previously, he held positions at VISA USA, Providian Financial, and First Data Corporation, and was CEO of First Performance Corporation and Reunion Student Loan Finance Corporation. DeVos said at the time,

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“Wayne is the right person to modernize FSA for the 21st Century. He actually wrote the book on student loan debt and will bring a unique combination of CEO-level operating skills and an in-depth understanding of the needs and issues associated with student loan borrowers and their families. He will be a tremendous asset to the Department as we move forward with a focus on how best to serve students and protect taxpayers.” 

NextGen was Wayne’s brainchild. And then, he announced in October 2019 that he would be leaving his post to seek an appointment to the U.S. Senate. The conservative Republican is running against 20 others for the special Senate election in November to fill the balance of the term of retired Sen. Johnny Isakson. 

On March 25, 2020, candidate Johnson said he thinks the student loan benefit package in response to COVID-19 should be extended from 6 months to 12 months. He added, “The national response to the coronavirus was never the time to talk about canceling student debt. Debt forgiveness is just one part of a real, bipartisan plan. We need to do more than just cancel student loan debt on a piecemeal basis; we need to cancel the Federal student loan program and chart a new course to pay for secondary education in Georgia and around the country.”

The years-long litigation saga between large private collectors (PCAs) and the Department of Education (ED)

It all started in 2014 when the five-year 2009 ED contract for debt collectors ended. New small business contracts were awarded on schedule, but the large-firm contracts were delayed, awarded, protested, underwent a “do-over,” and then A LOT of litigation. To get out of it, in May 2018 ED ultimately canceled the whole solicitation. ED’s justification? Large PCAs would no longer be needed because the whole process is going to be reimagined as part of the NextGen system and process that was announced in 2017.

The PCAs ultimately lost their battle against ED in August 2019.

The litigation that moved to NextGen

The NextGen plan would put all federal student loan servicers on a common technology platform with a single database. The PCAs’ filed a complaint, saying ED had improperly bundled pre-and post-default servicing in the same procurement, which is a) illegal and b) makes it impossible for debt collectors to compete for work unless they can either a) provide all services required by the full student loan cycle (which, it’s argued, no company is capable of) or b) establish a viable teaming arrangement as a subcontractor (which, it’s argued, is both challenging and would cause a conflict of interest). This article provides a great background on the twists and turns.

Meanwhile, NextGen is a REALLY BIG PROJECT on a very tight timeline. Really big government projects often don’t go as planned, even under the best of circumstances. This one, remember, lost its champion last October. Also, along the way, the details of the solicitation have changed multiple times and deadlines were postponed.

The latest official action in the solicitation was recorded November 12, 2019. Then, things went quiet (although sources tell insideARM there was a lot going on behind the scenes).

Suddenly, on April 2, 2020, Nelnet announced that ED had notified the company that its proposal in response to the Enhanced Processing Solution (EPS) component of NextGen has been deemed “outside of the competitive range and will receive no further consideration for an award.” EPS is the technology system and certain processing functions the Department plans to use to 43 million student loan customers. The company said it requested a debriefing by ED and that they intend to file a protest challenging the decision.

Nelnet has been the only announcement so far, however, we have to assume others may have received a similar notice.

And finally, on April 3, 2020, ED canceled the solicitation. Here’s what it says on the procurement site:

“Cancellation of Solicitation Number 91003119R0007, Optimal Processing Solution (OPS). The solicitation is canceled in accordance with FAR 5.207 (f) effective with this notice. On December 19, 2019, the Fostering Undergraduate Talent by Unlocking Resources for Education (FUTURE Act) (H.R. 5363) became law. While FSA is still assessing the requirements and implications of the FUTURE Act, it is clear the legislation will have a significant impact on FSA’s business processes and the scope of the OPS requirements necessitating FSA’s cancellation of this solicitation.”

insideARM Perspective

There are other portions of NextGen. This cancelation applies to solicitation R0007. Who knows what will happen with the other pieces. A lot of money has been spent responding and then re-responding and then re-responding to these solicitations.

Yet again, we’re left wondering how a major decision by the Department of Education will affect both borrowers and student loan collectors. At least for now, it seems the small PCAs that were awarded contracts in 2014 will continue to have work…well, that is, if they are still around after the COVID-19-related prohibition on outbound collection efforts expires.

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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One year ago, Plaintiff Navient – a student loan and collection company – flipped a switch and sued copious plaintiff-lawyers in Navient v. Law Offices of Jeffrey Lohman.  Navient alleged a devious plot, hatched to bilk Navient out of millions. Navient claimed that these plaintiff-lawyers hunted student borrowers with debt to Navient, convinced them to stop paying Navient, and to instead pay them to renegotiate their debts.  The mucho unkosher part is how the plaintiff-lawyers stirred up consumer claims.  As alleged in the original complaint:

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“…[They] would often provide their clients with a “script” for “revoking” consent to receive telephone calls from [Navient], and would surreptitiously stay on the telephone lines while calls with [Navient] were taking place… [They] often recorded such conversations, without the knowledge or consent of [Navient]… [They] frequently instructed their clients not to answer any further calls from [Navient], the intent and effect being to ensure the number of potentially actionable calls was inflated…”

“Alternatively, [they] would issue letters to [Navient] on behalf of their purported clients requesting to redirect communications to them. In their letters, [Defendants] advised the debt was ‘disputed’ …to manufacture TCPA claims by laying an arguable predicate for such claims with a deliberately vague and muddled ‘revocation’ of TCPA consent.”

After the lawyers manufactured these TCPA claims the students would be referred to Defendant Law Offices of Jeffrey Lohman who’d crank up the claims into lawsuits for max settlement extraction.

Navient went all out; it’s a messy docket, everflowing with a dozen+ named defendant attorneys and law firms.  Not satisfied, in December 2019, Navient added ten defendants to the brawl, including Defendant GST for being part of the scheme. 

Defendant GST is a super niche company that purchases accounts receivables, from plaintiff-lawyers that assist student debtors.  After GST was hauled into the amended complaint, Defendant GST turned around and counter sued Navient back. In a wild filing twist, GST alleged that Navient’s in house counsel directed Navient’s employees to call student debtors, and convince them to fire their lawyers: causing students to terminate or not pay their lawyers, which “destroyed and/or substantially reduced the value of the accounts receivable that GST had acquired…”

Navient filed a motion to dismiss GST’s claims.  The court agreed with Navient, and dismissed all GST’s counterclaims.  Let’s see how this now cut and dry conspiracy suit transpires. 

Editor’s Note: For all related insideARM articles and other information, please check insideARM’s COVID-19 Impact resources page.

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Washington, D.C. becomes the latest jurisdiction to ban outbound collection efforts during the pending coronavirus pandemic. The COVID-19 Response Supplemental Emergency and Temporary Amendment Act of 2020 passed unanimously yesterday, and D.C.’s Attorney General made clear that he would begin enforcing it immediately.

The new law goes into effect immediately and lasts until 60 days after the emergency ends. The law prohibits the outbound collection via any medium—phone calls, letters, electronic messages—to consumers from debt collectors and debt buyers. The law, however, allows for a debt collector to return consumer-initiated communications. The prohibition on outbound collection efforts explicitly does not apply to original creditors who are collecting on their own behalf. 

In addition, the law prohibits both creditors and debt collectors from initiating legal proceedings, repossessions, or visiting a consumer’s home regarding debts that are secured by a vehicle. 

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insideARM Perspective

We previously wrote about the dangers of blanket collection bans—they allow consumers who are not financially impacted by COVID-19 to be unfairly enriched on the backs of others who will likely join the unemployed ranks. It’s the right thing to do to provide hardship allowances to consumers who are impacted by the emergency, but as we’ve said before—the credit ecosystem is a two-way street. 

Interestingly, DC’s new ban on outbound collections does not apply to creditors. There are two points to this. First, what policy purpose—other than easy PR points for unjustly bashing debt collectors—does it serve to ban outbound collection efforts by third-party collectors while explicitly allowing it for creditors? If third-party collectors are banned from collecting, then creditors will have no choice but to ramp up their in-house collections to make up for it. DC’s law seems arbitrary, and there are better ways of solving the problem, such as requiring collectors to provide hardship assistance to consumers if requested. Second, the new law leaves an open question: where do first-party collectors fall?

Most importantly, outbound communication bans from debt collectors prevent consumers from receiving important information about their accounts, which harms consumers in the long run.

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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Just when it looked like things were starting to settle down in TCPAWorld, we find ourselves on fire again.

The Second Circuit Court of Appeals held today that the Telephone Consumer Protection Act (“TCPA”) applies to any system that calls or texts automatically from a list of numbers. Specifically, the Court held that the TCPA’s automated telephone dialing system (“ATDS”) definition applies to devices that store numbers–in addition to just those that can randomly or sequentially generate numbers to be dialed. The ruling is Duran v. La Boom Disco, case no. 19-600-cv, (2d Cir. 2020).

As readers of TCPAWorld.com are well aware, the case law regarding the TCPA’s ATDS definition was finally beginning to coalesce following years of uncertainty as to the reach of the statute. Indeed, a new “majority” position on the statute’s ATDS definition had finally taken shape and district courts were repeatedly ruling that the statute applied only to random-fire calls–as the statute’s definition seems to contemplate. And with back-to-back wins at the Circuit Court of Appeals level–first in the Eleventh and then in the Seventh–Defendants had much to be confident about.

Indeed, for the first time in years, it appeared the TCPA had fallen out of vogue altogether. After slight dips in filings the last two years, TCPA filings in 2020 have fallen off a cliff. And while it is true that COVID 19 is slowing all federal litigation, the downturn in TCPA filings was far more reflective of the Plaintiffs’ bar’s acceptance that their “golden goose” might really be gone forever.

And then, this.

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The lower court in Duran had held that a device requiring a human being to determine when a text campaign would run is not an ATDS because the timing was selected by a human being, and not by a computer. While the district court had not followed the new-majority position that only random-fired dialing can trigger TCPA coverage, it did determine that the “human intervention” needed to select numbers and submit “start” to initiate a campaign was sufficient to deprive the dialer of its “automated” character. That is, because a person and not a computer was deciding when to send the message and to whom the system was not an ATDS subject to the TCPA.

On appeal, the Second Circuit Court of Appeals disagreed and set aside the judgment entered in favor of the Defendant below.

The heart of the ruling is the Second Circuit’s determination that the TCPA’s ATDS definition–including devices with the “capacity to store or produce” numbers using a “random or sequential number generator”–applies equally to devices that merely store numbers to be dialed automatically as to those that produce such numbers randomly or sequentially.

To get there, the Court focuses primarily on avoiding making words within the statute’s definition superfluous. Well, really just one word– “store.” In the Court’s view the word “store” serves no purpose if the statute applies only to randomly or sequentially generated numbers since all “random” numbers “stored” within an ATDS must have been previously “generated” in that manner. So, the argument goes, the word “store” must stand alone and not be subject to the requirement that the numbers be generated randomly or sequentially.  (I note that it does not follow that all devices with the capacity to “store” must also have the capacity to “produce” those numbers, so the court’s conclusion seems non-sequitor to me.)

The Duran court also notes that the TCPA’s exemptions for calls made with consent and calls made on behalf of the government would make little sense if the TCPA applies only to random-fired calls. It rejected the Eleventh Circuit’s point that the TCPA also applies to pre-recorded messages–so the defenses still have a purpose even if ATDS calls are solely random–concluding that the overall structure of the statute and its exemptions speak to an application to deliberately targeted ATDS calls.

One of the most remarkable portions of Duran, however, was the Second Circuit’s affirmation that the FCC’s 2003 and 2008 predictive dialer rulings may still be good law. The Court directly rejected any holdings that the Second Circuit’s earlier ruling in King had recognized those rulings having been set aside. And in footnote 28 the Duran panel notes that ACA Int’l had not actually set aside the 2003 and 2008 rulings as so many courts have now found: “However, as we discuss below, the earlier Orders do not suffer from the same internal contradiction since they are clear that ATDSs can dial from stored lists. As a result, there is no reason to think that the D.C. Circuit’s decision to invalidate the 2015 Order on this ground also invalidated those that came before it.”  While stopping short of affirmatively yielding to the FCC’s earlier ATDS rulings, Duran looks to the FCC’s own interpretive guidance as “still valid” and offering further support for the conclusion that the TCPA applies to more than just random-fire dialers. As Duran sees it:

The FCC’s interpretation of the statute is consistent with our own, for only an interpretation that permits an ATDS to store numbers—no matter how produced—will also allow for the ATDS to dial from non-random, non-sequential “calling lists.”

That just leaves the question of whether the equipment has issued has the capacity to dial the stored numbers “without human intervention.” In the Ninth Circuit ruling in Marks, the court stopped short of determining what “automatic” dialing means, noting only that minimal acts of human intervention–such as turning on a system–do not amount to manual dialing.

In Duran, the court holds squarely that dialing without human intervention is required to trigger TCPA coverage, but dives deeper into what human intervention actually entails.

First, the Duran panel rejects the district court’s groundbreaking formulation that a human-being selecting the timing of a call is what removes a device from statutory coverage. While this was a rather creative solution to the “human intervention” puzzle, it was flatly rejected by the Second Circuit: “We do not agree that the human-intervention test turns solely on this timing factor.”

Instead, the Second Circuit looks to limited human intervention actually at issue in the case–the requirement that the caller hit “send” to initiate the text campaign. The Court concludes that the mere act of hitting “send”–standing alone–is not sufficient to constitute human intervention because the single click may send thousands of texts. That is, it is the system that is doing the dialing, not the human being.

The real crux of the analysis is actually found in a footnote for some reason. As the Court explains:

[w]hen one clicks on the “send” button in the programs at issue here, one is not dialing a particular attached number beforehand or afterwards. Simply put, the “send” button, unlike a contact card, is not a short-cut for dialing a particular person. Rather, clicking “send” is accomplishing a different task altogether: it is telling the ATDS to go ahead and dial a separate list of contacts, often numbering in the hundreds or thousands.

That leads, inexorably, to the following holding:

[S]ince the programs here required only a human to click “send” or some similar button in order to initiate a text campaign, we conclude that the programs did not require human intervention in order to dial. Therefore, LBD’s programs have the second capacity necessary to be considered ATDSs. They both can dial numbers on their own which is to say, automatically.

Remember those words: “they both can dial numbers on their own which is to say, automatically.” We have a definition of automatic–the capacity to dial numbers on their own. Keep it in mind TCPAWorld. I suspect you’ll be seeing that phrase repeated with some regularity.

So what more need be said here? The playfield has leveled. Yes, in the Second, Ninth, Eleventh and Seventh we know what to expect. No more ATDS suits filed in Florida or Chicago, plenty to be filed in S.D.N.Y. and sunny California. And the spaces in between? In the Eighth or the First? In the Fourth or the Tenth? Well, we have new battles to fight and the skill and arguments of the advocates will continue to carry the day.

Obviously the fact that we no longer have a majority position renders the TCPA as vague as ever before. How can a statute that impacts speech and carries such enormous penalties be constitutional when its reach is determinable–if at all–only with reference to what court a caller is ultimately sued in? it is simply nuts that this statute remains on the books.

Luckily, SCOTUS will shortly review the TCPA and—unless I miss my guess—will find a way to review the ATDS definition and conclude, once and for all, that the statute applies only to devices that make use of random and sequential number generators. Until then, however, expect TCPA cases to spike.

DULUTH, Ga. — Crown Asset Management, LLC announced today that it has made a contribution to a local food service provider, Gourmet Innovations, to fund meals for frontline service care providers involved in the fight against the coronavirus pandemic in the Atlanta metropolitan area.  

Crown Asset Management is a leading accounts receivable management company headquartered in Duluth, Georgia. Brian K. Williams, Chief Executive Officer, stated: “Crown is fortunate enough to be able to help in this battle that affects all of us.  We feel we must do our best to support the brave doctors, nurses and other medical personnel who deal with this threat daily. We expect to continue our assistance in the coming weeks and hope that our example will galvanize support for the valiant healthcare workers in our community.” 

Businesses worldwide are becoming more involved in the coronavirus effort. Brand name companies such as Apple, Microsoft and Google have stepped up their efforts to provide aid, particularly in areas where they can apply their technological expertise. Richard Hatchett, CEO of the Coalition for Epidemic Preparedness (CEPI) has stated that assistance from business is: “the best investment your companies will ever make.” 

Gourmet Innovations accepts donations on its website from businesses and individuals wishing to help in the coronavirus effort.

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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COVID-19 has brought widespread uncertainty and confusion to the collections industry. Some states have imposed, or are considering imposing, moratoria on collections activity due to the pandemic. Federal regulators may follow. Collections organizations can use this time to optimize their consumer data strategy. Once normalcy returns, the investment will improve consumer contactability, right-party-contact rates, and revenue per dial.

Consumer information is the backbone of any outreach effort. Higher accuracy brings better results. Conversely, during a time of stressed resources, inaccuracies in customer information may inflict an outsized impact on operational efficiency and revenue-per-dial.

Most CRMs are out of date

Every year, 60M people change their addresses​, 45M change their phone numbers​, and 2.1M legally change their name. On average, 5%-15% of typical CRM records go out-of-date in a single month. This impacts all phases of collections: when accounts go delinquent, the duration of delinquency, and in the days prior to delinquency. At each phase, the collector with the most current consumer information has the best chance of reaching the consumer and collecting.

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In the weeks after collections activity is allowed to resume, collectors may find themselves in a blind race. If a consumer misses payments on multiple loans, they may start to hear from multiple collectors in short order. These consumers may spread partial payments over multiple loans or strategize as to which loan receives full payment. Either way, the risk of partial or incomplete payment is greater for collectors slow to make contact. Outdated customer information slows that outreach; a period of days and several outreach attempts will pass before it’s clear the information needs updating, during which time another collector may take payment instead.

Consolidations and acquisitions compound the problem. Consumer data held by an acquired company doesn’t readily update when it’s integrated with the acquirer’s databases. A parent company may inherit multiple records for the same consumer. Siloed records could co-exist for years. Most organizations have no formal data governance framework or budget dedicated to data integration. Bringing data together into a single, current view is often difficult and expensive, yet doing nothing invites the risk of non-compliance and operational waste.

Consumer records can contain multiple phone numbers. One number may be associated with the consumer’s employer. One or more may no longer be associated with the consumer at all or may have been ported from a landline to a cell phone, presenting a risk to TCPA compliance. One may be the consumer’s primary number. Without knowing which is which, agents or systems will waste dials and resources, and increase regulatory risk.

The cost of data decay

A commissioned study conducted by Forrester Consulting on behalf of Neustar (Why Consumers Won’t Take Your Outbound Calls, July 2019) found that over 60% of respondents believe “lack of contact data” was “critical” or “important” to addressing challenges in contacting customers over the voice channel. These challenges impact the top and bottom lines: 48% of firms experienced increased operational costs and 43% lost productivity. A tolerable annoyance during a bull market, inaccurate customer information may become an existential threat during a downturn.

Unemployment has skyrocketed. Business in multiple industries has ground to a halt. COVID-19 may spark a recession. These trends may accelerate the rate at which consumer contact information changes, either from moving residences or changing phone information. Collections organizations that assess the quality of customer information currently on file and understand in real-time the accuracy of their CRM sources will be better positioned to anticipate what’s coming.

Refresh and deepen consumer data

Now is the time to implement a strategy that ensures that customer information on file is consolidated, complete, and dynamically updated. If an audit of consumer records reveals related information is spread across silos, connect the records. It’s easier to match identifying information to unique, persistent customer records. This will expedite subsequent updates and repairs to customer databases as changes occur.

Second- or third-party consumer data enhances this effort. Referencing multiple authoritative data sources makes it possible for databases to corroborate and absorb changes as they occur. Because those changes are continuous, automated CRM updates must likewise become a continuous part of the business process.

This isn’t easy to develop or maintain in-house. Data integration topped the list of enterprise challenges in a survey of 1,400 business and IT professionals. In Forrester’s survey, 67% of respondents say that technology vendors are critical or important to solving the challenges discussed earlier.

A trusted data solution may be one of the most effective ways to mitigate the current environment of uncertainty. By proactively cleansing, repairing, and filling in the gaps across customer records, such a solution ensures the most accurate and complete view of each contact at all phases of collections: in the days leading to delinquency, entering delinquency, and until the account becomes current.

Regardless of what disruption COVID-19 brings, collections organizations retain control over how they manage their CRMs. Honing an accurate view of customer information now will enhance customer outreach when normalcy returns.

Todd Meeks is Product Management Director at Neustar, which offers free data analysis for organizations to understand the quality of their current data and provides insights for operational data improvements. To learn more contact: risk@team.neustar.

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About the iA Innovation Council

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 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: For all related insideARM articles and other information, please check insideARM’s COVID-19 Impact resources page.

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A week ago—although it feels like its been an eternity—the Massachusetts Attorney General (AG) adopted emergency rules prohibiting outbound debt collection calls and legal rememdies for 90 days during the pendency of the COVID-19 crisis. The emergency rules led to a lot of unanswered questions, so the AG issued an FAQ document on Friday, April 3, to fill some gaps.

To quickly summarize the FAQ clarifies that:

• First-party collectors and those collecting on behalf of a debt buyer are considered debt collectors for the purposes of the emergency rules.
• Debt collectors may still take inbound calls.
• Debt collectors may return a telephone call initiated by the consumer. 
• Debt collectors may still send text messages and emails.
• The Supreme Court of Massachusetts tolled the statute of limitations for all legal claims.
• If a wage garnishment or other attachment was effected prior to March 26, then the garnishments can continue or, if the creditor/debt collector chooses, may be reduced or halted.
• The emergency rules halt all activities related to the repossession of vehicles.

There you have it, folks. 

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Editor’s Note: For all related insideARM articles and other information, please check insideARM’s COVID-19 Impact resources page.

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This morning, the Consumer Financial Protection Bureau’s (CFPB) former director Richard Cordray published a whitepaper on Medium, addressed to current director Kathleen Kraninger, warning the CFPB to pay attention to the fallout of the COVID-19 pandemic. His comments include sections about debt collection, credit reporting, and rulemaking.

Debt Collection

Among several recommendations—such as helping keep consumers in their homes by stopping foreclosures and evictions—Cordray urges Kraninger to “provide vigorous oversight over debt collectors.” In full, Cordray’s comments on debt collection state:

As more indebted consumers begin to face delinquency and default, there will be more scope for harassment and abuses by some debt collectors. This is especially true as borrowers find it more difficult to repay their loans, and debt collectors find it harder to get compensated for debts they are unable to collect. The CFPB and state officials can issue guidance reminding debt collectors that the Fair Debt Collection Practices Act prohibits any conduct “the natural consequence of which is to harass, oppress or abuse any person in connection with the collection of a debt” or any conduct that is “unfair or unconscionable.” The CFPB should issue guidance about what parameters debt collectors should observe in the current crisis to avoid engaging in conduct that is abusive or unconscionable, such as refraining from initiating new debt collection lawsuits, garnishing wages, or attaching bank accounts. The CFPB must also ensure that contracted debt collectors abide by all the terms newly set by the original lenders for loan modifications or payment forbearance to deal with the crisis.

Credit Reporting

Cordray also makes mention of credit reporting, specifically addressing the CFPB’s policy statement from last week that recognized credit reporting agencies and data furnishers are also enduring hardship, and thus will ease the dispute investigation timeframe requirement on a case-by-case basis. Cordray bluntly states:

That guidance is harmful to consumers and should be rescinded immediately.

Cordray also lays out some concerns about using the code in credit reporting that specifies the consumer’s account is impacted by a disaster. Cordray discusses the importance of reporting accounts accurately and keeping consumers’ access to credit open when they will most need it. He states that the CFPB should “encourage” the proactive use of the disaster code.

Rulemaking

Cordray recommends that the CPFB stop all non-essential rulemaking, and instead focus on helping consumers with the disaster currently happening. Cordray notes:

For the next several months, it is also likely that neither industry nor consumers are likely to have the bandwidth to pay attention to requests for information or otherwise to participate in the rulemaking process in any event. This step should include the CFPB’s latest request for information on its new task force charged with rewriting federal consumer financial law; nothing could possibly justify such a priority right now.

To get more details about the above-mentioned request for information, click here. 

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insideARM Perspective

There are many comments that can be made about Cordray’s statements, but we’ll leave it at only a few. Some items referenced by Cordray, such as pausing rulemaking efforts to focus on the crisis at-hand and giving consumers who are directly impacted by the crisis some leeway, are solid recommendations. Others miss the mark. 

The only leeway provided by the CFPB’s policy statement from last week is to give companies some extra time—not forego the requirement altogether—on a case-by-case basis in the dispute investigation timeframe, recognizing that companies themselves have been forced to slim down their resources due to the crisis. Cordray’s recommendation doesn’t take into account that many businesses are impacted as well, and following his guidelines might lead to companies actively choosing NOT to credit report, which would make credit reports less accurate (or at least not show the full picture).

The whitepaper also discusses how crucial it is to keep consumer access to credit open. At the end of the day, the credit ecosystem is a two-way relationship—it doesn’t work if one party is lending money and the other is not repaying it. If lenders can’t—or are unreasonably burdened from—recovering on the credit they provide, they will provide less credit. One way to prevent this roadblock is to refrain from issuing blanket regulatory prohibitions on the recovery of debt. Consumers who need hardship assistance should absolutely get it, but not all consumers fit this bill. Many were able to retain their jobs and successfully transition to working from home. Any regulations that come forth should keep this in mind.