Collection Advisor November/December 2017 by Receivables Advisor

CO VIR SO LLE TUA FT C T L WA I O RE N USING TECHNOLOGY TO EMPOWER COLLECTIONS

STOP SEARCHING FOR THE GOLDEN BULLET 5 WAYS TO KEEP YOUR LEADER SHIP AFLOAT LEADING COLLECTORS PROVIDE TELECOM COMPLIANCE INSIGHTS CONSUMERS MAY “PARTIALLY REVOKE” CONSENT TO BE CALLED DEBT BUYERS NOT DEBT COLLECTORS FOR FDCPA – RESPONSE REWARDING TELECOM CONSUMERS TO ENTICE PAYMENTS SUPREME COURT HENSON CASE BRINGS COMMON SENSE WORKING WITH THE MODERN MORTGAGE CONSUMER TOM STOCKTON RECEIVES STRAUSSER JR. AWARD FINANCIAL TRANSPARENCY IN DEBT COLLECTION November/December 2017 Vol. 17, No. 6

Jeff Parker

TRACKING KEY METRICS IN TELECOM COLLECTIONS

Collection Advisor P.O. Box 92342 Southlake, TX 76092

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TELECOM COLLECTIONS

Sam Eidson

Ron Brown

Sam Edens

Harry A. Strausser III

Debra J. Ciskey

Fred N. Blitt

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e m o c l e W T

elecom collections has been a moving target the past few years since the CFPB’s increased interest in the subject. Many collection professionals have found success in avoiding the lament of change, anticipating the regulations coming down from Capitol Hill and adapting based on the data they receive from their own collection efforts. Prince Parker and Associates has done this and explains its formula in this issue’s Agency Spotlight. Agency Advisor Sam Eidson illustrates how the mortgage landscape has evolved for consumers and collection professionals alike. Compliance Advisor Debra J. Ciskey discusses how telecom collections has changed since the CFPB announced consent agreements with the two largest wireless providers. Legal Collection Advisor Fred N. Blitt contemplates how the results of Henson v. Santander Consumer USA verdict will affect collection professionals across the country. Skip Tracing Advisor Ron Brown has reached a milestone writing for Collection Advisor, providing professional tracing insight for the benefit of all collectors. In fact, this issue contains Brown’s 50th article. For this occasion, Brown reveals a normally coveted piece of information every skip tracer needs to stop pursuing. Benchmark Advisor Harry A. Strausser III looks to some leadership gurus for inspiration and presents five ways a collection professional can successfully lead an agency. Technology Advisor Sam Edens explains how there is more than one way to skin a cat. Edens shows how collection professionals can work with consumers to not only encourage payments, but entice them. Next issue, Collection Advisor dives into legal collections to provide techniques to help professionals navigate an oftennecessary solution. We will also take a closer look at legal collection software. Until next time, we look forward to hearing from you.

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November/December 2017

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USING TECHNOLOGY TO EMPOWER COLLECTIONS

November/December 2017

ADVISORS

Volume 17, No. 6

AGENCY ADVISOR Working with the Modern Mortgage Consumer Sam Eidson 6

SKIP TRACING ADVISOR Stop Searching for the Golden Bullet Ron Brown

COMPLIANCE ADVISOR Leading Collectors Provide Telecom Compliance Insights Debra J. Ciskey

25 7

Business Directory

Collection Industry Top Product Nominees

ALANE A. BECKET

5 Ways to Keep Your Leader Ship Afloat Harry A. Strausser III

Welcome

Debt Buyers are Not Debt Collectors for the FDCPA – Response

BENCHMARK ADVISOR

1 9

LINDA STRAUB JONES

DEPARTMENTS

Financial Transparency in Debt Collection

TECHNOLOGY ADVISOR

Supreme Court Henson Case Brings Common Sense Fred N. Blitt

ACA INTERNATIONAL

Rewarding Telecom Consumers to Entice Payments Sam Edens

LEGAL COLLECTION ADVISOR

Tom Stockton Receives the Harry Strausser Jr. Award

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Consumers May “Partially Revoke” Consent to be Called by Automatic Dialing Systems

PATRICK T. MCLAUGHLIN

Agency Spotlight Tracking Key Metrics in Telecom Collections Jeff Parker, President of Prince Parker and Associates

What Your Collections Need to Go Virtual Software Roundtable

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Working with the Modern Mortgage Consumer

Almost a decade ago the mortgage industry turned upside down. Many factors led to the crash including our economy, subprime lending and adjustable rate mortgages. As a young collector in my twenties I was able to purchase my first home using a stated income and was given a 30-year mortgage with a rate that adjusted after seven years. We submitted a stated income to the lender in order to get approved because 60% of my annual income earned was from bonus checks. For some, this process for approval backfired because the loan was based on income that was not guaranteed. Some of you may remember the refinance boom. Loan officers attempted to assist consumers by refinancing their home loan for bill consolidation, home improvements or to avoid their interest rate and monthly payment from increasing after adjustment. The opportunity to make large commission checks even prompted a few of my colleagues to leave the collection industry and become loan officers. A few of them partnered with me to where I would send the consumer their way and, if they could, refinance the consumer’s loan where I would receive a kickback. The agency I worked at saw this as an opportunity and even opened a mortgage company to which we could refer consumers. Could you imagine how that would be received given today’s regulatory environment? Things sure have changed over the years as we make our recovery from the economic crash. There are many home loans left unpaid needing assistance from collection agencies. All collection products require a unique approach and the same holds true for unpaid mortgages. Collectors must have advanced skills in order to be successful collecting mortgages. As with any type of debt collection, knowledge is power. Having information such as property address, property value, a recent credit report and knowing state laws are essential prior to making contact. Once contact is made take time with the consumer and allow them to explain their situation. The information they provide will help you understand which options will best fit the consumer’s need. After you’ve listened to the consumer you can begin walking them through what is best for them and the servicer. If the consumer is still in the home, find out if they want to keep the home or if they just want out. By the time you reach them the servicer has more than likely already offered a deferment or loan modification. If the consumer wants to keep the home, they have equity and their credit allows they may be able to refinance their loan. If they don’t have equity and their credit doesn’t support a refinance, try to work out a payment plan that satisfies the

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Agency Advisor Sam Eidson

servicer in an effort to avoid foreclosure. If they want out of the home and have equity they may be able to sell and could potentially make a profit. If they are too far upside down they may have no other option but to short sale the home. In order for this to happen all the lien holders would have to agree on a payoff. Having a copy of the HUD will help you determine how much money is available and ensure you negotiate the best possible settlement. If the consumer is not willing to cooperate, foreclosure may be inevitable. If you are collecting on a second mortgage or line of credit state law may protect consumers who are current on their first mortgage. Consumer protection laws limit the ability to collect these types of debt forcing many lenders to wait until the home sells eventually satisfying the lien. Once the home has been foreclosed the second mortgage or line of credit becomes unsecured debt. If the home has already been foreclosed, making contact with the consumer could be challenging. A certain amount of skip tracing may be needed in order to obtain the most recent address, employer or phone number. For many Americans their home is the last thing they stop paying so if they’ve recently fallen delinquent their financial situation may not allow them to repay at this time. Again that’s where collectors must have the ability to listen and solve problems while not being intimidated by large balances. Volume and resources have forced many agencies to rely on dialing systems however based on the need for skip tracing and personal touch I recommend a dedicated team of experienced professionals that are geared towards a manual dialing strategy. Sam Eidson is the Director of Compliance for Delta Outsource Group, Inc. He also serves as Secretary for the Missouri Collectors Association. November/December 2017

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Stop Searching for the Golden Bullet

In today’s world of cyber tracking, the tracer has many data sources from which to choose. Tracers are being constantly bombarded with claims from various data brokers indicating they have the largest database or they are the most accurate and touting prices that are all over the place. The prices can range from $5.95 per month to $1,200 per month and “no hit… no charge” non-refundable social security searches for $150. Let me start out by telling you that in all my many years of tracing, I have found no “golden bullet.” It just does not exist. I feel comfortable stating there is no one data site containing all the information required to locate everyone for which we search. The professional must always track the databases they are using and make careful note of what data providers worked for certain geographical areas, what databases gave the best information when related to employment and which databases provided the best information for money spent. The data providers selected should have proprietary sources for obtaining data related to skip tracing, people searching, credit bureau header data, address searches, driver’s license search, address searches, telephone searches, reverse address search ability, reverse phone search ability, UCC fillings, civil and criminal records, secretary of state filings, bank searches, employment searches, stock and bond searches, property searches, asset searches, assessor’s office access, property deed searches, motor vehicle and DMV searches and the ability to batch process accounts when required. As I stated earlier, there is no “golden bullet” so the process of selecting and building a bank of reliable data sources must fall on the shoulders of the tracer. As such, in this issue, I would like to provide you with some basic information and guidelines that you might use to locate and utilize valuable source streams of electronic stored data. We begin by understanding a few basic elements of searching for the searchers. All data brokers are not created equal and are not the same. Just because you pay more does not necessarily mean you get more. In many cases more data can hinder rather than help. Finally, any data from any source must be verified for authenticity. As of 2017 there is an estimated 326,814,316 people in the United States. That is 4.34% of the total world population. It is also estimated that 82.9% of the US population is urban. The United States is comprised of approximately 3,535,111 square miles. From these numbers, we are able to see that each person has over a square mile in which they could be hiding. About 83 out of every 100 will be located in a metropolitan area. That enables the professional tracer to narrow their search and it also allows them to begin the process of categorizing the person that is being traced. When beginning the tracing process, the first question I ask myself is a simple, “Where could they be?” I try to make this determination by looking at where they have been. I look at previous residences. Do I see urban residential dwellings, apartments, or parent’s homes? Are they addresses, streets and avenues or routes and boxes? This knowledge will assist me in choosing the

COLUMN

Skip Tracing Advisor Ron Brown

databases I will use to locate the person. I look at the person’s previous employment and ask myself: are the employment locations urban or rural, small business with no web presence or large businesses with a locatable website? Did the employment require licensing of any type, union membership or trade association membership? I then try to determine if the person is moving alone or with a wife and a family. I learned long ago that knowledge is power in the tracing industry. The more knowledge I can obtain prior to the tracing process, the better chance I have at success. With my information at hand I now am able to determine the databases I will use to search for my subject. I like to think I am knowledgeable enough that I am utilizing the current generation of data which is obtained from multiple sources and maintained through technology, which will allow me to gather and view scalable data obtained from multiple massive repositories at warp speed. I need for the data to be current and verifiable with actionable consumer data in an easy-to-massage and manipulate format. I spoke with one data provider a while back who insured me their data was utilizing powerful analytics and was built around an evolving base that was constantly updating algorithms and linking technology. I spoke with another who laid claim to over 200 million consumers in their system, two-thirds of the United States population. The problem must have been I was looking for the one-third that was not in their database. There are many mediocre data providers in our industry; there are a fair number of good data providers and there are a few great data providers. The bottom line is, always has been and always will be, the knowledge and skills of the professional tracer who has the natural ability to disseminate the data, separate what is good and bad, and solve the puzzle by putting the right pieces in the right spots. Until next time… good luck and good hunting. Ron Brown is a member of the National Association of Fraud Investigators and the author of “MANHUNT: The Book.” Contact him at rbrown2150@aol.com. November/December 2017

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TOM STOCKTON RECEIVES THE HARRY STRAUSSER JR. AWARD

uring the ACA International 2017 Convention & Expo in Seattle this past July, Tom Stockton, IFCCE, CEO of The CMI Group in CarTom Stockton rollton, Texas, was presented the Harry Strausser Jr. ACPAC Ambassador Award. “Tom Stockton recognizes the importance of getting involved in the political process and understands that ACA could not successfully achieve its legislative goals without the support of its members,” said Patrick J. Morris, ACA International CEO. “ACA International relies on engaged members like Stockton to serve

as volunteers and ambassadors of the industry,” Morris said. “We work diligently to successfully educate the industry and to promote high ethical standards and accountability by all participants in the credit and collection cycle.” As past president of ACA and a former member of ACA’s Council of Delegates, Stockton knows that ACPAC must have sufficient resources to provide political help to lawmakers who demonstrate an understanding of and support of the industry’s issues. His commitment has enabled ACPAC to remain a strong advocate for the credit and collection industry on Capitol Hill. The ACPAC Ambassador Award is given in honor of Harry Strausser Jr., a true ambassador of ACA’s political action

committee. The purpose of the award is to honor an ACA member who has made significant contributions of time and talent on behalf of fundraising for ACPAC, or assisting friends of the credit and collection industry.

Pat Morris, Tom Stockton, Keith Kettelkamp

Rewarding Telecom Consumers to Entice Payments

Great opportunities for agencies to get into the telecom market remains. The continued growth of telecommunications providers combined with loosely defined regulation in the industry has introduced a noteworthy amount of debt. Fierce competition among providers to retain customers can be costly and will likely lead to a write-off when the customer becomes uncooperative with the provider. Industry competition also makes it easier, and often more economical, for customers to switch providers. For the provider, excellent customer service and availability to the newest offerings in the industry will often result in customer loyalty, even when competing providers are offering lower priced entry packages. In cases like this, customers will pay to keep the service. However, this concept of loyalty doesn’t serve the agency well. Can agencies create something that entices telecom consumers to pay? The answer is yes – at least in my opinion. An agency-sponsored rewards program can make a big difference. Programs like this are becoming very popular, especially in the telecom space and even before accounts are placed into the collection process. For example, Verizon Wireless has a rewards program labeled “Smart Rewards.” This program rewards customers with points for simply remaining a customer and maintaining an excellent payment history. The points do not expire and can be redeemed for discount shopping on items like apparel, tech gadgets, gift cards, travel and auctions. An agency-sponsored rewards program could share similarities with the Verizon Wireless program, but there must be a different structure because the customer is in collections and based on how agencies operate. Let’s look at how an agency might implement a rewards program and how it can be configured as a technology driven process.

Your Rewards Program

Agencies are well aware consumers come up with all sorts of excuses to stall the collection process. What I am suggesting is a rewards program could make the consumer want to pay. Whether the program accumulates points or offers a one-time prize, it can be configured and managed directly within the collection software. A custom field can be added at the consumer level and displayed directly on the representative screen. The field should be read-only and essentially function as a “ticker.” This way it cannot be manually adjusted by the representative working with the consumer and it is easy to see when an update/new reward/point accumulation event takes place. As the consumer is worked, obvious events like making a payment, scheduling a payment plan, or a settlement can offer maximum rewards. (Events like these should be configured in workflow to automatically apply or update the rewards). There are other events to engage the consumer throughout the collection process as well. I will call these “touching” events. The idea is not only to contact the consumer but keep them engaged until

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Technology Advisor Sam Edens

the debt is satisfied. Customer touching events can include each occasion a payment is made on time for the promised amount, providing consent to receive email or text communication, confirming or updating contact information, or responding to a survey from the agency. Ensure the consumer is being rewarded for events like these as well.

Promote the Program A rewards program is not beneficial

if the consumer is not aware of it. On any phone conversation, the representative should be explaining the rewards program to the consumer and informing them of their current “level” or “status” in the program. Other methods of informing the consumer should include a clear indicator on manual or automated letters and updates via email or text. These types of reminders can be programmed in the collection software directly at the workflow level or as a sub-event when specific actions or updates are made on the consumer record. There can be any number of rewards programs like what I have detailed. What was described are only a few examples of how such a program might be configured. Agency owners know their business and know their consumers. Be creative with your programs and don’t be afraid to experiment. It is also imperative to know when to quit. Some consumers cannot be persuaded so do not attempt to offer anything and everything. Lastly, a rewards program can be named in a variety of ways. The term “rewards” is not necessary. Some agencies may find it beneficial to utilize terms like “loyalty,” “allegiance,” “good standing” and so on. Competition is accelerating at the telco provider level and we can only expect it increase among agencies as well. A rewards program could offer your agency a slight edge on the competition. Sam Edens has been with Emprise Technologies since 2006 and is currently serving as Vice President. Prior to his time with Emprise, Sam designed and developed performance and flow management software for UPS. November/December 2017

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November/December 2017

5 Ways to Keep Your Leader Ship Afloat

Whether you are the CEO of an organization, a supervisor of a group of collectors, the president of a trade organization or a den mother for a local scouting pack, the topic of leadership is an important one. The success of any firm or department is contingent upon having the right staff members in the right seats and the best person leading the charge. Effective leadership is critical to our success. Are you a good leader? Astronaut Chris Hadfield nicely outlined the importance of good leadership when he said, “Ultimately, leadership is not about glorious crowning acts. It’s about keeping your team focused on a goal and motivated to do their best to achieve it, especially when the stakes are high and the consequences really matter. It is about laying the groundwork for others’ success, and then standing back and letting them shine.” Does your team shine? Everyone in the collections space is keenly aware that today the stakes are high and the consequences of the daily activities on our collection floors really matter relative to the viability and success of our organizations. Without the right leadership team, your leader ship will float aimlessly. Years ago I was doing a substantial amount of leadership training and found some great material in a book by James M. Kouzes and Barry Z. Posner, “The Leadership Challenge.” If you are striving to be the most effective and respected leader you can be in any setting there are five fundamental traits you must develop. According to Kouzes and Posner you must:

1. Model the Way

If you want your staff to act or react in a certain way, then YOU must set the example. You have to find your voice, clarify your personal values, and then regularly set the example. You must align your personal actions with the culture that has been established within your organization. In other words, you must proverbially, “talk the talk and walk the walk” within your department/organization.

2. Inspire a Shared Vision Sometimes the challenges that face

us daily dampen our vision for the future of our organizations. A good leader is inspirational and helps those they lead to envision the future positively by focusing on the exciting and hopeful dynamics of the business. You must rally the staff members and enlist them in sharing the same forward-thinking sentiments.

3. Challenge the Process

One of my favorite quotes is, “Change is inevitable. Growth is Optional.” We absolutely have to accept that change is a constant in the collections industry and we will perpetually be challenging our comfort levels. Just as we learn a new process or rule, someone will change it. It is endless. An effective leader will continually search for new opportunities

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Benchmark Advisor Harry A. Strausser III

by seeking innovative ways to manage change and creating safe environments for staff to embrace the unexpected turns in the road.

4. Enable Others to Act

On an average day in any collections office there are thousands of moving targets: letters, voicemails, phone calls, emails, faxes and attorney letters. As a leader you cannot possibly, personally, manage and oversee every aspect of the office. Through effective training and oversight we must cultivate a team that can act quickly, nimbly and confidently. We must build trust and ultimately share power and discretion regularly.

5. Encourage the Heart

We spend a large percentage of our lives at work. And we encounter all types of emotions and life challenges. An effective leader sets their sights on significant and important goals for the organization but is continually cognizant that the team must have a personal as well as a professional balance. Make a point to regularly recognize staff contributions by showing appreciation for individual excellence. Create a spirit of community within the office and celebrate significant milestones. Leadership in the collections space today is a tremendous challenge. In the midst of great industry adversity, the leader must wear the optimistic face and fearlessly plod forward while setting an example for those that follow. Henry David Thoreau once noted, “It’s not what you look at that matters, it’s what you see.” What you see as a leader, that vision, is what creates a strong foundation for any organization. If you have the respect and admiration of those that follow you, your team will eventually see what you see and move in successful, positive and forward directions. And, if the leadership challenges start to get the best of you, then listen to the words of Robert Louis Stevenson, “Keep your fears to yourself, but share your courage with others.” We encourage our readers to submit a “best practice” idea for inclusion in this column. Until next time, I’m in a collection office near you! Harry A. Strausser III is president of Remit Corporation/Interact Training & Development. Contact him at harry@remitcorp.com. November/December 2017

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FINANCIAL TRANSPARENCY IN DEBT COLLECTION BY LINDA STRAUB JONES

here has been much discussion lately about financial transparency within the financial services industry. Assuring that all consumers have access to credit and have the Linda Straub Jones full story relating to their financial institution is a necessary part of commerce. But how does financial transparency trickle down to the back-end of the credit lifecycle…collections? By first understanding what financial transparency means to front-end lending, we may be in a better position to understand how it may impact debt collections. Financial transparency, according to the Financial Dictionary (http://financial-dictionary.thefreedictionary.com), is defined as “The state in which all relevant information is fully and freely available to the public.” Simply put, it means the financial institution is not hiding anything; it is being honest about their performance, even when it’s not perfect. Financial transparency allows for investors to make wise investments in a company and it allows consumers to make the right choice for them when obtaining credit. Without financial transparency in the lending industry, consumers could not make well-informed choices about from whom to obtain a mortgage, auto loan, student loan, credit card or any other type of financial product. So how does this flow down to the collection of a past due account? Financial transparency flows through to collections in the way in which you provide an open line of communication to consumers, providing them with the documentation they request to prove the balance and ownership of the accounts. Collectors need to be clear on who they are and who is the original creditor. They must be clear on what options are available to consumer, and what actions the collection .com

agency can legally take to collect the debt. “The majority of consumers in collections are good people who have hit a rough spot. Most people want to pay, but circumstances are such that they just can’t,” explained Thomas C. Brown, senior vice president, U.S. Commercial Markets and Global Market Development, LexisNexis Risk Solutions. “Bringing them back into commerce is a good thing for everyone involved and the economy as a whole. To do that, though, banks and/or collectors need to make the environment of collections transparent by stating their intent in communications and touch-points with the consumer,” stated Brown who has been in the credit and collections industry for 28 years.

November/December 2017

“Transparency is key to thriving in the current highly regulated collections industry, it not only keeps you in line with the regulator’s expectations, but it is also fair to the consumer,” said Brown. The CFPB has made it very clear that one of their goals is to improve fairness and transparency in the debt collection market. On the Compliance & Guidance page of their website, the first thing they say is, “Our goal is to issue regulations that protect consumers and promote fair, transparent, and competitive markets.” In July 2016, a blog post titled “We’re working to improve fairness and transparency in the debt collection market for you” appeared in the Continued on page 21

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Leading Collectors Provide Telecom Compliance Insights

The compliance world changed somewhat for telecommunications providers in the Spring of 2015 when the CFPB announced consent agreements with two of the largest wireless providers related to their billing practices, among other things. Two years later, the compliance discussions are ongoing within compliance departments at the telcos, and with their collection agency vendors. To gather material for this article, I had discussions about the direction of compliance concerns with three collection agency compliance heads, and I am indebted to them for providing their insights.

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Compliance Advisor Debra J. Ciskey

What changes have you seen related to compliance con- discussion. The telecoms seem to want to be out in front of the cerns of telecommunications clients? Telecom clients issue. Best practices discussions include topics around reasonseemed to be lagging behind financial services companies and student loan servicers related to concerns about the impact of the Consumer Financial Protection Bureau on their attempts to recover balances owed by their customers. They informally sought information on compliance issues debt collectors were facing but weren’t seeking it to consider making internal changes, but to understand the challenges their vendors were facing. However, in the past 12 months, their interest has increased, getting closer to the level of concern demonstrated by clients in the financial services sector, primarily due to the CFPB’s revelations related to debt collection related rules for credit grantors. When their interest started ramping up, it seemed like the telecom world wasn’t really sure what they needed to do, so they started with the easiest approach and started or increased their monitoring of phone calls. They wanted to hear what was happening between their collection agencies and their customers before taking the deeper dive. They have since hired compliance experts to help them understand the broader issues and have a more organized approach to understanding the compliance initiatives of their debt collection business partners.

What compliance issues have telecommunications clients asked about? Specific issues they have been concerned about in-

clude convenience fees, collection fees and TCPA/prior express consent and dialing platforms. Credit reporting takes an even higher priority, especially as the CFPB has demonstrated its interest in this broad aspect of doing business. Because telecom accounts get moved frequently from agency to agency, and because of anticipation of rules and requirements from the CFPB and state regulators, handling verbal disputes is a frequent topic of

able investigation of disputes, and several of the big providers have streamlined their process to provide necessary validation to agencies faster. Other best practice discussions relate to cease communication notification to the original creditor from the consumer, and disputes, especially related to accounts furnished to credit reporting. Like most creditors, they have historically limited outside access to their internal systems to the minimum access possible; however, some have been considering providing wider access to assist with dispute resolution real time. The downside of this move could be the allocation of resources, i.e., the cost to conduct investigations of disputes would move from the creditor to the agency. There seems to be frequent discussion of the risk and cost compared to the reward related to credit reporting. The bottom line is telecoms continue to furnish data, or require their collection agencies to do so. A tricky subject for telecom providers is out of statute debt. Generally, telecom agreements are handled as verbal contracts. Payments revive the debt in some states on verbal contracts, but not in others. Tracking gets complicated in the world of small balances and high volumes of accounts. The revival issue combined with the differences in disclosure requirements by states has caused one agency I spoke with to implement 27 distinct disclosures related to out of statute debt, with business rules associated with using them.

What predictions can you make about the compliance picture in the telecom world in the near future? I asked my sources

for their predictions – what does the future of compliance in telecommunications collections look like? They expect more detailed and more frequent audits, and have seen this develop November/December 2017

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DEBT BUYERS ARE NOT DEBT COLLECTORS FOR THE FDCPA – RESPONSE USING TEC

BY ALANE A. BECKET

Septemb er/Octob er 2017

Vol. 17, No.

However, the Court in Henson was not asked to, and it specifically noted PAT I E that it was not addressI N M E DNIC E W I N S CO L L E C T C A L ing, whether Santander IONS was a “debt collector” under the first phrase of the definition; that is, one whose business WHAT’S COMING IN MED IC AL CO LLEC TION has the primary purpose S of the collection of debts. Debt buyers are generally unlike banks and other financial institutions, which, in addition to collecting their debts engage in lending and associated activities. Thus, debt buyers must still consider whether they are debt collectors under the FDCPA despite the opinion in Henson v. Santander. Jason Mey er

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he article in the September/October issue of Collection Advisor, “Debt Buyers are not Debt Collectors for FDCPA” should be read with caution. While the authors correctly recite the holding of the opinion, debt purchasers should not be breathing a sigh of relief. Alane A. Becket The FDCPA’s definition of a “debt collector” is twofold and covers: “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C.§1692a. The Court in Henson addressed the second phrase of this definition, to wit: whether because the Citifinancial originated the debts that Santander acquired and was collecting, those debts were “debts owed or due or asserted to be owed or due another.” The opinion, as noted in the article, delved into the grammatical aspects of the phrase “owed … another” and found that, although, the debts at issue had previously been “owed” to the original creditor, Santander, now the owner, was not a debt collection under that definition.

HNOLOGY

EMPOWER 4 SOURCES COLLEC TIO YOU NE NS ED TO SE ARE WE ARCH TH ABIDING E INVISI BY “SUBJ BLE WE HOW I HA EC TIVE B COMPLIA STUDEN NDLE FEDERA NCE?” T LOAN COLLECTL AND PRIVATE CFPB FA IONS LSE ACCU SATIONS MAKE LIK OR REAL E THE CU PROBLEM BS AND S? DEBT BU WIN FO YERS AR R COLLE E NOT DE CTIONS CFPB AR BT COLLECT ORS FOR VIOLATE GUES INCORRE S FDCPA FDCPA CT DEBT AMOUNT EXCEEDIN TO LAWYER G DATA SECURIT STATISTIC Y REGULA S YOU NE TIONS ED FOR DIALER CAMPAIG NS

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3:17 PM

Alane A. Becket is Managing Partner at Malvern, PA based Becket & Lee LLP, a law firm specializing in the representation of consumer lenders and debt purchasers in bankruptcy matters. In 2016, Alane was named one of Collection Advisor’s 25 Most Influential Women in Collections.

“The intensity of background checks required for collection agency personnel, clean room requirements, and quality assurance/compliance scorecards vary widely from provider to provider.” recently. Their routine annual client audits now include more elements related to compliance, like dispute policies, Standard Operating Procedures, TCPA compliance, and collection letters. Formerly, audits were mostly related to collection performance and tracking payments from customers. Some clients have started requiring their agencies to provide monthly complaint logs and dispute volumes, rather than looking at the data only when conducting annual audits, as they had done previously. Telecom clients are starting to include compliance related items in their QA evaluations and scorecards and working compliance considerations into bonuses for their agencies. Trust but verify seems to be the model. I heard cautious optimism about the impact of the CFPB’s first party rules. This should change the compliance environment and make it easier for third party agencies, because of the requirements that could be placed on first party entities. .com

November/December 2017

Mergers and acquisitions in the world of the large carriers will be interesting from a compliance perspective, primarily because they each have their own ideas about compliance. While they may share philosophies related to compliance, they all have different ways of doing things at different levels. For example, the intensity of background checks required for collection agency personnel, clean room requirements, and quality assurance/ compliance scorecards vary widely from provider to provider. My thanks to Jason Davis, Senior Vice President of Compliance at ERC BPO, Michelle Dove, Esq., General Counsel/Chief Compliance Officer, I.C. System, Inc., and Alicia McKeighan, Chief Compliance Officer at Afni, Inc., for the insights they so generously shared with me for this article. Debra Ciskey is the Compliance Officer at Wakefield & Associates. Inc. She is a member of the board of directors and a certified instructor for ACA International.

Supreme Court Henson Case Brings Common Sense?

In June, the United States Supreme Court handed down its decision in Henson v. Santander Consumer USA, Inc., holding that entities who regularly purchase debts originated by someone else and then seek to collect those debts for their own account are not “debt collectors” subject to the FDCPA Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718, 198 L. Ed. 2d 177 (2017). Drafted by its newest Justice, Neil Gorsuch, the decision appears on its face to be a game-changing decision for creditors. Or is it? The facts and issue before the Court were relatively simple: Santander purchased defaulted auto loans originated by CitiFinancial Auto after which Santander sought to collect raising the question of whether Santander was a debt collector and subject to the FDCPA. Gorsuch said no. Focusing on the statutory language, he noted the FDCPA applies to those who regularly collect debts owed to another, so its plain meaning was the FDCPA was focused on third-party collections. In broad language, Gorsuch wrote that definition of debt collector did not “suggest that we should care how a debt owner came to be a debt owner—whether the owner originated the debt or came by it only through a later purchase. All that matters is whether the target of the lawsuit regularly seeks to collect debts for its own account or does so for ‘another.’” Moreover, Gorsuch refused to countenance a counter-argument suggesting the FDCPA intentionally exempted loan originators, finding the Act was focused on the “present (not past) debt relationships.” Finally, Gorsuch noted even the definition of creditor excluded only assignees who sought to collect for another, meaning a buyer of defaulted debt is a creditor under the FDCPA. I was frankly surprised by the broad nature of the ruling because based on the circumstances, the court could have split hairs to arrive at a way to prevent Santander, generally a loan originator, from FDCPA liability. In 2010, Santander acquired $3.2 billion of CitiFinancial Auto loan assets, some of which may have been loans in default. As such, Santander did not fall into the “traditional” definition of a debt buyer – it was not in the business of buying entirely defaulted debt. Notwithstanding, decisions are already coming down in an effort to get around the decision. Just two weeks ago, in our federal district court, a judge held the servicer of a debt buyer (a wholly owned subsidiary of the debt buyer bearing the same name) was a “collection agency” because it collected on chargedoff debt for owners of debt – the debt buyer. In another case, the court made a point of finding the decision was narrow because it did not address the “principal purpose … is the collection of any debts.” The court reasoned because the debt buyer admitted its purpose was buying defaulted debts and collecting on them, they were debt collectors covered by the FDCPA. In a ruling that has gotten less attention but one I believe

ROUTING SLIP Initials

Date

Legal Collection Advisor Fred N. Blitt

has more impact upon us as lawyers was the unanimous Supreme Court decision in Kokesh v. S.E.C., 137 S. Ct. 1635, 198 L. Ed. 2d 86 (2017). In that case, the Supremes found the five-year limitations period applies when a government agency seeks disgorgement. This is potentially important as the CFPB has argued no statute of limitations applies to claims it brings in administrative enforcement actions, such as those suffered by Hanna and a host of other participants in our industry. Justice Sotomayor noted statutes of limitations are “vital to the welfare of society.” It is sad we need the Supreme Court to weigh in on such basic concept of justice but nonetheless a cause for hope. All of us maintain policies and procedures, are subjected to audits and maintain the highest efforts to work with consumers. But it is important to note policies are developed in response to events, and circumstances to correct oversights or to put into black and white a practice you deem critical. In other words, at some point in the past, you did not have a policy in many instances for that specific item. Perhaps it wasn’t an issue then, but is now. Perhaps it was created in response to a perceived error. But the CFPB does not look at things that way. They want to reach back into the time when what you were doing was not improper (or in many instances never was) to extract a press release by living in the past. Kokesh stands for the proposition that such a manner of doing business helps no one, rights no wrongs nor makes anyone truly whole. In Henson, Gorsuch noted “[d]isruptive dinnertime calls, downright deceit, and more besides drew Congress’s eye to the debt collection industry.” I think that is a prescient comment, one regulators should take to heart: Get the truly bad actors but work with the good ones to make our system better and fairer for all participants. Do Henson and Kokesh solve all our problems? Absolutely not. However, do they seem to point to a more common sense approach to consumer protection? There, I think the answer is a firm yes. Fred N. Blitt, Esq., is a partner with Blitt and Gaines, PC in Illinois and Couch, Conville and Blitt in Louisiana. He is past president of NARCA. November/December 2017

.com

CONSUMERS MAY “PARTIALLY REVOKE” CONSENT TO BE CALLED BY AUTOMATIC DIALING SYSTEMS

BY PATRICK T. MCLAUGHLIN

new decision has been made that may have important implications for automatic dialing systems. The United States Court of Appeals for the Eleventh Circuit held in the Patrick T. McLaughlin case of Schweitzer v. Comenity Bank that the TCPA allows a consumer to partially revoke his or her consent to receive automated telemarketing calls. The ruling presents complications for telemarketers and debt collectors by giving rise to potential TCPA liability based on equivocal and unclear statements by a consumer that a jury could find to be revocation of consent to be called using automated dialing systems. The ruling also places a burden on telemarketers and debt collectors to potentially have to restrict calls to certain times of the day if so requested by the consumer. Based on this ruling, we recommend that companies making a substantial volume of automated calls – especially telemarketing agencies and debt collectors – closely review their policies regarding recording revocations of consent to be called from consumers, and put procedures in place to confirm and promptly act upon revocation of consent, whether partial or complete.

Background The TCPA makes it un-

lawful for any person, absent the “prior express consent of the called party,” to make non-emergency calls using any Automated Telephone Dialing System (ATDS) to any telephone number assigned to a cellular telephone service. Anyone who violates the TCPA may be liable for “actual monetary loss” or $500 in damages for each violation, whichever is greater. In 2014, the Eleventh Circuit held in Osorio v. State Farm Bank that a consumer may orally revoke her consent to receive automated calls absent a .com

contractual provision to the contrary. On August 10, 2017, the Eleventh Circuit again examined the contours of revocation of consent in the case of Schweitzer v. Comenity Bank.

Schweitzer v. Comenity Bank

Schweitzer was issued a credit card by Comenity Bank in 2012. She consented to receive calls on her cell phone from Comenity by providing her cellular number to Comenity in her credit card application. Schweitzer failed to make the required payments on her credit card account. Comenity began calling her on her cellular phone using an ATDS to collect on her credit card debt and made hundreds of such calls. On October 13, 2014, a Comenity employee called Schwietzer, who stated the following: “Unfortunately, I can’t afford to pay right now. And if you guys cannot call me, like, in the morning and during the work day, because I’m working, and I can’t really be talking about these things while I’m at work. My phone’s ringing off the hook with you guys calling me.” The Comenity employee replied that “it’s a phone system. When it’s reporting two payments past due, it’s a computer that dials. We can’t stop the phone calls like that.” Five months later, another Comenity employee called Schweitzer, who unequivocally asked that Comenity stop calling her. Comenity logged the request and the calls ceased. Schweitzer sued Comenity for violating the TCPA. She alleged that she revoked consent to be called during the October 13, 2014 telephone call, and Comenity called her an additional 200 times before it stopped. The district court granted summary judgment to Comenity, finding that Comenity “did not know and should not have had reason to know that [Schweitzer] wanted no further calls.” The district court also found that Schweitzer did not

November/December 2017

“define or specify the parameters of the times she did not want to be called,” and as a result, “no reasonable jury could find that [she] revoked consent to be called.” Upon appeal, The Eleventh Circuit reversed and remanded the case, holding that the TCPA allows a consumer to partially revoke her consent to receive automated calls, and that there is an issue of material fact as to whether Schweitzer revoked her consent to be called in the morning and during the work day.

Outcome and Implications

The Eleventh Circuit, relying on common principles, reasoned that since a consumer had the right to completely withdraw consent to stop all future automated calls, the consumer also had a right to partially withdraw consent to stop calls during certain times. In so doing, the Eleventh Circuit brushed aside the district court’s concerns that partial revocation of consent might present “logistical and technical challenges to callers and present evidentiary difficulties for those attempting to recover under the TCPA,” finding that the mere “potential for complications” is not enough to limit a consumer’s powers under the TCPA. Regarding Schweitzer’s specific statements during the October 13, 2014 call, the Eleventh Circuit held that based on the record, the issue of partial revocation is for the jury to decide. The Eleventh’s Circuit ruling presents complications for telemarketers and debt collectors by giving rise to potential TCPA liability based on equivocal and unclear statements by a consumer that a jury could find to be revocation of consent to be called. The ruling also places a burden on telemarketers and debt collectors to potentially have to restrict calls to certain times of the day if so requested by the consumer. Patrick McLaughlin is a Partner at Spencer Fane LLP.

Agency Spotlight

Tracking Key Metrics in Telecom Collections

BY JOSHUA FLUEGEL

veryone likes surprises. That is, everyone except those on a collection floor. A steady predictable meeting of goals is undoubtedly the ideal way every collection professional wants his or her day to proceed. Tracking progress is the most effective way of preventing surprises at the end of the month. Collection Advisor sat down with Jeff Parker, president of Prince Parker and Associates to discuss telecom collections, difficulties with the TCPA and key metrics collection agencies should be tracking. Tell us how you got started in collections. I got my start in the business on the client side. I began working in the collections group for a Fortune 500 telecom Jeff Parker provider. I was fortunate enough to work my way up through the organization over 13 years. I spent my final three years running the collections division. In the early â&#x20AC;&#x2DC;90s, I wrote a business plan and opened my own agency. Shortly afterwards, we began providing services to the telecom space and the industry continues to be a major focus for us today. If you had to pick the most important advance in telecom collection technology in the past 10 years, what would it be and why? From my perspective, alternative contact platforms have been the most significant and important technology advancement in the telecom space. The developments of legal and compliant platforms that meet TCPA guidelines have been critical to all companies serving the industry. As

the volume of delinquent telecom work was expanding, our ability to effectively contact customers had become challenged by regulatory conditions. As a result, industry leaders developed alternatives to predictive dialing that bridged the regulatory gap and assured more cost effective methods to meet the challenges. So it really became critical to develop engines that would assure account penetration requirements and also adhere to compliance and regulatory standards. A number of studies have demonstrated collection software can improve the detection of non-compliant collecting. What functions should collectors use routinely in telecom collections if it is available? There have been significant advances in collection software as well as support services that are game changers. Collection software platforms continually evolve with features that drive compliance. Our particular software has numerous built in advanced security and quality certifications. Offerings including cell phone validation, regulatory requirements by state and time zone recognition. are all available in real time. Basically, we use the platform to dictate strategy on any given account from cradle to grave. Within our organization, the systems and software are configured by management to design strategy in an attempt to drive compliance and performance. Designed properly, management and strategy resources within your organization utilize software and support services to develop contact campaigns. This takes decision making on tools and campaigns off the collection floor, allowing collectors to focus on compliance. We push out the tools and

the strategy to our front line specialists so their single focus can be executing the interaction and maximizing call outcomes. It remains unclear whether dialers result in better compliance control, but evidence suggests this approach offers advantages in terms of recovery/promises to pay. How can these advantages be utilized in telecom collections and maintain compliance? Again, a hybrid contact platform strategy is required to assure TCPA compliance. Dialers do increase results in both contact rates and ultimately financial performance but also create compliance roadblocks. Designing a delivery platform that maximizes contacts while meeting regulatory requirements is an absolute necessity. Does the current collection compliance environment support the use of text messaging? Unfortunately, we havenâ&#x20AC;&#x2122;t been provided a definitive message on compliance related to text usage. It is not prohibited within FDCPA. However, there are other considerations including prior consent, inability to have the customer incur any charges, disclosure requirements, inability to disclose information to third parties and mandates that provide options for customers to opt out. We do not have any current telecom clients that have authorized text messaging. It would be advantageous for the industry to more clearly define text messaging compliance as SMS is rapidly becoming the most popular communication channel. What is your philosophy when it comes to monitoring collector compliance and performance? Managing both compliance

November/December 2017

.com

“Designing a delivery platform that maximizes contacts while meeting regulatory requirements is an absolute necessity.“ and performance is critical to the success of our company. Our competitors in the industry are continually improving and we have to keep pace. From a compliance perspective, we deploy independent resources within our agency that are responsible for training, monitoring and coaching compliance. We monitor collectors on an ongoing basis and develop processes assuring state and federal regulations are met. Systems should be designed to drive contacting the right people at the right time and documenting the accounts with legal detail. We develop teams of collectors dedicated to particular groups of clients in order to assure compliance with client procedures as well. As it relates to performance management, we measure front-line resources and managers based on three key variables: production metrics, performance metrics and employee metrics. Production metrics are activity-based and include measurement of results on items including number of accounts worked, number of contacts and number of promises made. Production metrics are results based including dollars collected, paid-in-fulls, web payments, post dates, credit card payments and so on. Employee metrics are also critical and include measurement of schedule adherence, attendance and attrition. We cross reference the various metrics to determine and demonstrate cause and effect and provide feedback and coaching to improve individual, team and company results. Is there a place for settlement plans that are not fulfilled to revert to the full amount of the debt in telecom collections? Settlement options are utilized in the space and are effective tools for resolution. Settlements are normally used as a strategy to resolve older accounts in later stage portfolios. The offers often include dates for resolution to create a sense-of-urgency window in conjunction with the offer. .com

If an offer includes a deadline and you make a decision to accept the settlement beyond the deadline, it would be wise to include safe harbor language in the notice giving you the right to change the terms of the settlement offer. What do you predict will be the most important game changer in telecom collection management in the next three years? It is difficult to predict just one. There is a continual evolution of data procurement and continued advancement of analytics. Securing and performing detailed analy-

incumbent that we have controls to minimize those mistakes and ongoing training to assure they are not repeated. Compliance errors are without a doubt the most critical. It is much easier to recover from a mistake made in collection technique which precludes you from a positive outcome on an account than to recover from a compliance error potentially creating exposure to your company and your client. Again, ongoing measurement, monitoring and coaching are essential to minimize errors.

The Prince Parker & Associates staff

sis on account data will allow our industry to continue to improve the work we do for our clients. Account scoring, enhanced skip tracing and trigger data are all essential to adapting to the telecom landscape. However, if I had to pick the most important game changer, it would be continued investment in people. We know that regardless of technological advances that our people are ultimately going to determine the level of success for our organization. As a result, we maintain a commitment to continually developing and nurturing what we consider our most valuable resource.

What does Prince Parker and Associates do to help/be involved in the community? We are extremely active in our community. We consider ourselves fortunate to be able to serve and give to local charitable organizations. One of my proudest accomplishments was being named “Leukemia and Lymphoma Man of the Year” a few years back. We are supporters of 20 local charities including Habitat for Humanity, Special Olympics and a number local homeless shelters and food banks. Our involvement with these organizations is extremely rewarding.

What is a serious error collection professionals make when collecting telecom debt and how do you suggest it be avoided? Mistakes happen in our industry. It is

What do you like to do in your free time? Most all of my free time is spent with family and friends. I wouldn’t have it any other way.

November/December 2017

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EternCertifi rt opment collecto t to reach individuals and Devel sy hardes s.com nion ppo and 877-519ncy ontario tariosystem Solutions, Inc. ren Su g TransU ntinge therscato on al ™ @ s n p He ctions d fo eColle + si -Fee Co in rate3227 tion M Corn Licen rance TLOx lections m for AR.com y Optio Solu Agency – Flat 1 om m/cool ecolle icesctions co sur0-o28m380rp s gy and Serv .ccom ns repositor StateE&O Insu pport.ctlop.co ts@TLO. g and in lly io rt ta s Inco un ct e o da lo e lle te m st su ac n p a r massiv Co socia y chno the ste n STe and rstone tor.com ionou censi ferassge nesunew 856-55 Bureau s te even s r li99 ar Sy ctio ions. rneollectionAdviso www.C ers ngrithms to loca at owe. nsen & AllectidonCollection Collection 800-e premietraucin ryg-; leprovelicenalsigo Pam ar Colle s.comCollect January/February 2015 co @corn 0 ess th hriste ebt CUo nite 3rd Party is thep skioipn ind st stlin teking info 45-866 pport De Pam rsystem D C ct and busin nd chuedr a s re

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Virtual Collections Software Roundtable

WHAT YOUR COLLECTIONS NEED TO GO VIRTUAL BY JOSHUA FLUEGEL

ome would say virtual collections is the last frontier in debt collection, the omission of the debt collector completely. While it is highly unlikely collection floors will empty in our lifetime, the prospect of automating a time consuming portion of debt collection is tempting for the budget-minded. Collection Advisor rounded up the thoughts of thought leaders on the subject to analyze key analytics and what they could mean for virtual collection software implementation.

Carl A. Briganti President and founder of CSS, Inc. What key analytics allow collection professionals to modify and improve collection efforts? There are a variety of key analytics that collection professionals are recommended to utilize and evaluate to modify and improve collection efforts including: account type, age, number of agency placements, file penetration, and others. This is why agencies are strongly urged to employ powerful reporting tools and real-time dashboards to provide this crucial information at both point-in-time and on a regularly scheduled basis.

What advice would help an agency best integrate virtual collection software into its collection efforts? Virtual collection software is designed primarily for accounts with higher liquidation rates or are in the beginning stages of delinquency. Old, recalcitrant accounts will not benefit from this approach. The deployment of a virtual collection application will help an agency engender payments with a “soft” recovery approach. It would benefit the agency by saving from paying commissions, internal or external, when a debtor would pay regardless of the approach.

Matthew Hill President / CEO of InterProse What key analytics allow collection professionals to modify and improve collection efforts? One of the most important data points that facilitate “tuning” of a virtual collection platform over time are the bail-out points. This is a tool that tracks the point where the consumers break the engagement; if before payment resolution, then when and where? For example, this knowledge can help us find off-putting or confusing language. By identifying flaws that can be reworked or moved to a more suitable place in the session.

What advice would help an agency best integrate virtual collection software into its collection efforts? Use every possible communication channel available to drive the consumer to the site. Statistics show that nine out of 10 consumers prefer online to live collectors. If a site has the advanced capability to handle multiple debt types and complex offers, then you truly can divert as much as 15%-20% of all payments to a virtual agent with the bonus an additional lift in the dollar amount of payments.

November/December 2017

.com

Albert Rookard President and CEO of Applied Innovation What key analytics allow collection professionals to modify and improve collection efforts? There are many responses to this question which are valid. Let’s start with the math. The investment in a collector for a month is $3,000. In an eight-hour work day they obtain 25 promises to make payment. Over a 21-day work month that’s 525 arrangements. The cost is $5.71 for each arrangement made. ($3,000 / 21 x 25) = $5.71 Okay? So far so good. Now, what if a virtual collection system can do the same work for something like 50 cents. That’s 8% - 9% of the current cost to obtain the same thing…a promise to make a payment on an account. Additionally, a virtual collection system can use many of the tools available to a live agent when determining what is or is not an appropriate repayment plan, such as age of account, client, scoring analytics, balance, date of last payment… just to name a few. The decision tree can be every bit as complex as the creditor or agency would like it to be, even to the point of understanding prior “discussions” between the virtual system and the consumer.

What advice would help an agency best integrate virtual collection software into its collection efforts? Do it. The risk is nearly zero. For every payment captured by way of a virtualized collector, resources are freed for other endeavors. Live agents can then spend their time on broken arrangement follow up or skiptracing. A virtual collection system, used fully, creates efficiencies in many areas. Give it the attention it deserves. How many hours or days are spent hiring and training a new collector? Yet, a virtual collector may be addressed once and left to run on its own, utilizing the same strategies created with its original “hire.” Check into your virtual collector with some frequency. How is he/she doing? Effectiveness of the collection approaches. Review the language used to best develop confidence in the consumer and prompt a high frequency of payments. Encourage consumers to “discuss” their accounts with the virtual collector. It’s in a safe environment that allows them to look and review repayment options at a time convenient for them. A link from a website or provided on a notice encourages exploration of the virtual option. In the end, and if you so choose to implement a virtual collection system, use it as you see fit. Maybe conservative in the beginning with tweaks along the way to find where it best fits into your overall strategy.

“CFPB cites several violations that could have been avoided with complete transparency to consumers.” Financial Transparency in Debt Collection Continued from page 11 CFPB’s blog1 as an explanation to consumers about the release of the proposed collections rulemaking the CFPB announced that month. The CPFB has always been very clear in their settlements and rulings with collection agencies that being transparent is an expectation, not a suggestion. In the CFPB’s Fall 2016 Supervisory Highlights2, the CFPB cites several violations that could have been avoided with complete transparency to consumers: • Collectors telling consumers that the ability to settle the collection account was revoked or would expire .com

when in fact the consumers still had the ability to settle. • Collectors had impersonated consumers while using the relevant creditors’ consumer-facing automated telephone system to obtain information about the consumer’s debt. • Collectors purported to assess consumers’ creditworthiness, credit scores, or credit reports, which were misleading because collectors could not assess overall borrower creditworthiness.

to back-end collection practices, being transparent with consumers is not only the ethical thing to do, but it may also help to keep you out of hot water with the regulators.

As you can see, transparency is critical in all phases of the consumer’s financial lifecycle. From up-front lending practices,

November/December 2017

Linda Straub Jones is Director of Collections Compliance at LexisNexis Risk Solutions.

ttps://www.consumerfinance.gov/ h about-us/blog/were-working-improvefairness-and-transparency-debt-collection-market-you/ http://files.consumerfinance.gov/f/ documents/Supervisory_Highlights_Issue_13__Final_10.31.16.pdf

High-End Collections Software Roundtable

SATISFYING THE MANY NEEDS OF HIGH-END COLLECTIONS

BY JOSHUA FLUEGEL

he needs of a high-end collection agency (1,000+ seats) are particular and numerous due to the diversity of many of these agencies’ portfolios. Collection Advisor gathered the thoughts of experts to help collection professionals navigate the complexity of high-end collection software.

Ed Wallen Vice President of FICO What is an aspect of collection software for a 1,000-seat agency that is dramatically different from collection software for a smaller agency of which collection professionals should be aware? A key aspect of collection software specifically aimed at large-scale agencies is best action optimization. As collections organizations scale up from small operations to large call centers, it becomes increasingly difficult for collectors to apply consistent treatments across the customer base. Best action optimization is becoming a key feature in effective and efficient debt collection by driving compliant consistency in how customers are treated. Optimal offers are provided to each customer at the right time, whilst ensuring that all customer interactions remain compliant. Furthermore, less reliance on the knowledge and experience of the collector means faster onboarding time and, ultimately, a more productive collection organization. What would justify a small agency graduating to collection software for a larger agency? Whilst features such as best action

optimization provide significant ROI for larger scale operations, small agencies can gain the benefit of many collection features which historically have been targeted at larger organizations and which have been out of the reach of smaller agencies due to the cost of highend software. The key to making highend collection software available to smaller scale agencies is reduced cost of delivery, configuration and implementation, and lower total cost of ownership. Such cost reductions can increasingly be achieved through cloud-based offerings of software packages traditionally offered for “on premises” implementation only, which provide the level of feature functionality hitherto only available to large-scale organizations but without the need for expensive infrastructure and high implementation and support costs.

Lex Patterson President of DAKCS Software Systems What is an aspect of collection software for a 1,000-seat agency that is dramatically different from collection software for a smaller agency of which collection professionals should be aware? As the number of employees in an agency grows, the training and supervision requirements tend to grow. Having role-based permissions can save a lot of user setup time and ensure that a new employee has access only to system areas they need. Easy-to-learn processes and well-written documentation are important, but these areas are magnified in the larger agency environment. Being able to control workflow and ensure compliance becomes a greater challenge in the larger agencies. Having system tools that assist in these challenges improve results. It’s been my experience that the larger agency also needs more control of the domain. For example, an agency’s data exchange needs for working with client or vendor data is driven by the amount of data involved. As the need scales up, larger clients find it economically beneficial to develop IT/development staffs to handle the additional need. Providing a platform that

allows flexibility for internal development, while still protecting the core components of the collection system is a necessity. In this environment, application programing interfaces and technology partnership are a differentiating factor. What would justify a small agency graduating to collection software for a larger agency? The small six-user office that grows into the 500+ user company is not that uncommon. In fact, we’ve been part of that journey many times during my 30 year tenure with DAKCS. Changing platforms is expensive. The time involved in converting data, processes, and retraining staff is never easy. Thinking about this on the front-end and selecting a technology partner who can grow with your business will save you in the long run. A software platform should scale and continue to provide value and opportunity as your business needs to grow. Growth can happen gradually or you can land that big contract and it explodes almost overnight. Having a partner who provides the platform, the experience, and the commitment makes the transition from a small agency to a larger agency much easier alleviating pains of changing systems.

Paul Castelli President of Codix What is an aspect of collection software for a 1,000-seat agency that is dramatically different from collection software for a smaller agency of which collection professionals should be aware? A large collection agency or a department of a large institution (for example a bank’s group consolidated risk and collections handling service) handle a large variety of different debt flavors, situations and contexts. This requires a lot of flexibility in their software solution. As they are working with a lot of clients/creditors that are usually submitting large volumes, a large collection agency must be able to address any need of its clients. This includes providing full automation of the process as well as efficiency implementation and reporting (recoveries/cost ratio). These solutions also require well-structured and precise application administration management that can handle a large set of possible rules and parametrizations. The ultimate target is to allow the expert application administrators to handle these tasks, while keeping it simple and straight forward for the application users. So the investment is not only for the IT solution itself but the application administration team who handles it.

What would justify a small agency graduating to collection software for a larger agency? From one aspect, smaller agencies need to be efficient and have a fully automated process with as many self-care features and tools as possible. From the other side, smaller clients/creditors represent even more different flavors of debts and context that need to be handled. Of course it is still a question if the investment is necessary. This is not just with the IT solution which can be acquired at a reasonable cost even by a small agency, but in the internal organization and the application management team. This should include experienced business professionals who take care of the flexibility of the system and appropriate parametrization and monitoring. The appropriate software could be used to scale from small to large collections, as it should be a technical matter if the correct solution is chosen that can handle the volumes. Otherwise if the solution doesn’t support the volume and/or flexibility, the cost of handling these manually and the risks involved would justify the graduation to the larger collection agency solution.

Carl A. Briganti President and Founder of CSS, Inc. What is an aspect of collection software for a 1,000-seat agency that is dramatically different from collection software for a smaller agency of which collection professionals should be aware? Preemptive compliance is essential when an agency deals with a large volume of agents. Each agent potentially represents a point of failure therefore increasing the exposure to compliance breaches. This is particularly true when the agency relies on training to conform to some or all compliance requirements. With a high demand for strict compliance in today’s regulatory environment, it has never been more important to leverage technology that limits or eliminates human intervention from compliance activities. Implementation of automated processes that evaluate, on a real-time basis, conditions to ensure that all compliance requirements are met is imperative nowadays. It is well known that a lawsuit can be detrimental to the well-being of an organization so it is imperative that point-in-time compliance checks are deployed in all key areas, including state regulations, financial actions, legal actions, consumer contacts, dunning and more. For such a large agency is it imperative to have access to the tools needed to be .com

November/December 2017

able to accommodate this level of mass automation. What would justify a small agency graduating to collection software for a larger agency? When an organization experiences rapid growth from a small scale operation to an enterprise level corporation, they need to graduate to an enterprise level solution. Software that provides scalability and is capable of keeping pace with a constantly expanding business is essential to prevent hindering or stalling of that growth. When a company flourishes from a small agency to a larger agency they may find the software they once found suitable is no longer capable of meeting their needs and this becomes a major setback. This is why any small agency looking at the big picture needs to invest in a software company with their finger on the pulse of today’s technology and an eye to the future. Another major justification for a small agency to upgrade to a software geared towards a larger agency is an increase in stringent regulations and compliance. Whether it is adhering to client covenants or federal and state regulations, taking full advantage of a software application that engenders virtually 100% compliance is a must.

Continued on page 24

HIGH-END COLLECTIONS COMPARISON CHART GENERAL FUNCTIONALITY

Beyond ARM

FICO Debt Manager Solution

IMPACT HD 2.0 | Collections

Codix

Separate collection database/normalized database

Yes

Consolidated statement from subclients and master client

Yes

Generates customizable correspondence on demand

Yes

Automated letters by client with flexible triggers

Yes

Automated faxing

Yes

Integrates with email

Yes

Automated phone dialing

Yes

Goals feedback in real-time

Yes

GUI environment

Yes

Web access: Secure and customizable remote access for collectors

Yes

Web access: Secure and customizable remote access for debtors

Yes

Web access: Secure and customizable remote access for clients

Yes

Generate an individual status report for an account (or linked accounts)

Yes

Application development studio

Yes

Built-in collection agency templates

Yes

Integration with Crystal Reports

Yes

User-defined account matching criteria

Yes

User-defined balance buckets

Yes

Ability to extend the account and related tables

Yes

User-Defined payment types

Yes

Configurable account flow

Yes

RECOVERY FUNCTIONALITY

Beyond ARM

FICO Debt Manager Solution

IMPACT HD 2.0 | Collections

Codix

Pre-charge-off collections

Yes

Post-charge-off recovery

Yes

Agency/attorney management

Yes

Asset sales

Yes

Metro2 reporting on post-charge-off

Yes

System of record or nonsystem of record functionality

Yes

Repossession tracking

Yes

Bankruptcy/deceased management

Yes

Work by accounts or people (person- vs. account-centric)

Both

Beyond ARM

FICO Debt Manager Solution

IMPACT HD 2.0 | Collections

Codix

Disputes/deduction codes can be assigned

Yes

Identifies and tracks problem invoices

Yes

Coded problems separate from other receivables

Yes

Offers customer and invoice-level notes

Yes

PRE-CHARGE-OFF FUNCTIONALITY

Electronically reproduces/transmits invoices

Yes

Beyond ARM

FICO Debt Manager Solution

IMPACT HD 2.0 | Collections

Codix

Dialer

Yes

Fully integrated dialer

Yes

Real-Time read/write access to application database

Yes

Unattended messaging

Yes

Call blending

Yes

Carrier grade hardware (Nebs compliant)

Yes

Automatic remote error reporting

Yes

Automatic software/firmware updates

Yes

TELEPHONY FUNCTIONALITY

•

All systems permit related accounts viewed simultaneously, customized formatting of statements, will set up clients as either gross or net remittance, statements can be regenerated for a specific period, and each system tracks multiple internal and external contact names/numbers. • All systems have agency functionality for trust accounting, complete client activity statement history and user-defined collection tasks. • All systems have external vendor/service integration for automated service requests based on collection strategies, automated collection strategies based on returned data and processes check and credit card payments interactively. Information on this table is derived from information posted on the Internet and direct questions. The company is the ultimate source and should be contacted directly.

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Business Directory

Analytics & Data

The Computer Manager, Inc. Debt$Net Collection Software debtnet5.com sales@debtnet5.com 800-552-8397 Since 1987, Debt$Net collection software has provided collection agencies, law firms and in-house collection departments with one of the most comprehensive collection systems in the industry.

Quantrax Corporation Inc. RMEx quantrax.com marketing@quantrax.com 301-657-2084 Quantrax is a high-end collection technology company that has marketed and supported an intelligent collection software platform for over 25 years.

Simplicity Collection Software SimplicityCollect simplicitycollectionsoftware.com sales@simplicitycollect.com 866-791-0224 As an industry leader, Simplicity is the only Noble Systems Corporation is a global leader in customer software provider to offer a web solution with communications, providing innovative premise and cloud unlimited users, clients, accounts, and custom Comtech Systems solutions for Contact Center, Workforce Management and fields at an affordable price! Collect! Interaction Analytics technologies. Credit and Debt Sentinel Collection Software Collection Agencies Development collect.org Solutions, Inc. info@collect.org United Collection Bureau, Inc. eCollections 800-661-6722 1st and 3rd Party Collection Services ecollections.com Collect! combines ease of use with total integration sales@ecollections.com of functions. Accounts are efficiently tracked from 515-564-0585 the time you receive them until activity is concluded Collection Software The result of 20 years of industry-leading collections/ and they are closed. Collect! keeps track of critical recovery platform development, eCollections is a information automatically. Total integration provides Beam Software comprehensive enterprise collection system with flexible for seamless and accurate month end invoices and BEAM Accounts Receivable Management configuration, ease-of-use, powerful payment features, statements with full account histories. Software, Beam Cell Phone Identification workflow automation, and unparalleled reporting and Software tracking. Comtronic Debtmaster CDS Software debtmaster.com Collection Support Services CollectOne 800-414-2814 collectone.com The Debtmaster® Software along with our industry info@collectone.com Corporate Advisory leading Cloud-Hosted environment gives you a reliable, 888-816-3333 powerful, cost-effective collection solution right at your Solutions CollectOne is an award winning suite of debt M&A Advisory Services, fingertips. collection solutions that provides a feature-rich set of Valuations, Market Intelligence automated business processes designed to minimize corpadvisorysolutions.com DAKCS Software costs and maximize results. mlamm@corpadvisorysolutions.com Systems 215-717-8719 Beyond.Net CODIX Corporate Advisory Solutions, LLC is a boutique dakcs.com iMX Collection, investment bank and we specialize in M&A Advisory sales@dakcs.com Legal and Recovery Solution Services for the Outsourced Business Services (OBS) 800-873-2527 codix.us/debt_collection sector; our core focuses are in Accounts Receivable DAKCS Software Systems has been an industry leader bquinn@codix.us Management (ARM), Customer Relationship for over thirty years. Headquartered in Ogden, Utah, 404-790-0998 Management (CRM), and Revenue Cycle Management DAKCS provides a one stop shopping solution for a iMX is a complete centralized debt collection and (RCM). diverse client base. DAKCS is committed to providing recovery software solution. Based on the latest their customer community with all the tools they need technologies, iMX Debt Collection includes all the most Cornerstone to succeed in the ever changing advanced business functionalities supported by native Support ARM business, today and in the future. tools. State Licensing and E&O Insurance InterProse Collection Solutions cornerstonesupport.com InterProse Software, Inc. info@cornerstonesupport.com WebAR ACE CSS IMPACT! HD™ 2.0 888-445-8660 interprose.com/collection-advisor cssimpact.com Cornerstone Support is the premier licensing and aaron.reiter@interprose.com carlb@cssimpact.com insurance provider to the collection industry; 844-244-1135 818-593-4830 Debt Recovery Software Solutions through a patented professionally trained to assist you with all of your CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading state licensing needs. ARM | Collections & Compliance Platform delivering decades Virtual Agent Collector and a true, web-based collection platform, open to third-party integrations and Continued on page 26 of deep rooted industry acumen for the ARM, Collections & packed with process automations. Compliance sectors. IXP (Lite) also available. Noble Systems Corporation Contact Center Technology noblesystems.com info@noblesystems.com 404-851-1331

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Business Directory

Continued from page 25 VoApps DirectDrop Voicemail voapps.com sales@voapps.com 855-737-1596 VoApp’s patented DirectDrop Voicemail service delivers a voice message directly to a consumer’s voicemail server – without calling the phone in question.

Compliance LexisNexis® Risk Solutions LexisNexis ® Accurint ® for Collections lexisnexis.com/risk/receivables-management 800-869-0751 LexisNexis Risk Solutions assist debt recovery professionals with increasing workflow efficiencies, gaining greater insight into debt portfolios, collecting more in less time and achieving greater profitability.

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Payscout Credit Card & Check Processing ACCOUNTS RECEIVABLE MANAGEMENT Merchant Services payscout.com ales@payscout.com 888-689-6088 Payscout provides a full range of electronic payment solutions, including credit, debit & HSA cards, check, and ACH transactions, along with multiple software integration web payment portals, and the from one greatoptions, payments brand. IKEY Product Suite with the attorney endorsed Reg E us help your ARM company grow. pport, and more: complianceLet solution. Contact us at:

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Business Directory

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egistered ISO/MSP of Deutsche Bank Trust Company Americas, New York, New York. Payscout Brazil is nPay. Payscout is a registered ISO with VISA EU and Mastercard Intl. Payscout is a registered PF in LAC. arate approval. Copyright © 2016 Payscout, Inc. All rights reserved.

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Skip Tracing IDI Inc. idiCORE ididata.com sales@ididata.com 855-842-1410 Trusted for over a decade by collection agencies and collection attorneys. IDI provides fast, accurate and cost-effective consumer verification and skip-tracing solutions via online, API, and batch processing. Reduce Cost, Not Quality. Innovis RPC innovis.com 855-601-1915 Innovis is a leading provider of consumer identity information. The company’s RPC solution provides collection agencies with tools to improve contact and recovery rates. LexisNexis® Risk Solutions LexisNexis ® Accurint ® for Collections lexisnexis.com/risk/receivables-management 800-869-0751 LexisNexis Risk Solutions assist debt recovery professionals with increasing workflow efficiencies, gaining greater insight into debt portfolios, collecting more in less time and achieving greater profitability. LocateSmarter Batch & Online Skip Tracing Platform www.locatesmarter.com info@locatesmarter.com 888-254-5501 LocateSmarter is a data provider focused on innovation and data quality. LocateSmarter offers skip tracing products such as phone append, bankruptcy, deceased, cell phone scrubs and more. Melissa Data Listware melissa.com greg@melissadata.com 800-542-7434 Melissa offers solutions that empower collection professionals with the right-party contact information for successful collections and account management efforts. VeriFacts Payroll Promise verifactsinc.com sclark@verifactsinc.com 800-542-7434 Payroll Promise is designed to support a legal strategy by locating verified full time places of employment. The information returned is 100% guaranteed to be accurate.

November/December 2017 Volume 17, No. 6 Editor T. Steel Rose, CPA, ACG editor@collectionadvisor.com Managing Editor Joshua Fluegel josh@collectionadvisor.com Copy Editor Myrna Nelson Advisory Board/Columnists Fred N. Blitt Ron Brown Debra Ciskey Sam Edens Sam Eidson Nick Jarman Harry A. Strausser III Publisher Angie Rose angie@collectionadvisor.com Production Andrea Bergeron Paul andrea@collectionadvisor.com Subscription Changes Joshua Fluegel josh@collectionadvisor.com The opinions given by contributing authors are their own and not necessarily the opinion of our staff and ownership. All trademarks used are the property of their respective owner.

Collection Advisor (ISSN# 1556-0813) is produced six times a year by Abide Media, P.O. Box 92342, Southlake, TX 76092, 888-610-1144. Standard Mail postage paid at Sussex, WI 53089. ©2017 All Rights Reserved Magazine Publishing Group, Inc. Printed in the U.S.A.

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RMEx

Mobile Suite

Quantrax

WHY IS THE ONLY COLLECTION PLATFORM THAT HAS USED ARTIFICIAL INTELLIGENCE WITH SPECTACULAR RESULTS, THE INDUSTRY'S BEST KEPT SECRET AFTER 25 YEARS? The collection industry spends millions of dollars a year maintaining and enhancing core collection platforms. Software companies that failed to evolve, can not meet today's demanding requirements. Against great odds and without a great deal of support from the industry, one company has quietly persevered. Their innovative, intelligent technology has given small and large companies stunning gains in productivity, automation and powerful machine thinking that this industry has never seen. In a modern era, the call for pioneering solutions to old problems has never been greater. Are you tired of hearing and reading about dated technology that has overstayed its welcome? Call us if you want to be amazed.

(301) 657-2084 | www.quantrax.com | marketing@quantrax.com

CORPORATION

Receivables Management Expert

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This This simple-to-use simple-to-use data data cleansing cleansing tool tool helps helps This simple-to-use datacurrent cleansing tool and helps you you locate locate and and maintain maintain current address address and you locate and maintain current address telephone telephone numbers numbers forfor less less than than aa penny penny a aand telephone record! record! numbers for less than a penny a

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Contact Contact data data forfor 140 140 million million households households && Contact data for 140 million households & 1919 million million businesses businesses

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