The CFPB released the Outline of Proposals Under Consideration and Alternatives Considered this past July describing rules it may implement to be followed by all debt collection entities. The CFPB then announced this 70-page outline would be scrutinized by a panel of third-party collection establishments 28 days later in accordance with the Small Business Regulatory Enforcement Fairness Act (SBREFA). Among the collection professionals chosen to provide suggestions on behalf of the debt collection industry was Kelly Knepper-Stephens, general counsel and chief compliance officer at Stoneleigh Recovery Associates.

The panel was an eight-hour opportunity for Knepper-Stephens and a select few collection professionals to sit before officials of the CFPB and present suggestions to improve the proposed rules for consumers and collection professionals alike. The selected collection professionals, or small entity representatives (SERs), came prepared, bringing with them detailed descriptions of problems with the rules along with options for how to amend them.

“My written response alone was 43 pages,” Knepper-Stephens said. “Every couple of pages I had recommendations. I had two or three recommendations, at least, for each rule.”

The recommendations were numerous and echoed the desires of many collection professionals looking for definition and certainty in an often-ambiguous set of regulations. Among the recommendations were requests for safe harbor provisions as protection from FDCPA violations as well as requests for definite dates in the future when rules would go into effect. Knepper-Stephens backed these recommendations with substantial of data.

“I had a lot of numbers about how some particular regulations would impact my business,” Knepper-Stephens said. “For example, for the proposed written authorization requirement before you can take a payment on an out of statute debt, I brought data showing that when I send something out to a consumer for their written acknowledgement, I only get four back for every 15 I send out. I have a nonresponse rate of 73%. If I have the same response rate and if I’m not allowed to take a payment unless I have written authorization, then under the proposal, 73% of the time I’m not going to get a payment when I otherwise would have.

“We also came with solutions, ways to change the rule that would still meet the CFPB’s goals and obligations to protect consumers’ rights and interests but also allow small businesses to continue to exist. We came with suggestions across the board for almost every proposal the CFPB had.”

Not only did Knepper-Stephens and company’s presentations make requests for clarity but also for exactly what it is a collection agency or law firm can say or write to a consumer. The panel, as well as the rest of collection professionals, urged the CFPB to provide precise words that can request payment while being safe from legal repercussions. This has been fueled by the CFPB’s tendency to provide tools advertised to keep an agency safe from legal action yet still leading collection professionals into lawsuits; such as a collection letter the CFPB provided.

“I looked at the letter. I think I found at least five places where there were problems in light of existing cases and existing language that courts require to be on letters,” Knepper-Stephens said. “For example, an account that they chose for their sample validation letter is an interest- bearing account. But their isn’t any interest language anywhere in the letter. There’s a new case in the second circuit, there’s a seventh circuit case as well, that talks about if the balance is going to change because interest is occurring on the account you need to tell the consumer that. The CFPB didn’t have that language on the letter. The question for the CFPB is: Are they purposefully leaving that language out? Is that a choice? If we use that letter are we safe from lawsuits even though it doesn’t have that interest language on it? Did they forget it?”

Though the preparations for the panel were immense and the quantity of recommendation for the outline great, it was the hope of every SER present that this input would not fall on deaf ears. The proceedings were dictated by law so it was the fear of many that the CFPB’s attendance was merely the signing off of a requirement and nothing more. Fortunately, it appeared to Knepper-Stephens as if the CFPB representatives came ready to listen.

“I thought they were very receptive,” Knepper-Stephens said. “On the panel for the CFPB were Kristin McPartland, Dan Sokolov and John McNamara. John McNamara was a member of our industry before he joined the CFPB. I found that they have always been very open and eager for information that I hope they use to help create a balanced rule. I definitely felt like they were pleased that we had come prepared with a significant amount of data and information about each section of the proposal that we found troubling.”

CFPB Director Richard Cordray stated in his remarks for the release of the outline, “We also plan to address first-party debt collectors soon, but on a separate track.” Amidst the efforts to help make a workable set of rules through the recommendations of the SERs, Knepper- Stephens felt productivity could have been increased greatly if first-party representatives were present at the panel. The relationship of creditors and third-party collectors is largely entwined. An ideal collection scenario involves actions being taken by the creditor with the third-party in mind and visa versa. Taking recommendations for the outline from third-party without first-party present could possibly nullify progress if first-party were to have a conflicting opinion.

“I wrote 43 pages on how I think their proposal is going to impact my business,” Knepper-Stephens said. “If the first-party creditors say something that I wasn’t anticipating, it very well might change my answer. That’s why I have been very concerned and asking, ‘Where are the creditors, why aren’t they here and what are you guys going to do about it? I am concerned about the small business creditors not being here to comment and how their comments will likely impact or change my answers.’

“The CFPB indicated that they had to start somewhere and this was how they decided to start. We know the CFPB has a first-party team that’s working on first-party debt collection rules. From the information I gleaned that day at the panel, I think they anticipate having a first-party SBREFA for the first-party rule before the CFPB will release the debt collection proposal. It is unclear whether the CFPB will allow the creditors to comment on the proposed debt collection rule through a formal SBREFA. For the first-party SBREFA, I hope that the CFPB will convene a SBREFA panel with first-party people and debt collectors who collect using an early out strategy. Any small business that would be impacted by the rule should get to comment.”

Knepper-Stephens seems to hope most of all that the communication between the CFPB and third-party collectors continues and the progress does not stop after the SBREFA panel.

“I think the CFPB is trying to figure all that out,” Knepper-Stephens said. “I hope they are willing to continue to have a dialogue with the SERs who served at the last panel and perhaps solicit feedback from them again once the first-party rules come out.”

Of course the best preventative measures are proactive measures. Had a meeting or panel of some sort with the CFPB and third-party collectors been held before the rules were released, collection professionals might not have felt such a sense of regaining lost ground. Even establishing a mutually understood language would have laid a strong foundation for an effective set of rules.

“I do wish that before they had come out with this outline they would have at least presented it to folks at ACA International, DBA International, the CRC [Consumer Relations Consortium], and NARCA,” Knepper-Stephens said. “Perhaps they could have avoided the larger problems that they didn’t see. For example, using the term “default.” Across the board, everyone presented that using the term “default” is just problematic. I think the CFPB chose the term “default” because it’s a word used in the FDCPA; but it’s not defined in the FDCPA. There has been a significant amount of litigation about that.”

Even though the process of enlightening the CFPB on debt collection has seemed like an uphill battle to many collection professionals, it is a process that must continue. Knepper-Stephens explained that seeking feedback for this particular outline is a first step and the CFPB may still be able to contribute to a positive future for the debt collection industry. She said future steps can also be aided by collection professionals making their voices heard.

“I don’t think there is any reason why they [collection professionals] should keep silent,” Knepper- Stephens said. “If they have comments and thoughts about the proposed rule, I think they should reach out to the CFPB rulemaking team and provide them with information. The CFPB has been very open about trying to reach out to industry members or industry associations. If you put something together to send to the CFPB, you should also send it to your local Congressman.

“Unfortunately because of a couple bad actors in our business, there is a bad perception about us. We need to actively end that perception and turn it around so folks realize we are great businesses. We keep the economy running.”

Collection professionals can identify and contact their representatives by visiting the following websites:

This issue’s Agency Spotlight is pointed at CBE Group. Collection Advisor spoke with CBE Group’s president and COO, Chad W. Benson. Benson describes CBE Group’s formula when working with telecom debt and how it can successfully collect with other types of accounts for a truly diversified account portfolio.

Tell us about when and how CBE Group opened its doors.

CBE’s roots go back to 1933 when our early founders started a local credit bureau company in Iowa. When Tom Penaluna, our CEO and Chairman of the Board, purchased the company from his father in 1986, he had a vision for innovation and growth in accounts receivable management. After we sold our credit bureau division to focus on debt collection, CBE Group’s growth really took off.

Why do you collect telecom debt? What other kind of accounts does CBE Group collect?

It was really our early success and growth in the telecom industry that launched us into our first growth trend. We quickly became experts in the telecom industry and defined specific strategies and analytic models around the uniqueness of accounts in the cable, satellite, wireless and subscription service industries. Our strategies work well for the high volume and low balance attributes of telecom accounts. Meanwhile, our culture supports positive customer satisfaction and brand reputation that has significant reward in an industry where repeat customers are so important.

In addition, to the telecom space, we also have strategic business units dedicated to financial services, government services, healthcare, education and utilities. We find that this level of diversification has really paid off. Not only do we apply best practices across industries, but it also creates less risk for our clients in financial stability. That is big in today’s legal landscape. Too often I see agencies go under because of an impact on the one industry they rely on. Diversification has made us more flexible and sustainable.

What would you say is the most pressing issue with telecom collections today and what do you think is the best way to deal with it?

Approximately 60% of all telecom placement accounts are associated with consumers that are cell-phone-only users and do not have landline telephones. Therefore, about 80% of right-party contacts are communications via cell phones. The Telephone Consumer Protection Act makes this a pressing issue. Agencies need to have a means of providing quality services to their clients in a manner that is efficient enough to meet all compliance and work standards while simultaneously meeting TCPA regulatory requirements. That dynamic, coupled with increased sophistication in recovery management, close races in competition and higher security and infrastructure expectations makes leading performance for clients more challenging to achieve. The best way to deal with it is head on. You have to have the ability to invest in things like compliance management, IT innovation, extensive security and tools of efficiency to stay ahead of the curve. Catching up with standards is far too difficult.

What is the most underrated/underappreciated technology that an agency has and how can an agency make it work harder for them?

Location based services are extremely important to the success of collection efforts. Too often, agencies aren’t strategic enough with this investment. As one of the larger variable expenses, it is something that must be leveraged for success. As an industry, we have to start looking at big data differently, and more strategically. Process time, data accuracy, de-duplication, vendor variety, waterfall strategy – these are all things that must be closely managed and analyzed so this investment works harder at delivering not only top performance, but the best customer experience.

What methods of payment does CBE Group accept (check, credit cards, ACH, bitcoin, dogecoin, etc.)? Why?

CBE accepts payments from consumers via checks by mail, electronic check 21 processing, major credit cards, WesternUnion and MoneyGram. We strive to offer the best balance in options that make resolving bad debt balances consumer-friendly, cost-effective, accountable and secure.

What would you say is the key to success in telecom collections?

Protecting our client’s reputation in the consumer market. A customer with a bad debt account might once again be a customer someday and the likelihood of that happening is influenced by how they are treated when they are not an active customer. We understand that customer satisfaction is important to our client’s long-term success. Performance shouldn’t have to sacrifice customer experience, compliance or our client’s reputation.

How do you keep your collectors motivated and on their A-game?

We invest heavily in professional and personal development for our employees. We pride ourselves on low turnover and highly satisfied employees and know that the culture we’ve created has a big impact on the customer experience and performance we deliver for clients. First, we ensure employees have the tools, skills and support they need to succeed. Second, we keep our staff motivated through team contests, a healthy commission plan, performance and profit-based bonus structure, and, most importantly, a strong culture that creates a family-like environment where people are naturally motivated.

We’ve invested in things like company-wide 7 Habits of Highly Successful People training to help our employees be better at work and at home. To be sure our efforts are paying dividends, we use analysis through the Net Promoter System and employee engagement surveys to keep a strong pulse on the effects of our initiatives.

Our Organizational Development team would say our staff is “green and growing, not ripe and rotting.” It’s encouraging to me to know that our people, the most important thing to success, are at CBE because they want to be, not because they have to be. That makes a big difference in the results we deliver each day.

Aside from successfully collecting accounts, what are important factors to keeping clients happy?

We are very focused on well-rounded client partnerships. It’s about much more than a liquidation race for us. In fact, if that is absolutely all a client looks at, we might not be the best fit. We thrive with clients who value a well-rounded client partnership where trust and transparency are crucial to creating a win-win environment. We are committed to staying ahead of the curve, adding value outside of the services contracted to help solve business challenges, and looking for ways to improve, test new ideas and create new outcomes. Especially in the telecom industry, we’ve been the go-to agency for many clients when they have a pilot program or are testing a new strategy. They trust us to understand the problem, help create a solution, and manage change without compromising consistent overall performance.

Is CBE Group involved in the community?

Our staff is remarkable when it comes to giving back to our community. We have several initiatives as part of our CBE Cares program where employees come together to do remarkable things for others around them. The results of United Way month each year astonish me. Last year our employees raised over $80,000 to donate to an organization that does so much for our community. In addition, we support pay-it forward month, where employees team up to do something that makes a significant impact on lives in the community. We also work very closely with local schools. In fact, Tom Penaluna, CBE’s CEO and Chairman of the Board, has made significant personal and corporate investments in launching FranklinCovey’s The Leader In Me program in communities surrounding our corporate headquarters. What he has done for area youth, our future employees, is truly incredible.

Developments in telecom collections have allowed collection professionals to gather a huge amount of information regarding the consumer, the collection process, and the collection professional’s actions as well. The trick is utilizing the right information at the right time in the process. Collection Advisor shines the Agency Spotlight on MRS BPO and talks to senior vice president of business development, Misty Carson. Carson reveals how they keep collectors in the know during collection calls and talks about tools they developed to help reach their payment and compliance goals.

Tell us about when and how MRS opened its doors.

MRS was established in April of 1991 and we officially opened our doors in Cherry Hill, New Jersey in June of 1991. Our first clients included regional banks in later stage account placements.

How did you become involved in collections?

I started working in contact center services in Huntington, West Virginia as a Frontline Operations Supervisor in the mid 1990’s with many Regional Bell Telecom clients as partners servicing telesales and customer care calls. With the same company, I advanced from Supervisor to Operations Manager and into Client Services in North Carolina which ultimately led to a Sales and Marketing Director position in 2002. Around 2006, I transitioned into Business Development in collections supporting growth of many telecommunications client partners. I joined MRS in 2010 and I have enjoyed expanding our presence into telecommunications as well as other vertical industries.

What is a recommendation you would make to fellow business development collection professionals?

My recommendation to other business development individuals would be to really try to focus on being hands on with their accounts. It really gives you the opportunity to interface with the client and internal teams. When the business development person brings the account on board, it’s the client’s expectation you’re going to perform well for them. When a person stays involved in the account it generates a better long-term partnership.

What does MRS do to optimize upper management’s performance?

MRS has made significant investment in quality assurance, compliance, and data analytics. The MRS information technology team has created data warehouses which enable us to conduct in-depth data mining with specialized business intelligence processes for strategic analysis across all client portfolios and especially in our telecommunications programs. We rely heavily on our data analytics solutions to generate many strategic dashboards and advanced views of the data to optimize upper management’s performance. We also utilize strategic planning, analytics, and forecasting tools to manage our client scorecard results. Our data solutions are customized to our clients’ portfolios and we can make changes quickly.

What is the key to making data analytics really work for an agency?

From a data analytics perspective, our internal team developed a performance dashboard we can use in data analytics. It has a ton of information. We also partner with some vendors. Experian is a key vendor we partner with for some of our data analytics. In addition, we also built some homegrown technology platforms. One, we call CB Analyzer which is a data dashboard that gives us an analysis of an account from a scoring perspective. It’s been very useful.

If a customer makes a payment on our website, our IT team has built in different qualifiers or questions asking the customer if they were responding to a letter MRS sent or if they have been contacted via phone call. The data we capture from the customer, even from the website, is beneficial to us in understanding what might work well as far as the letter programs or if it’s better to work with phone calls.

What is the most underappreciated technology an agency has and how can an agency make it work harder for them?

The most underrated/underappreciated technology is the richness of the call detail an agency has. Understanding how to capture and analyze this call information can greatly increase compliance and profitability.

Describe this call detail.

The other data we try to give to the operations team from a scheduling perspective is that which digs into the propensity of the customer to answer the phone at certain times throughout the day. Some of the data analytics IT can create dashboards for would be contact strategy around attaining the right party contacts. Obviously certain times in the evening of each time zone are a little more critical to staffing. There are also certain peak times we have found throughout the day and also certain days of the week being a little better like Friday evening. Typically a lot of customers receive their paychecks on Fridays. We really have to dig into the richness of the data detail to create an overview so as we’re talking we can pull from dashboard analytics we’ve created for operations.

CB Analyzer is a dashboard of the inventory we have for each particular account. The dashboard analytics information we can also access is the call duration, what periods during the day and the month we’re contacting customers, how long our average top time is within the day, the conversion rate of customers paying within certain periods of the day, or certain days of the week being a little better as well. It’s important, I think, for the agency to look at the trends and see what is happening with their calls.

What is a development you would like to see in telecom collection technology?

I would like to see our clients and regulators approve the use of email and text as a standard practice for third-party agencies in telecom collections. Some of our telecom clients are currently allowing email as a collections strategy in some capacity.

How does MRS keep its multiple locations operating perfectly in concert and what could hurt a multiple-location agency’s operations?

MRS links its sites using a fast and secure Internet technology as well as a shared policy platform ensuring all staff are consistent with their call handling. One of the biggest issues facing a multiplelocation agency is to ensure robust, fast and continuous connectivity between the sites. In today’s environment this is especially important, not only because downtime is costly to the bottom line, but it impacts the customer experience as well.

How do you keep your collectors motivated and on their A-game?

MRS deploys many unique motivation strategies (list below) to keep our resolution agents on their A-game. If an agent gets a payment over a certain established threshold, they get a shout out. For rookies, any payment they get they receive a shout out.

Our managers and directors sit right next to our agents. A shout out happens when a rookie gets a payment their director would just yell, “Yay, [this person]! [This person] just got a payment!” It’s just a quick little shout out in recognition without taking anyone off the phone or causing any kind of disturbance. Everyone is very team focused.

We have several contests:
• Lotto tickets for every payment over $500.
• Wawa gift cards for larger payments over an established threshold.
• Sweets/Pretzels. Provided to agents for great quality assurance results.
• Budget Reductions. We will have a budget reduction contest for those tough months. On a monthly basis each agent and manager receives a monthly budget from senior management. What the budget entails are the dollars an agent and team need to collect for the month. If they are on track to exceed their budget or they have really great quality assurance and are training really well early in the month, this incentive could give them a percentage reduction in the budget. With the goal reduces for them they would likely exceed the goal and get a bigger bonus for the month. We really focus this contest around the six-month roll up and with specific clients needing the extra push.
• Holiday contests. On Labor Day/ Memorial Day we have a contest giving an agent an extra day off if they reach specific goals.
• “Grab” Bag Days. Valentine’s Day, Thanksgiving, Mother’s Day, Father’s Day - We do a “Grab” bag. If they get a good payment they get to pick a bag. The prizes are sometimes client related or holiday items.

Aside from successfully collecting accounts, what are important factors to keeping clients happy?

MRS has made significant investments in quality assurance and compliance.
• Our quality assurance staff has more than doubled in the past year.
• Elevated compliance to executive level with addition of our chief risk officer.
• Security spends are up 60% year over year.
• We built a dedicated compliance team with 10 staff members. We have compliance policies and standard procedures our compliance team and chief compliance officer have created. We are auditing our staff and our accounts against the internal policy. For example, if Verizon has a unique customer dispute policy when the internal compliance team does their audit they would be auditing to our policy and procedures. This could be reviewing the account notes, assuring quality assurance, or the way the agent records them. Compliance has become integral.

A lot of our clients come out multiple times per year to do their client audits. Some clients come out on a monthly basis, some only come out annually. The compliance helps with the client audits but the compliance team along with the servicers also do the internal audits. We do pretty well at MRS with all of our client audits but think part of our success rate is because we’re constantly in audit mode. Whether it’s the compliance team doing their internal audits or clients coming out to audit, the team is diligent within their audit functions against our internal policy procedures.

• Hired a project manager for successful implementation of Call Mine.

Our customer complaints are very low, especially considering the volume of accounts we service annually including late stage accounts. MRS also keeps our clients happy with our award winning Client Services to ensure all client deliverables are provided timely and efficiently. Lastly, MRS is proud of our accomplishments in scoring the best not only in quality assurance but also in our client audits.

What is a piece of advice you would offer an agency considering telecom collections?

MRS would encourage an agency considering telecom collections to ensure they have robust technology to run efficient contact solution strategies for effective analysis of their telecom client data. MRS would also advise the agency to have quality assurance and compliance solutions to meet the changes in the rigor and demands of the always-changing regulatory environment.

Is MRS involved in the community?

MRS is actively involved in supporting our communities in Cherry Hill, New Jersey and in Westerville, Ohio with the following events:
• Breast Cancer Walk in October. This is something we do the entire month of October in New Jersey and Ohio. We do different raffles throughout the month. The other thing we do throughout the month of October is management will cook hotdogs and barbecue; and team members can come in and buy lunch and the proceeds go to breast cancer. It’s probably our biggest fundraiser of the year.
• Make-a-Wish fundraising.
• Salvation Army Holiday toy drive.

What do you like to do in your free time?

In my free time, I enjoy volunteering with the National MS Society in Charlotte, North Carolina. I enjoy spending time with my family and playing golf and also some travel. I also enjoy participating in spin class.