We have all been playing something of a guessing game with the advent of the CFPB. How will the industry change when rulemaking occurs? What will be the result and outcomes of the complaint portal? What will enforcement actions against debt collectors look like? What changes will the supervisory mandates require, and will they be consistent with the rulemaking and the enforcement actions?
Sometimes looking at the big picture distracts us from what is happening in the weeds in our own agencies. That is the really important stuff that affects us, our staff at all levels, the consumers we work with every hour of the day, and our clients, too. Let’s visit the weeds.
How does compliance affect our operation? The big picture may show that there are revenue impacts, and expenses including expenses for training, account management, and people management. Some people assume that tighter compliance will have a negative impact on revenue. Others have told me that tighter controls around compliance have had a positive revenue impact as they implement more scrutiny of the accounts worked, weeding out those that are unlikely to pay and more likely to generate complaints and threats of lawsuits.
How does compliance affect collectors? In some agencies, training around compliance has increased. Increased training can have positive impacts on productivity and morale. People who feel that they are being noticed produce more, it’s known as the Hawthorn effect. At the same time we train about compliance, we can’t avoid training collection techniques, so collectors who receive compliance training learn how to do their jobs better. People who perform better often are rewarded, and people who are rewarded for their performance are motivated to perform well consistently. We may be spending more on training related to compliance, and the reward for that can be higher levels of performance.
Collectors can also be subject to something they like less — call audits. Call audits are necessary and it is the feedback related to those call audits that makes all the difference. Audits that reveal deficiencies provide opportunities for productive and instructive feedback sessions. This is where we get very deep into the weeds. The CFPB has said it is interested in the quality of the experience a consumer has when interacting with a debt collector.
Feedback aimed at providing a compliant and compelling experience for the consumer is where the rubber meets the road, or where the whacker meets the weed. Isn’t it kind of amazing that we rely on (very often) young, inexperienced, and sometimes immature individuals to advance our reputation with consumers and regulators through their conversations with consumers? Now are you ready to invest more in training, call auditing, and positive, constructive feedback sessions?
As long as we are considering the impact of the behavior of collectors on consumers, we need to consider the effect on consumers when their account is placed with us for collection. They expect and deserve communications that comply with the law; however, often we see and hear demands for responses that are above and beyond that which debt collectors are required to provide. We have all seen the letters; in fact, just look at the consumer action letters at consumerfinance.gov for examples. The consumer experience can absolutely be impacted by consumer behavior. What about the consumer who is upset when he sees the account you are collecting on his credit report and demands to know why he wasn’t notified first? Very often, this consumer was sent and received an initial notice from a debt collector, only to have assumed it was junk mail and discarded it without opening it. Despite the debt collector’s best effort, accusations of non-compliant behavior proliferate—just look at the complaint database on the CFPB website. Responding to these complaints is costly and time consuming, and are rarely revenue generating. However, a collector who is well trained and armed with the information necessary to alleviate the consumer’s concerns can turn around a complaint call and turn it into a payment call. See how that training can pay off?
In its recent bulletin 2104-1, the CFPB provides further compliance guidance related to the duties of data furnishers that demonstrates how deep into the weeds it is looking. While a consumer who files a dispute related to a tradeline on his credit report is satisfied once that tradeline is removed, the CFPB says that isn’t good enough. Even when the outcome for the consumer is a deletion, which provides a measurable benefit for the consumer, the CFPB expects each dispute to result in a reasonable investigation. A reasonable investigation may uncover systemic problems that could have a negative effect on numerous consumers. Data furnishers are left to define a “reasonable investigation” themselves. The CFPB says what is reasonable depends on the situation. It is time to re-evaluate the dispute investigation processes which will require more crawling around in the weeds.
Debra Ciskey is the Director of Compliance at Afni, Inc. She is a member of the board of directors and a certified instructor for ACA International.