Editor’s Note: This article originally appeared on the TrueAccord Blog and is republished here with permission.

Debt collection agencies work to recover money on behalf of creditors. Unfortunately, not every debt is collectible, and it’s important to recognize these edge cases before they become bigger problems.

What are accounts uncollectible?

Accounts uncollectible, also known as uncollectible debts, are accounts owed that have almost no chance of being paid off. While it is better for the customer’s credit score and overall financial health, as well as for the lending company’s growth to receive these payments, there are some debts that will simply never be paid. There are several reasons that this may be the case:

• A customer is not reachable
• A customer is unable to pay
• A customer declares bankruptcy
• A customer disputes the debt

While some debts may reach a point where they become uncollectible, there is a lot that can be done before those delinquent accounts reach the point of no return. Debt collection agencies serve to lessen the impact of accounts that become uncollectible and work to prevent them from becoming bad debts. 

[article_ad]

The longer a company waits to adopt a collections solution, the more accounts they risk becoming uncollectible. We’ve already looked at some reasons why a debt may be hard to collect, but if a customer owes a debt, they have to pay it, right? Unfortunately, companies that make this assumption end up with debts on a timer.

A debt may reach its statute of limitations for collection.

Each state has distinct requirements that affect how long companies and collection agencies can legally collect on a debt. While a select few states have statutes that extend the collection window to up to 15 years, most are limited to somewhere between 3 and 6 years.

Once a debt ages out of these windows, it is considered a “time-barred debt.” Collecting a time-barred debt is possible, but the approaches are limited and debt collectors can no longer sue to demand collection.

Even if the debt is new enough to be collected, TrueAccord’s customer data indicates that new accounts (those in collections for fewer than 90 days) are four times more likely to begin a payment plan than those who’ve been collections for more than six months. 

Those same new accounts are also eight times more likely to begin paying off a debt than those who have been in debt for longer than two years. This rapid decline means that creditors need to act quickly to prevent an account from slipping away.

How do you avoid accounts uncollectible?

If a customer has not paid a debt for one reason or another then companies are working against the clock to collect. The typical solution to recouping otherwise uncollectible debts is to hire a third-party debt collection agency. Many agencies operate by reaching out to customers and requesting (or demanding) payment for a debt, hoping to instill a sense of urgency in the customer.

One of the issues with this approach is that customers are forced to engage on the collector’s time rather than on their own. TrueAccord recognizes that when customers work on their own time, they are given power over their financial freedom and are more likely to commit to a payment plan. 

Another key issue with the traditional collections model is a lack of proper analytics. While call centers may reach hundreds of customers daily, each call can vary wildly due to the personal nature of a phone call. Digital-first collections strategies allow agencies to regularly send consistent messages and accurately test which of those messages prompt the most engagement and, ultimately, lead to payments. 

Any amount of uncollectible debt directly translates to a loss for creditors. The best option available to companies that wish to avoid losing out on delinquent accounts entirely is to embrace a digital-driven debt collection strategy. Uncollectible accounts will only get more difficult to recover over time, and if teams wait too long those accounts will truly be untouchable. 

BUFFALO, N.Y. — Secured Resolutions, a certified-HUBZone, woman- owned small business (WOSB) in Western New York, has announced a transaction bringing Roxanne Baker to the firm as both an equity member and as its President and CEO, effective Tuesday, October 1, 2019. In this role, she will drive the ongoing operations of the company and its growth into new markets to include higher education and government.

Ms. Baker’s 21-year career has included stints at Pioneer Credit Recovery and West Asset Management (prior to its acquisition by Alorica) before her most recent, 11-year run with Coast Professional. Here, Roxanne started as a Vice President in 2007, with successive promotions corresponding with the company’s rise as a leading Federal contractor to the U.S. Department of Education (ED). Roxanne most recently held the position of President at the company for three years before her departure last year.

Ms. Baker commented, “I am proud to become part of this all-woman owned agency. With 20-plus years of leading companies to consistent first-place finishes on ED contracts along with managing other student loan and government contracts, it made perfect sense to combine that experience with a thriving medical collection agency owned by two leaders who share the same vision. Secured Resolutions’ success is built on a theory of ethical and compliant collections while maintaining the highest returns for their clients. Our goal is to grow the current business line while adding student loan and government collections. I am excited about this opportunity and look forward to what the future holds.”

Specializing in revenue recovery services, Secured Resolutions’ executive team has extensive experience with accounts receivable management and a proven track record with medical collections and servicing ED and other student loan clients. A member of ACA International with an A+ rating with the Better Business Bureau, the company is located in Buffalo, N.Y.  

Co-founder Laura Hirsch said, “Lisa True and I are thrilled with the addition of Roxanne as our new business partner.  Over the last 5 years, we worked to position the company for growth by becoming women-owned and HUBzone-certified. Our missing link was an experienced industry leader with a proven track record to take Secured Resolutions to the next level.  We are looking forward to significant growth with Roxanne’s experience and leadership and are excited to expand our services to include student loans and government collections.”

Secured Resolutions is a member of the Fed Cetera Network, a business development organization under 48 CFR 52.219-9.

As I have reported over the last few days, the calamity of inconsistent ATDS decisions has officially reached a fever pitch. Courts are now reaching inconsistent decisions on the application of the TCPA multiple times in a single day. And as I opined yesterday, the application of such an ambiguous statute in an ad hoc manner that chills speech is deeply inconsistent with constitutional principles.

Nonetheless, on Friday of last week—just a business day before three different courts would apply three different ATDS formulations to text message platforms— a Court in Maryland found the TCPA was not vague as applied to—wait for it—a text message platform. In Wilson v. PH Phase One Operations L.P., Civil Action No. DKC 18-3285, 2019 U.S. Dist. LEXIS 166732 (D. Md. Sept. 27, 2019) the Court rejected both a First Amendment challenge and a void for vagueness challenge to the TCPA, facially and as applied.

The result of the First Amendment challenge—although the wrong one—was not particularly surprising as the Court’s hand was forced by AAPC, where the Fourth Circuit held that the TCPA is unconstitutional under First Amendment principles but severed one of several content-specific exemptions in a bid to convert the statute to a content-neutral time place manner restriction, purportedly saving it. While AAPC applied both the wrong analysis and offered the wrong remedy, the Wilson court was obviously bound by it.  

The void for vagueness challenge analysis is far more interesting but, in the most delicious of ironies, the Court’s analysis is, itself, quite vague. The Court seems to imply that the TCPA cannot possibly be vague because it existed for ten years without any FCC rulings to serve as guideposts on the scope of the statute. While the premise is true—the FCC did not interpret the TCPA to expand what was an ATDS until 2003—the conclusion is a non sequiter. The TCPA was not vague until the FCC interpreted the statute to expand what was an ATDS—until then every Court agreed that the statute meant what it said; i.e. it only covers dialers that call randomly or sequentially. Indeed it took another 8 years—to 2011—before Courts actually began applying the FCC’s 2003 order and that, of course, was the watershed moment when the statute became impossible to apply.

From 2011 on, of course, things only get murkier with the FCC interpreting the statute to expand the definition further in 2015—seemingly in retroactive fashion—then the D.C. Circuit Court of Appeal set aside that ruling—again with retroactive impact– but some courts still applied the 2003 ruling—and some still do so, in part, to this very day–then the Ninth Circuit expanded the statute again in Marks—which some courts follow and some courts do not. In other words, even if the statute was not vague for 20 years it certainly is today. The Court’s review of simpler times, therefore, does not really yield much impact in today’s environment of uncertainty. Nonetheless, the Court overruled the vagueness challenge on essentially this analysis.

Defendant also posed an as-applied challenge which the Court gave unfortunately short shrift. Essentially the court punted on the issue and determined that the allegations of the complaint—this was a pleadings challenge—demonstrate that Defendant used a system with the capacity to dial randomly or sequentially and that’s exactly what the statute says. So deeming a statute void for vagueness when it is being applied to the very technology the statute covers is not appropriate. Here Wilson gets it right, sort of. The thrust of Defendant’s point was that human intervention was needed to send the messages at issue. The Wilson court does not really take that issue up-finding the analysis unpersuasive in light of the allegations of the complaint— but that is forgivable since evidence of the device’s functionality was not properly before the court at the pleadings stage.

While the results on the constitutional analysis were poor for Defendants, Wilson is not all bad. Importantly the Court concluded that there is no private right of action for violations of CFR 64.1200(d)—including a requirement to maintain internal DNC policies—and dismissed those claims. Suing under these regulations has become a new TCPA class action trend so keep Wilson in mind for those cases.

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. 

Editor’s Note: This article was originally published on the Maurice Wutscher blog and is republished here with permission.

—

The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the denial of a lender’s motions to dismiss and to strike a complaint filed on behalf of a class of borrowers who entered into loan agreements with the lender and its affiliates.

In so ruling, the Eleventh Circuit held that the loan agreements’ forum selection clause and class action waivers were unenforceable under Georgia’s Payday Lending Act and Industrial Loan Act, as enforcement would undermine the purpose and spirit of Georgia’s statutory scheme including to preserve class actions as a remedy.

A copy of the opinion in Davis v. Oasis Legal Finance Operating Company, LLC is available here. 

[article_ad]

A class of plaintiff borrowers entered into identical loan agreements with a lender and its affiliated entities.  The borrowers’ loans were generally $3,000 or less, and were to be repaid from the borrowers’ recoveries in separate personal injury lawsuits, and thus, were contingent upon the success of their lawsuits.

In February 2017, the borrowers filed a class action complaint against the lenders in Georgia state court alleging violations of Georgia’s Payday Lending Act, O.C.G.A. § 16-17-1 et seq., the Industrial Loan Act, O.C.G.A. § 7-3-1 et seq., and usury laws, O.C.G.A. § 7-4-18.  The lenders removed the class action suit to federal court and moved to dismiss and strike the complaint on the basis that the agreements contained a forum selection clause requiring the borrowers to file suit in Illinois, and further waived their ability to file a class action.

The trial court denied the lenders’ motions, holding that the forum selection clause and class action waiver were unenforceable and contravened public policy and the intent of the Georgia Legislature because the Payday Lending Act and Industrial Loan Act include express provisions providing class action lawsuits as a vehicle for consumers aggrieved by payday lenders.  This appeal followed.

On appeal, the Eleventh Circuit was tasked with considering whether the trial court erred in concluding that the agreements’ forum selection clause and class action waiver were unenforceable.

Initially considering the validity of the forum selection clause, the Eleventh Circuit cited rulings by the Supreme Court of the United States, holding that such clauses “should be given controlling weight in all but the most exceptional cases,” (Atl. Marine Constr. Co. v. U.S. Dist. Ct. for the W. Dist. Of Tex., 571 U.S. 49, 63 (2013)) and identifying four grounds on which a court can refuse to enforce such clauses: “(1) [if its] formation was induced by fraud or overreaching; (2) [if] the plaintiff effectively would be deprived of its day in court because of the inconvenience or unfairness of the chosen forum; (3) [if] the fundamental unfairness of the chosen law would deprive the plaintiff of a remedy; or (4) [if] enforcement of the [forum selection clause] would contravene a strong public policy.”  Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 1285, 1292 (11th Cir. 1998) citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15-18 (1972).

Here, the Eleventh Circuit considered the fourth ground—whether the forum selection clause “would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or judicial decision.” Bremen, 407 U.S. at 15.”  Noting that Georgia’s public policy bar is built on its constitution and state statutes, which provide that “[a] contract which is against the policy of the law cannot be enforced,” and a nonexclusive list of such particular agreements (O.C.G.A. § 13-8-2), the Court acknowledged that it could look to other Georgia statutes (i.e., those in the case at bar) to determine whether the state has a strong public policy against enforcing forum selection clauses in favor of out-of-state payday lenders.

As you may recall, Georgia’s Payday Lending Act provides, in relevant part, that “[a] payday lender shall not . . . nor shall the loan contract designate a court for the resolution of disputes concerning the contract other than a court of competent jurisdiction in and for the county in which the borrower resides or the loan office is located.”  O.C.G.A. § 16-17-2(c)(1). The Georgia Legislature further explained that “[c]ertain payday lenders have attempted to use forum selection clauses contained in payday loan documents in order to avoid the courts of the State of Georgia, and the General Assembly has determined that such practices are unconscionable and should be prohibited.”  § 16-17-1(d).  The district court found these provisions conclusive in its determination that the forum selection clause was unenforceable under Georgia public policy.

On appeal, the lenders argued that subsection 16-17-2(c)(1) of the Payday Lending Act’s use of the term “county” does not specify that the county must be in Georgia; thus, the lenders may select as forum the county where their “loan office is located”—in this case, Cook County, Illinois.  The Eleventh Circuit rejected the lenders’ argument, noting that Georgia venue provisions commonly use the term “county” or “counties” in reference to Georgia counties, without explicitly saying so, while rendering the language in subsection 16-17-1(d) meaningless.  See Ga. Const., Art. VI, § 2, ¶¶ III, IV, VI; O.C.G.A. § 9-10-93.

Next, the lenders contended that the Payday Lending Act doesn’t apply to the agreements between the Georgia borrowers and the out-of-state lenders because § 16-17- 1(d) states that “[p]ayday lending involves relatively small loans and does not encompass loans that involve interstate commerce.”  This argument, too, was rejected by the Eleventh Circuit, because: (i) its argument contradicts its theory that the term “county” was meant to include counties outside the State of Georgia; (ii) other provisions of the Payday Lending Act make clear that the Act governs “any business” that “consists in whole or in part of making . . . loans of $3,000.00 or less” unless those entities are specifically exempted (W. Sky Fin., LLC v. Georgia, 793 S.E. 2d 357, 363 (Ga. 2016) and out-of-state lenders are not exempt (§ 16-17-2(a)(1)–(4)) and; (iii) excluding loans involving out-of-state lenders from coverage would render the Payday Lending Act’s prohibition of out-of-state forum selection clauses meaningless (citations omitted).

Because Georgia statutes establish a clear public policy against out-of-state lenders using forum selection clauses to avoid litigation in Georgia courts, the appellate court concluded that the district court correctly denied the lenders’ motions to dismiss and motion to strike on that ground.

Having rejected the lenders’ argument that the agreements’ forum selection clause was unenforceable, the appellate court turned to its review of the class action waiver.

As you may recall, both the Georgia Payday Lenders Act and Industrial Loan Act contain provisions expressly provided that claims under the respective statutes may be brought as class actions. § 16-7-3 (“a civil action may be brought on behalf of an individually borrower or on behalf of an ascertainable class of borrowers.”); § 7-3-29(e) (“a claim for violation of this chapter against an unlicensed lender may be asserted in a class action.”).  In denying the lenders’ motions to dismiss and strike the borrowers’ complaint, the district court stated that the Georgia Legislature “expressly contemplated a specific remedy—[a] class action—for persons aggrieved by predatory lending . . . [and] did not expressly create the class action remedy so that predatory lenders could effectively wipe away this consumer protection with a waiver . . . ”

On appeal, the lenders argued that the trial court erred by failing to consider whether the provisions were procedurally or substantively unconscionable, and that neither statute prohibits class action waivers or creates a statutory right to pursue a class action.

The Eleventh Circuit agreed with the trial court’s reasoning that enforcing class action waivers in this context would allow payday lenders to eliminate a remedy expressly contemplated by the Georgia Legislature and undermine the purpose of the statutes, thus rendering any such provision unenforceable whether or not it is also procedurally or substantively unconscionable (citations omitted).

Acknowledging that Georgia courts may address whether a contractual provision is substantively unconscionable, they also “consider ‘the commercial reasonableness of the contract terms, the purpose and effect of the terms, the allocation of the risks between the parties, and similar public policy concerns” (Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 876 (11th Cir. 2005)) which remain an independent basis to hold a contractual provision unenforceable.  Glosser v. Powers, 71 S.E.2d 230, 231 (Ga. 1952).

Lastly, the lenders argued that the Payday Lending Act’s fee-shifting provision eliminates risk that enforcing the class action waiver would effectively prevent plaintiffs from litigating their claims.  While acknowledging that it has held that certain class action waivers were not unconscionable, in part because fee-shifting provisions permitted plaintiffs to pursue their claims individually, the Eleventh Circuit distinguished those cases by noting that enforcement of those provisions would prevent the plaintiffs from having their day in court.  See Jenkins, 400 F.3d at 877-78.

Here, the trial court did not conclude that the class action waiver was unconscionable or that the borrowers were barred from litigating their claims individually.  Moreover, the authority cited by the lenders concerned class action waivers in arbitration agreements, where the Federal Arbitration Act “create[s] a strong federal policy in favor of arbitration.  Picard v. Credit Solutions, Inc., 564 F.3d 1249, 1253 (11th Cir. 2019).  For these reasons, this argument, too, was rejected.

Because the Georgia’s Payday Lending Act and Industrial Labor Act establish the state legislature’s intent to preserve class actions as a remedy, the Eleventh Circuit affirmed the trial court’s denial of the lenders’ motion to dismiss and motion to strike.

On Thursday, October 3, the Consumer Financial Protection Bureau (CFPB or Bureau) announced its appointment of members to its Consumer Advisory Board (CAB) and other councils. The new CAB, which serves to advise and consult the Bureau on consumer financial issues, contains a varied and impressive range of members. Included are fintech companies, consumer advocates, creditors, and market researchers. However, debt collection industry representatives are noticeably absent—the closest match is the representative from Scrach Services, Inc., a loan servicer.

The newly-appointed CAB contains the following members:

• Chair: Brent Neiser, Senior Director, National Endowment for Financial Education (Denver, CO) 
• Nikitra Bailey, EVP, Center for Responsible Lending (Durham, NC)
• Nadine Cohen, Managing Attorney, Greater Boston Legal Services (Boston, MA)
• Sameh Elamawy, CEO, Scratch Services, Inc. (San Francisco, CA)
• Manning Field, COO, Acorns (Irvine, CA)
• Clint Gwin, President & CEO, Pathway Lending (Nashville, TN)
• Ronald Johnson, Former President, Clark Atlanta University (Atlanta, GA)
• Tim Lampkin, CEO, Higher Purpose Co. (Clarksdale, MS)
• Eric Kaplan, Director – Housing Finance Program, Milken Institute (Washington, DC)
• Sophie Raseman, Director of Product, Brightside (San Francisco, CA)
• Rebecca Steele, President/CEO, National Foundation for Credit Counseling (Washington, DC)
• Tim Welsh, Vice Chairman Consumer and Business Banking, U.S. Bank (Minneapolis, MN)

[article_ad]

insideARM Perspective

Based on the new CAB membership, it is evident that the Bureau is continuing its focus on innovation. It’s important to note that the debt collection industry is also trying to innovate—for instance, as evidenced by the iA Innovation Council.

In reality, debt collectors are most in need of innovation since the industry’s growth has been stifled by legal uncertainty related to the outdated FDCPA, which contemplated fax machines and telegrams, not email, text, and mobile apps. The CFPB’s proposed debt collection rules make some strides in overcoming this hurdle; it would have been positive for the industry to also have the opportunity to educate the Bureau on the nuances associated with debt collection via a seat on the CAB. The loan servicer representative is the closest equivalent, but loan servicers are not always subject to the same strict requirements that govern third-party debt collection. This is not the first time debt collectors were left out of the CAB. Other than the appointments of Joann Needleman of Clark Hill and Ohad Samet of TrueAccord, the debt collection industry has been noticeably absent from CAB membership. At the same time, debt collection is a major focus for the Bureau, which is expected to issue a final rule in 2020.

The CFPB’s proposed debt collection rules envision a much needed update and modernization to many provisions in the Fair Debt Collection Practices Act.  However, the CFPB’s proposed rules include a limit of the number of debt collection calls that may be made per week without regard to the REJECTION of call frequency limits by Congress.  Because our Congress considered and dismissed call frequency limits for debt collectors, the CFPB cannot implement such limits through rulemaking.

[article_ad]

In this episode of the Debt Collection Drill podcast, attorneys Mike Poncin and John Rossman re-enact (from official Congressional transcripts) portions of the April 4, 1977 debates in the United States House of Representatives regarding the FDCPA and specifically a then-proposed weekly limit on debt collection calls.  Members of Congress raised specific and detailed objections on the record about the Constitutionality of the call frequency limit proposal at that time and also concerns about false claims. 

Listen here.

California Governor Gavin Newsom has signed SB 208, the Consumer Call Protection Act of 2019, to, among other things, “identify those engaging in deceptive robocalls and protect Californians, especially vulnerable populations, from impostors using telecommunications to defraud consumers.”

The new law, which adds Section 2893.5 to the Public Utilities Code, would require each telecommunications service provider, on or before January 1, 2021, to implement STIR/SHAKEN protocols “or alternative technology that provides comparable or superior capability to verify and authenticate caller identification for calls carried over an internet protocol network.” A “good faith effort” to comply with this requirement will be a defense to a claim for violating Section 2893.5 in this regard.

Further, pursuant to authority granted to the states in 47 U.S.C. §227 (i.e., the Telephone Consumer Protection Act), the California Public Utilities Commission (CPUC) and the Attorney General (AG) of the state are authorized to “take all appropriate actions to enforce that section and any regulation promulgated under that section.” In addition, the law provides that the CPUC may, at the request of the AG, work with the AG for the purposes of enforcing the TCPA provisions that specifically provide state authority (i.e., 47 U.S.C. §227(e), (g)).

Finally, the new law specifically provides that it does not (a) require a telecommunications service provider to employ call blocking, (b) limit any right otherwise permitted by law and (c) otherwise expand the power of the CPUC.

While the states proceed to address the problem of illegal robocalls, TCPAWorld awaits the results of Congressional negotiations on the Federal level. Recent trade press reports indicate that Senate and House efforts to meld S. 151, the TRACED Act, and H.R. 3375, the Stopping Bad Robocalls Act, may produce results after Congress returns from its current recess in mid-October.

Stay tuned to TCPAWorld on that score.

—

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.

LOS ANGELES, Calif. — The City of Norfolk Virginia has officially launched implementation of their new Cloud Collections & Accounts Receivable Management Financial Ecosystem, “CSS IMPACT! HD™ 2.0.” CSS, Inc., the developers of “IMPACT! HD™ 2.0,” is the leading provider of “NextGen” Cloud Financial Ecosystem platforms for enterprises & government.

CSS’s financial cloud ecosystem removes prohibitive costs of acquiring “NextGen” Debt Collections technology enabling City workforces to overcome fundamental day to day process challenges. Metropolitan Municipalities, like the Cities of San Francisco & Los Angeles – and now the City of Norfolk, are leveraging CSS’s Financial Ecosystem Cloud technology to deliver turn-key revenue & business process automation with an intuitive frictionless “Digital Consumer Engagement” platform, while efficiently streamlining the City’s workforce. This in turn enables veteran City staff to focus on revenue management & customer care.

The City of Norfolk’s selection of CSS aligns with its vision of delivering technology that improves productivity, quality of service & citizens engagement that promotes business growth & educational opportunities.

USA Today recognized the City of Norfolk as one of the Top 10 booming downtowns, recognizing a decades-long housing, retail and financial boom. Norfolk is home to the world’s largest naval base and the North American Headquarters for NATO (North Atlantic Treaty Organization).

“CSS is truly humbled to have been selected by the City of Norfolk for this implementation to deploy our “NextGen” Financial Ecosystem to better serve its citizens by enabling rich digital customer service experiences, as well as business and cloud  automation. We look forward to a long-term partnership with the City of Norfolk.” – Carl Briganti, President & CEO of CSS, Inc.

To learn more about how municipalities are leveraging CSS’s Cloud Financial Ecosystem, please visit http://www.cssimpact.com/software/tax-information-platform-system or download CSS’s tax platform brochure at http://tax.cssimpact.com

About the City of Norfolk, VA – Office of Finance

The City of Norfolk Virginia sprawls across roughly 66 square miles and encompasses some 247,000 residents. It has seven miles of Chesapeake Bay beachfront and a total of 144 miles of shoreline along our lakes, rivers, and the Bay. The Department of Finance provides exemplary financial services through cooperative interaction with our customers, clients and coworkers within a framework of shared values.

For more information please visit https://www.norfolk.gov/fbs

About CSS, Inc.

CSS is a leading provider of end-to-end cloud Financial Ecosystem platforms & Contact Center solutions for enterprises that generate & manage mass receivables, payments, recoveries & revenues. By delivering cognitive cloud Financial Ecosystems technology, CSS helps municipalities and enterprises improve and automate all their daily financial processes, consumer engagement & business process. For more information, download our brochure at http://brochure.cssimpact.com or visit us http://www.cssimpact.com or call 877.277.4621 

Today, the New York City Department of Consumer and Worker Protection (DCWP) announced the release of a report titled, “Lost in Translation: Findings from Examination of Language Access by Debt Collectors.” The report examined several NYC-licensed debt collection agencies to see how they service consumers with limited English proficiency (LEP). DCWP notes that the findings were concerning and proposes solutions that would require licensed debt collection agencies to provide better services to LEP consumers.

The report found that of the thirty-two debt collection agencies investigated, all claimed to provide some form of access to non-English speaking consumers, but that “those services were often limited and lacked quality.” Thirty-one of the agencies provided LEP services that were delayed (e.g., having to wait several minutes to be connected to a Spanish-speaking representative) or not provided at all (e.g., transferring the consumer to a voicemail consisting only of English instructions). Fourteen of the agencies failed to record the consumer’s language preference, and ten of the agencies failed to maintain policies and procedures about how to work with LEP consumers.

The report also notes that of the 517 NYC-licensed debt collectors that contact consumers directly:

• 46% reported they contact consumers in a language other than English.
• 20% reported they provide collection letters (including disclosures) in a language other than English.
• 41% reported that they are staffed with multilingual customer representatives.
• 9% provide general translation services to consumers.

According to the announcements:

These findings show that without a legal obligation to serve LEP consumers, the majority of licensed debt collection agencies will not offer language assistance services to consumers to ensure they can understand the collection process. Based on these findings, the report proposes new debt collection laws and regulations that would require collectors provide certain notices and materials to consumers who request them in their preferred language.

The proposals include requiring debt collectors to request and maintain language preferences of consumers, require that a validation notice be sent in the consumer’s preferred language prior to collecting the debt, requiring collectors to provide a glossary of commonly-used terms in the consumer’s preferred language, and prohibiting inaccurate or incomplete translations.

[article_ad]

insideARM Perspective

The premise of this report—that debt collectors should communicate in a way that is understandable to the consumer—is supported by industry and consumer advocates alike. However, there is one glaring gap in this analysis: the disconnect between the creditor, consumer, and debt collector. Creditors that offer non-English services usually require their debt collectors to provide similar accommodations. If it is argued that LEP consumers are not equipped to understand collection notices, even with the non-English services already provided, then could it not also be argued that the consumer did not understand the original credit agreement and its implications?

Editor’s Note: This article was authored by Josh Allen, Revenly’s Founder & CEO, and reflects the opinions of the author. Revenly is an all-in-one payment platform focused on using digital engagement and customer preference to drive collections. It previously appeared on the Revenly blog and is republished here with permission.

Last December, I wrote an article for insideARM that presented a pretty straight forward message: the collection industry needs to start adopting newer technology. A few short months later, the CFPB answered the call to arms by announcing a long-awaited proposed rule change to the FDCPA (Notice of Proposed Rulemaking, or NPRM), which aims to bring technology and modern communication to debt collection. With the spotlight now on newer technology—especially technology related to communication channels—thoughts of using text, email, and chat went from bleeding edge to cutting edge.

The NPRM brought excitement and conversation, but when the party was over, there was an unmistakable void left in the room. An advisor of ours helped provide a different perspective, leading to a bigger conversation. While I still couldn’t put my finger on what was missing, I felt a disconnect in how the collection industry was still under-valuing the application of newer technology.

Where is the value? How do you measure it? It’s hard to differentiate between the conjecture and sales pitches that promise features to increase collection overnight and what is real. What’s real isn’t always the first thing we want to admit. It costs too much. It’s not a priority. Who else is doing it? These objections are consistent responses to valueless technology where, in an atmosphere like this, everyone is an “expert” and we tend to hear what we want to hear, from whom we want to hear it. In reality, we have very little data sourced from this industry that shows where the true value is. Don’t hold your breath for the CFPB either; they won’t write a technical business strategy for any of us.

If we start to tune out the noise, we’ll find that there are groups, like the Consumer Relations Consortium and the Innovation Council, working on ways to break ground and demystify collection technology. It goes to show that this industry can be incredibly proactive if it works together. The question is not what feature we need, because all of them are useful. The real question is where do we start, what do we start with, and what is the new order of operations that provides a reliable benchmark to leverage against the rest. In other words, show me the proof. 

While not claiming to have all the answers, there are people like myself who have fully immersed themselves in the process of digitizing a collection strategy. As luck just so has it, a few of us are hosting an ARM-U panel this fall in an appropriately titled session: Digitize Your Collections. During the presentation, you’ll learn how to go from getting your feet wet to jumping headfirst into using newer technology strategically from people who have done it before.

It’s not the CFPB holding back innovation—it’s facing down our technical debt, the implied cost of additional rework caused by choosing an easy solution instead of using a better one, that no one wants to readily admit as the reason for why these growing pains exist. The “Digitize Your Collections” session is hosted by those who’ve bucked the trend because they saw a misalignment of contact strategies and didn’t hesitate to question the status quo in order to start solving the problem.

You can register for free today and submit your questions now by clicking here. ARM-U is a series put on by insideARM.