The CFPB's proposed rulemaking has sent shockwaves through the accounts receivable industry. Speakers of the upcoming CollectTECH19 conference provided their take as to what they think this means for professionals around the country.

Ron L. Brown MCE, IFCCE, MPRS, CCCO, CARS, CFA
Owner
ConSec Investigations, Inc.

Now that the CFPB has proposed new rules to govern how third-party debt collectors contact borrowers, it is my opinion that the rules will accelerate the industry’s switch from insistent phone calls to emails and texts.

It appears that under the new rules, our collectors would only be able to call a consumer seven times a week — currently they can call as often as they want but we seldom call seven times in a work week. The major impact that I envision will be that once our collector reaches a consumer by phone, they will not be able to contact that consumer for at least a week. What if the consumer requested information? We will not be able to provide that information via telephone for a week.

The advantage to the new rule is that the CFPB is proposing no cap on the number of texts or emails a collector could send. This rule has become quite a controversial issue as it will open the door which will allow debt collectors to use various text messaging apps to include but not be limited to direct text, Facebook Messenger as well as many other textbased messaging services.

Consumers will not have to agree to text or email communications, however, the rules will provide the consumers an opt-out from collectors’ texts and emails. It is my opinion these changes are a long time coming and will update the laws to address today’s communication methods. The changes the CFPB has proposed are a reflection of how we communicate in today’s techno-world. Texting and email is without a doubt the way we communicate today.

Collection agencies that have for many years relied on telephonic contact with consumers will have to change their business model. It’s going to create a major change in the collection industry and auto dialers may go the way of the slide rule.

John H. Bedard, Jr.
Managing Attorney
Bedard Law Group, P.C.

The doors may soon be open for the credit and collection industries to communicate with consumers in ways most convenient to and desired by consumers. The CFPB’s proposed rule paves the way for the creation of ground rules focused on communicating with consumers via text message and email. This is the first step along a long road toward serving consumers in ways that meet the needs of a 21st Century economy.

Gordon C. Beck III
President and COO
Valor Intelligent Processing

The new CFPB rules will bloom many opportunities for the industry, but none more than modernizing the way we communicate with consumers, specifically the practice of texting and emailing. We will start to see an abundance of options on platforms such as our very own CMS systems that will act not only as a CMS, but will utilize strategic analytics to automate communications such as text messaging and emails as a viable replacement to expensive alternatives. The future of tech in the ARM industry will have no boundaries.

Chris Dunkum
President
First Collection Services

The new CFPB ruling could open up responsible use of texting and emailing between receivable management firms and consumers. These tools would allow us to communicate with consumers in a way that is easier, more convenient, and faster for them. Our clients would also be able to securely answer questions that we forward to them from consumers much faster. Speeding up the flow of this information might improve overall results and reduce complaints commonly made against our industry. It isn’t a far stretch to imagine a consumer’s dispute being answered in hours instead of weeks. Proper implementation of these new CFPB rules is key to the success for everyone. It is going to be more important than ever for industry leaders and regulators to make sure safeguards are put into place to protect the flow of this information. Technology and data providers working with us to provide proper consent management and data tracking will have many benefits beyond the obvious things we think about today. I truly believe this could be a new beginning for our industry.

Leslie Bender CIPP/US, CCCO, CCCA, IFCCE
Chief Strategy Officer and General Counsel
BCA Financial Services

It is commendable that the CFPB has crafted some clear guidelines for communicating with consumers per consumers’ preferences. This creates a wonderful opportunity for industry and consumer groups to study the proposal and find common ground for meeting consumers’ communication expectations. Subject to guardrails for respecting consumers’ privacy and avoiding third party disclosures, the strategies outlined in the NPRM for modernizing communications in debt collection are a terrific start.

Jon Balon
VP of Product Development
Williams and Fudge, Inc.

It’s a great start by defining a framework to use when communicating using these technologies. The ruling also helps in paving the way for future communications using mediums that many people use in their day-to-day lives. Imagine the day where we can communicate with people using the communication medium they want, versus the one they are being forced to use. This ruling will help us in giving account holders what they want.

Mike Frost
Partner
Malone Frost Martin PLLC

It is clear in the new proposed rules from the CFPB that the regulator fully understands that consumers prefer communication options and there is not a one size fits all method to communicate with consumers. That said, the rules have shaped some recommendations, provided safe harbors and created some restrictions. Those within the industry that utilize omni-channel routes to communication with consumers will need to implement policies, procedures and compliance controls. All of which are feasible and provide significant opportunity for the ARM industry to reach consumers, especially millennials and Generation Zs.

Rick Perr
Partner
Fineman Krekstein & Harris, P.C.

The express inclusion of communication via text and email in the CFPB’s Notice of Proposed Rulemaking is a welcome development by the ARM Industry. Written in 1977, the FDCPA was not designed with modern technology in mind. Instead, it has been left to a myriad of courts to fit a round peg into a square hole when it comes to interpreting the use of advanced communication techniques in conjunction with the proscriptions of the FDCPA. There will surely be guidelines on its usage, but the mere recognition that consumers should be able to be communicated with in the medium they desire is a big win for technology and efficiency.

Debra J. Ciskey
Executive Vice President
The Collections Coach, LLC

The proposed Debt Collection Practices rule will help debt collectors communicate with consumers in their preferred communication mode. The interaction of multiple statutes, including the TCPA and ESIGN Act, will complicate the process, and these can be overcome. Specific and systematically enforced policies and procedures will be necessary to prevent errors and overcommunication. In the long run, consumer satisfaction with communications will increase, and documentation related to the receipt of messages will be a valuable benefit to the industry.

In 1977 when the FDCPA became law, the first Apple II computer went on sale, a gallon of gas was 65 cents, Elvis Presley died in Graceland and Jimmy Carter was elected president. Forty-two years later the receivables industry is on the cusp of seismic disruption due to an updated FDCPA and financial institution financial reporting mandates. As the CFPB recognizes the pivotal role collections provides, communication technology will help resolve complaints and improve consumer credit worthiness.

It’s a brave, new world where I can hear, “free at last,” ringing in my ears. I can also tell you that 2019 is just the beginning. Four letters: CECL are being referred to as the biggest accounting change in banking history, the most profound revolution in financial services since the FDIC secured deposits. The Financial Accounting Standards Board (FASB) introduced Current Expected Credit Loss (CECL), part of ASU 2016-13, Financial Instruments: Credit Losses, as the new accounting standard for the recognition and measurement of expected credit losses (ECL) for loans and debt securities. CECL takes effect in 2020, following global accounting rules under International Financial Reporting Standard 9 (IFRS 9). Both standards will have drastic impact on how financial institutions report loan losses and collection departments who can reduce them.

The absence of agents or dialers may become a reality for first parties as international companies comply with the 31-day “time bomb” under IFRS 9. To prevent accounts from rolling to Stage 2, and recording a lifetime expected credit loss impairment, creditors in the financial services industry are expected to accelerate collections by assigning more accounts to collection agencies.

Instead of throwing bodies at this opportunity, collection agencies can use artificial intelligence on accounts not only to prevent 31-day delinquencies but to collect more. Using AI will be transformative to increase right-party contacts, free up agents from busy work and overcome agent mistakes in compliance and creating dialer queues.

In a world where most financial matters take a few taps on an app, collections is stuck in the last century limited to the telephone and letters. Phone calls may soon give way to emails, texts and even social media-direct messages as the CFPB updates the FDCPA. Collections that utilize machine learning and artificial intelligence could follow under a separate CFPB proposal to create a regulatory sandbox program for financial innovation. This regulatory sandbox would provide a two-year “safe harbor” trial period for determining whether these practices are profitable while the CFPB evaluates whether they benefit consumers.

Through the sandbox program regulators seek to gain a working knowledge of new financial technology before its full implementation. Many of today’s consumer-facing financial technologies, such as online banking and mobile electronic payments, would not have existed if regulators had not fostered an innovative market, but instead solely relied on enforcement measures.

There are many drivers for this shift towards greater investment in collections. As delinquencies and outstanding debt levels across most consumer lending categories trend upward, collection departments will face larger workloads in the next 18 months. As that happens, banks will be unprepared to handle the problem due to rising acquisition and reward expenses for credit cards. Slowing revenue growth prevents card issuers from investments in receivables management.

Additionally, the concept of collections within banks’ customer relationships is changing as banks modify their services to drive better financial outcomes for their customers. Increased customer loyalty extends to debt collection, especially technologically enhanced collections.

Consider this alone, FICO recently commissioned a global telecom research report that showed 94% of global service providers are using text messaging to communicate with their customers, but less than one in five are personalizing these communications for late payments.

Artificial intelligence and machine learning will articulate a methodology to set the stage for the disruptive technological advancements of 2020. In 1977, there was no email, no cell phones and very little bad debt. According to the Federal Reserve, in 1977 there was $37 billion in outstanding revolving debt mainly credit cards. As of March, 2019 there were $1.057 trillion in revolving credit outstanding. I am not saying categorically that if communication rules had stayed current these outstanding levels may not have exploded, but I am saying that if I said, “Ladies and gentlemen, Elvis has left the building,” most people would not know what I was talking about.

Gamification was a new term to me as of a few years ago. I thought “gaming” was what my teenage sons did when they were playing their favorite console system or messing around on their phones. As it turns out gaming is not just for teenagers, it’s for all of us! Specifically, gaming in a contact center is a way to challenge team members to reach certain goals throughout the day, as well as, just keeping work fun! Here are the Top 3 Ways Gamification Impacted Our Contact Center:

1. Transparency of KPIs Promotes a Competitive Environment

The tool we use features a dashboard where we select the top three key performance indicators (KPIs) for each contact center role and have them displayed for each contact center agent to see on their gaming home screen. Those KPIs share important measurables in a consistent way each day for each contact center agent. By sharing the KPIs the agents not only see their team’s performance, but also their individual performance. These KPIs have data fed into a leaderboard, which is displayed on TV screens throughout the contact center. By sharing who is on the leaderboard, we are instilling the competitive drive to be at the top of the leaderboard, and sharing what it will take to be considered “the best” in certain KPIs. The competition drives increased productivity.

2. Ease of Managing Contests and Incentives

With a gaming system that receives informational updates very frequently throughout the day, the contests do not have to depend on a leader updating a spreadsheet or manually posting an update on a board. Technology is used to feed data into the gaming system, which provides routine updates to all agents, across the contact center, so each person and each team knows exactly where they stand in comparison to their KPIs and the progress on their contest throughout the day.

By having auctions or using the store to distribute prizes, contests are easier for the supervisors to facilitate and keep track of, not to mention the results being more accurate. A deeper dive into contests and incentives will be presented at the CollectTECH19 conference. But I will say that it is fun to challenge your co-workers to certain “duels” in order to see who can reach the top results for each day. Plus, there is no supervisory involvement needed to make that happen!

3. Keeping the Contact Center Fun

Keeping incentives fresh can be a challenge and there are many aspects to gaming including earning points, leveling up, bidding on auction items, challenging teammates in head-to-head competition, and even having a bracket-style tournament. Being able to personalize your profile and engage with others through the system increases interaction among coworkers and gives team members something fun to talk about!

Gaming came to State Collection Service and it is here to stay! Some of our contact center agents were willing to share their feedback about gamification and here’s what they had to say:

“I love gaming,” said Jalisa Johnson! “When you work in a larger company it can be hard to get recognition for everyone, and through this system I can get recognition without waiting for a supervisor to notice my individual accomplishments. You get to customize the shelf that holds your awards and they stay as yours forever. You can even click on them and they tell you what you did to earn that one. It’s nice that they stay on the shelf so you can always see the milestones you have completed!”

“The system helps me keep myself personally accountable,” said Andrenia Morgan-Washington. “I like to see what I immediately need to improve on throughout the day. I can see my calls and payments during the day and know what I need to do to reach my daily goals. I really like that it’s immediate and gives you instant feedback.”

“Another thing I like is that it shows me what my personal best was,” said Jalisa Johnson. “Then, once I’ve outdone myself, it stretches the goal a little further so I keep increasing my performance.”

“I really need the immediate feedback and it motivates me,” said Andrenia Morgan-Washington!"

Tracy Dudek is the Chief Operating Officer for State Collection Service, responsible for overseeing the organization’s production and support areas including the company’s Extended Business Office and Third Party Collection divisions as well as Patient Engagement, Business Intelligence, Client Services, and Human Resources, among others. Tracy has been involved in the receivables industry for over 20 years.

The accounts receivable industry thrives on innovation of method and technology. This innovation first takes form in the minds of thought leaders. Collection Advisor reached out to industry leaders and colleagues to gather nominations for technology/service providers in the collection industry that strive to work side by side with professionals to improve the industry’s efficiency and the country’s economy.

To qualify, executive officers of collection technology vendors were asked to provide advice for collection professionals and respond to candid questions from Collection Advisor Editor T. Steel Rose. Their insight will allow collection professionals to do more with less. Rose learned about collection performance rates in Europe, clear-your-name Festivals in Brazil and many other collection insights to be covered in a later issue.

The following are the Top 30 Technology Thought Leaders of 2018. In light of recent changes in many Americans’ paychecks, leadership from each of the following partners are asked:

What advice would you offer accounts receivable professionals as take-home pay has increased for 90% of American consumers due to tax changes?

AUTOSCRIBE CORPORATION
ROBERT POLLIN | President & CEO

“Providing consumers with self-serve payment options has grown significantly – with more than two-thirds of Americans in the US leveraging digital banking and payment channels. Online payment portals and automated phone systems enable accounts receivable professionals to be more efficient and encourage consumers to self-service their debts as disposable income increases.” Pollin added, “There is a reprieve in the heavy handed approach from the CFPB.”

BEAM SOFTWARE
THOMAS MOHR | CEO

“I suggest that collection agents learn and understand how the federal tax-withholding guidelines affect them personally. Using that knowledge, collectors can educate consumers on how they can actually afford to pay any higher amounts the collector will be asking them to pay. It should be used on the talk-off side to ask for higher payments on monthly payments.”

BILLINGTREE
EDGARS “EDZ” STURANS | CEO and President

“Consumers will likely take advantage of extra funds for new purchases. Their ability to pay will not necessarily increase their interest in paying off past debt. Since consumers will have better cash flow, offering payment plan options along with multiple payment channels, including self-serve options, should increase overall payment volumes.” Sturans added, ”The interactive website can be very helpful especially for millennials.”

CASTEL COMMUNICATIONS
JOHN RIPA | President

“During customer conversations, accounts receivable professionals should strategically present favorable take-home pay and tax changes as opportunities to accelerate debt relief. Speech analytics should ensure tax-related dialogue occurs during live conversations. Call scoring and keyword spotting should determine which tax-related conversations and keywords produce the most collections revenue. You could pop a script based on the words.”

CDS SOFTWARE
JEFFERSON K. KIM | President

“You should be cautious making long-term spending plans based on next year’s revenues from tax changes. Tax code changes can be reversed. A great possibility however is investing in something now that will lead to future savings or efficiencies, such as a new software platform or employee training and development. The predicative dialer is interesting because even if the dialer regulation eases up, the way people use their phones has evolved. They may not pick up their phone at all, but after an initial consent, text messaging becomes more common.”

CODIX
LAURENT TABOUELLE | Executive VP

“Review collection strategies for certain segments of consumers. Modify strategies utilizing flexible technologies. Utilizing AI based on statistical data is gaining momentum to profile debtors and optimize the strategies. Along with business process modeling technologies and easy payment mechanisms through debtor web portals, the CPR [collection performance rate] will keep going up.” Tabouelle added, ”In continental Europe, for example, the CPR is 70% for agencies, 60% for banks and 30% for utilities."

COGENT
AJAY KAUL | President

“This 90% of Americans will derive benefit but they have to anticipate to be potentially being under-withheld for tax year 2018 thus owing money later. Accounts receivable professionals should consult consumers and negotiate payment terms or make more effective wage garnishments.”

COMTECH SYSTEMS INC.
FRITZ SCHULZE | President

“As the U.S. economy improves, AR professionals have a better opportunity to increase cash flows by taking advantage of new applications and technology available from suppliers who provide automation and contact plans that are both effective and compliant at price points never before available. Customization is key.”

COMTRONIC SYSTEMS
JEFF DANTZLER | President

“Agencies must continue to leverage all forms of outbound contacts, messaging and payment portal options, while at the same time reducing security risks by moving their collection platforms to the cloud where their cloud partners can offer best-in-class security standards. It has been a century of manipulation of data and security breaches like Expedia, Russia or North Korea. The best way to partner is with someone like Microsoft Azure in the cloud. Focus on dealing with the issues in the cloud, which reduces the expense. The workstations remain the same.”

CORNERSTONE SUPPORT, INC.
MATT PRIDEMORE | Principal

“The tax changes on the personal side along with rising wages and full employment have led to consumer confidence levels we haven’t seen in over a decade. That coupled with the changes in leadership at the CFPB have made this a great time to invest in the ARM industry. There is a change in energy, more start ups in the last nine months than in the last six years.”

CSS IMPACT
CARL BRIGANTI | President & CEO

“This anticipated increase will have competing attention from consumers as they make decisions as how to use the extra cash. In a way, this is an extended “tax season” and AR professionals should deploy the same strategies that are typically limited to “tax season” in order to compete for the additional earnings. Tactics which improve payments include targeting the right dials using real-time, propensity to pay, waterfall data and SMS text campaigns.”

EFT NETWORK, INC.
ALEXANDER R. BACON | President

“Additional ‘cash in consumers’ pockets,” that would presumably be available for debt re-payment (among other things), will vary significantly based on their gross income level, state of residency and whether the person owns a home. Be mindful of the tax benefit, but stick to your basics on collections strategies!”

EXPERIAN
STEVE PLATT | Group President

“For years, the industry has talked about right channel, right time and right offer. But, now it’s a reality. Businesses can access data and technology to gain insights about customers and communicate with them on a personal level by assessing their ability to pay, ultimately preserving the long-term relationship. There is a fervent desire to understand the view of the financial position of the consumer.”

INNOVATIVE E-PAY SOLUTIONS
GARY ADAMS | President

“This increase represents small amounts of extra cash per paycheck, not a lump sum like previous tax rebates. ARM Professionals will benefit by actively encouraging payment plans! Automated solutions provide 24/7 convenience to the debtor, ensuring the highest possible payment while reducing overall compliance exposure and cost to the agency.”

INTERPROSE
MATTHEW HILL | President/CEO

“My advise would be to continue to apply industry best practices when communicating with consumers. Fair and compassionate treatment will always yield the best results regardless of the economic climate. It makes a win-win-win, for the client, the consumer and the agency. If the climate is on the upswing then improved collection results will be a natural by product.”

LARIAT SOFTWARE
JAMES DUNLAP | CEO

“Be prepared. The ARM industry requires ARM professionals to be prepared to adapt to changes in the market. Favorable market conditions are not advantageous unless you are prepared to capitalize them. The primary focus should always be on improving core competencies as they define success.” Dunlap added, “The ARM industry is no stranger to ups and downs. Adaptability is the key”

LEXISNEXIS
THOMAS C. BROWN | Senior Vice President, U.S. Commercial Markets and Global Market Development, LexisNexis Risk Solutions

“Getting to the right consumer quickly and in a compliant fashion are the most critical factors for collectors. Understanding the financial well-being of the consumer also is important so that a collector can customize repayment. Indicators like employment, liens, judgments, bankruptcy, property and other alternative data elements provide deeper insights. There has not been a dramatic change in paying down debt based on the tax break.”

LOCATESMARTER
JONATHAN BROOKS | President

“Although take-home pay has increased, there’s still outstanding debt. Skip trace data needs to be accurate and excess data must be reduced to improve phone penetration, right-party contacts and dollars collected. The faster you reach a consumer, the less competition you’re likely to have – making payment recovery easier.” Brooks added, “Not just phone numbers, we are constantly analyzing the data.”

MICROBILT
KEITH GOODNIGHT | SVP, Product Development & Management

"Implement smarter data strategies to identify those most affected by tax rates. More money will increase consumers’ moving status, so monitoring address and phone changes will help maintain contact. Also, use collectability scoring strategies to prioritize collection resources on consumers realizing higher paychecks before others claim the additional income.”

ONECLICK-DATA
JEFF FLOOD | Director

“As consumers have more income it is a great time to focus on their employment, finding where they work and communicate with them at work or go for a garnishment since consumers have basically gotten a raise and thus are probably going to stay longer with their current employer. With a better job they may stay put and be easier to locate.”

PAYMENT SAVVY
CHAD DEATHERAGE | CEO

“The more a consumer realizes resolving a debt will bring peace of mind, the more eager one is to pay. Having compliant, responsive and emphatic agents on your team is the key to bringing in top-dollar revenues and taking advantage of the new tax law.”

PAYSCOUT
MANPREET SINGH | President

“Tax breaks mean consumers have more disposable income to apply to outstanding accounts, but it’s important for ARM professionals to provide frictionless bill payment options. Payment portals allow consumers to set bill payments online - or via IVR - through an easy, convenient, self-service platform.” Singh added, “New technology from Visa will ensure a card number is never visible.”

QUANTRAX
RANJAN DHARMARAJA | CEO

“Consumers will not voluntarily pay their bills because they have extra money. They still need to be contacted and persuaded to pay. This is not your father’s business! Today’s collections is all about change and old technology is not going to address the millennial paradox, mobile technology, the need for AI, chatbots, automation or analytics. For dealing with the millennial paradox who don’t want to answer the phone, Quantrax deployed a collection robot. It recognizes several languages, determines balance and has an intelligent engine for settlements.”

REVSPRING
JOHN TELFORD | President of Financial Services

"Given ongoing wage stagnation, an increase in take home pay will be helpful to individuals striving to meet their financial obligations. Agencies should engage consumers using omni-channel communication and payment solutions that create a positive experience by making it easier to fulfill obligations in a convenient, compliant and secure manner. It is not just a millennial, consumers are over the fear of dealing with computers. It is a mass consumer swing. Customers want an interactive experience."

ROYDAN
DAN HORNUNG | President

“Many accounts receivable items are collected from a socio-economic segment that may not be representative of this statistic. Determining a consumer’s ability to pay should always be the top priority for any accounts receivable professional. Their tax situation, especially during tax season, is always an important part of the equation.” Hornung added, “You need to determine their communication style and adapt to it; and that is not trivial.”

SENTINEL DEVELOPMENT SOLUTIONS, INC. [ECOLLECTIONS]
CHRIS J. ROBERTS | President/Chief Operating Officer

“Because margins are already thin, my advice to ARM professionals would be to take a look at all of your existing business processes and see how automation (workflows) and automated collections practices (consumer portals) can reduce the need for human intervention during the collection process, thus further reducing costs. The more a collection operation can collect in a fully automated fashion the better.”

SIMPLICITY COLLECTION SOFTWARE
CHRIS CAMPBELL | CEO

“Automation! Find solutions to help you automate current processes and jump on collecting new accounts quicker. Quickly addressing new accounts and easily moving accounts between collection and AR processes in an automated fashion ensures that you are able to capitalize on and close out profitable accounts quicker without increasing overhead. Have software identify those who are going to make payments and are going to continue to stay on a payment plan.”

TCN, INC.
TERREL BIRD | CEO and Co-Founder

“We believe accounts receivable professionals should recommend consumers be fiscally conservative with their incoming cash flow and prudent with their spending habits. As more money comes into consumers’ take-home pay, we believe they should save and diversify their incoming revenue and be weary of quick and easy marketing ploys.” Bird added, “Business intelligence permits management to see every aspect of a call.”

VOAPPS
PAUL GIES | President

“Get notices of consumers’ debts out around common paydays to be top of mind when the extra money comes. The quality of the call is better because they are calling back to get resolution. Our clients have immense success delivering voicemails on the 1st, 15th, 30th and Fridays so they are top of mind when the consumer has time to call and make a payment.”

WEBRECON LLC
JACK GORDON | CEO

“I’m not usually one to give advice on how to collect money as I wasn’t particularly good at it. But it’s tough to go wrong when striving to be the one collector above all others that a consumer wants to pay. Always be respectful, positive, helpful and authentic with consumers. There is the great convergence of a great economy and a more favorable compliance environment.