Menu

Consumer Complaint Numbers Continue Streak of Decrease

According to American Banker magazine, the Better Business Bureau reports complaints against debt collectors are down.

Debt collectors outperform other industries in complaint resolution. Debt collection dropped to fifth place in complaints behind cell phone service, telephone service, cable television and auto dealers. The 13% decrease in complaints from 2015 to 2016 continues a 8.5% decrease from 2014 to 2015, and an 11% decrease from 2013 to 2014.

Altogether, it’s a substantial decrease in complaints over the last four years, especially considering there are over a billion customer contacts by collectors in a year resulting in just under 17,000 complaints to the Better Business Bureau in 2016.

ACA International analysis shows the total number of debt collection complaints received by the CFPB represents .06% of all Americans estimated to have a debt in collection.

The CFPB handled approximately 84,500 debt collection complaints in 2017, 3,500 less than in 2016. Only 0.005% of consumers who had contact with the debt collection industry during this time actually lodged complaints.

In comparison, America is quite lenient with consumers in debt. China maintains the Judgment Defaulter’s List of individuals who have failed to satisfy judgments against them. More than 3 million names were on this list already by the end of 2015. Being added to this list means more than just public shaming. It prevents those listed from flying in a plain, riding a high-speed train and sending children to paid schools. By mid-2016, about 5 million people had been preventing from buying these services in China as a result of being on the list.

95% of Consumer Debt Paid on Time

As many of you might know, April is National Skip Tracing Month. In the next issue of Collection Advisor, columnist Ron Brown explains how he coined the term "cybertracker."

Also, the May/June issue includes some research from George Mason University stating that approximately 95% of all consumer debt is paid on time. The research by Law Professor Todd J. Zywicki explains that this high level of voluntary payment depends, in part, on the perceived effectiveness of the debt collection system, in the event of nonpayment.

However, the CFPB estimates that 30 million consumers had debts in the collection process in 2013. 30,000 of those consumers lodged complaints. Of which under 2% turned out to be valid.

Competition or Collaboration?

beck gordonThe Truth About ARM Trade Organizations

There is much debate around the ARM Industry regarding trade organizations in our world of credit and collections. Is participation valuable? Which ones have the most dynamic and fresh content? Which ones are expensive? Which trade group will expose me to new clientele? Which ones require an invitation? We see it everyday in our email, through our LinkedIn, in our trade publications or websites, ads for the next conference, news about industry happenings, webinars to sign up for and committees to join. Behind these sources are the true heroes of our industry. In many cases the originators or organizers of these groups work in jobs like the rest of us and then dedicate their spare time to giving us all a voice, a platform to connect and learn and network and grow.

All of us professionally reside in arguably one of the most evolving, sometimes volatile, often undefined and almost always misunderstood industries of all time. We are always competing, for an edge as we seek out the best technology, vendors, employees and clients. However, what if we asked our clients what they prefer when it comes to competition versus collaboration? What if we told them that we were going to take our foot off the gas of individuality and joined forces, shared trade secrets, offer one another solutions for our related issues and products so all of us could stay ahead of the curve and ensure them through our collective efforts that no agency on the scorecard would ever finish less than 95% of best? Well I asked one of my largest clients this very question and here is what Steven Stone of Verizon Wireless had to say.

“I have always looked at the ARM industry as more of a fraternity than a competition and although I strongly believe in friendly competition, I am much more in favor of friendly collaboration,” said Stone. “The trade organizations the industry has to offer are plentiful and have too much to offer all of us so not further tapping into those resources through participation and the sharing of best practices would be a lost opportunity. There is no question that this would improve overall performance from the agency network and most likely aid in better compliance as well. Having all of your agencies at 95% of best is every OCA (outside collection agency) manager’s dream.”

Hiding in plain sight, in the bowels of your email and the reading panes of your web browser, are the platforms ready to unite us, yet too often overlooked or justified against. In a business where adaptation is survival, ARM trade organizations are there to bring us together so we can work smarter and faster then ever before. Anyone that knows me knows that I preach endlessly about the necessity to be transparent to each other in the best interests of our clients and our industry. I have watched our world in recovery consume, deter and excommunicate too many good ARM firms unnecessarily that I feel as if it is time to be the one to stand up and just say it, please get involved!

There are over 6,000 agencies in America, yet on many webinars, trade group rosters and conference attendee lists, it is common to see less than 200 participants and in many cases it is much less. Big or small, the industry needs your participation. Big ARM firms didn’t start big, they grew through solid practices and great performance. I know because when I started with my agency, 20 years ago, we had 9 agents and I would like to share with you my own, undeniable proof that trade organizations can not only teach and connect agencies, they can actually build them!

In 2006, my organization joined a popular trade organization whose focus was risk in the telecom arena. When we began participating we had 3 major clients, 65 FTE and one big appetite to learn, engage and grow within the industry that we were so passionate about. What transpired was twofold:

Personal Level

• Learned the art of public speaking.
• Learned how to “ice-break” (yes, ice breaking is a skill).
• Was taught many strategies and best practices.
• Learned what the ARM industry truly means to America.
• Met some of the best friends of my life.

Company Level

• Strategies brought back drastically improved performance.
• Company security and compliance improved.
• Met and hired vendors – best in class.
• Went from three major telecom clients to working with every major wireless, cable and satellite company in the country.
• Grew from one office and 65 people to five offices and 1,200 FTE.

None of this was possible, or at least not this quickly, if not for this trade organization. The best news here is that this is an example of what just one trade organization can do to aid in the growth and success of your agency. Imagine joining three, four or five of these groups that are organized and run by these industry heroes I mentioned earlier that have the same passion to help you succeed as the very publication you are reading now.

To the trade organizations out there, thank you for the time, effort, energy and desire to provide our industry with a voice and a chance to unite. I am involved with many of your groups and the future brings endless opportunity as long as the content remains fresh, the prices remain affordable and the chance to join is accessible. If your focus continues to make the quality of your attendee list as important as the quantity of your attendee list, our industry will get stronger with every passing event.

To all of my fellow agencies out there, I encourage you to research the trade organizations out there and find the ones that fit your needs and please get involved and when you get involved, share what you learn. As I said in the title, competition or collaboration, competition is awesome and important, but in the eyes of many of our clients they would rather us work together and execute best known practices so all of us can produce at the highest level for those that trust us to do so.

I have learned that the world as we know it, is the world as we make it. Our industry has many puppeteers such as the economy, decreasing margins, frivolous lawsuits and strict regulatory bodies, all that have made us move in directions we have not necessarily desired. Times are changing, the world of collections becoming ever more important as consumer confidence soars and consumers become intent on improving their lives and their credit. The time is now for us to take our industry back, come together as one and control our destiny; together, because NONE of us are as strong as ALL of us!


Gordon C Beck III is the CEO of Diversified Consultants Inc. and a director of the Accounts Receivable Professional Network.

Collection Tips for A/R Pros

Valuable information should be absorbed whenever it presents itself, particularly when it is from the minds of industry thought leaders. Fortunately, there is some presented right here, plain and simple. Do your best to put it into practice today.

Nick Jarman Owner of RightAway Consulting

Be Positive: Accept full responsibility for your choices. A positive attitude is a decision we make, moment by moment. If you look for the worst, you will find it everywhere. When you learn you have the power to choose your response to what life brings, you can look for the best and find incredible opportunities. If you find yourself with an attitude that is not what you want, change it!

Be Present: Be totally focused on the moment and on the person or task with which you are engaged. When you are fully present with each other, you are listening deeply and important opportunities do not escape you. The glue in us is being fully present for one another in all situations. Being present is a great way to fight burnout and it creates focus so that you do not keep wearing yourself out. Giving 100% to the task at hand demonstrates dedication, cooperation, and enthusiasm.

Be Memorable: Make someone’s day or moment through a small act of kindness. Turn a routine call or encounter into special memories. Never be afraid to lend a helping hand when a situation warrants it or not. Be sure to give words of encouragement and turn difficult circumstances into positive experiences. Offer to listen to issues or situations that are going on around you and act accordingly. Do not always think about the “expected,” but think about the “unexpected” as well. Most importantly, make them remember you.

Lou Freedman Partner at Blitt and Gaines, PC

The Culture of Dignity. Never lose your temper despite a frustrating call or tone from the consumer. Whether their situation is one they heaped upon themselves or a life-changing event that impacted their finances, it’s important to understand as best you can how they feel on the other end of the call. Collection with dignity is the gold standard.

Get Lawyers Involved. Understand that legal collections provides support for the call center, and vice versa. If the call can’t provide a solution for payment, or the consumer refuses to communicate, understand that you work for a law office that can level the playing field through the court system. Service of summons, a pending court date, or filing of a garnishment sometimes provides the inbound contact that helps reach a solution.

Harry A. Strausser III President of Interact Training & Development

Never, Ever, Stop Learning. One of the joys of life is to continually embrace the idea that “we don’t know everything.” The day we start thinking “we know it all” is the day that we should start looking for another job. Education is at the very heart of the collections industry. Whether you are a front-line collection professional or the CEO, the changing landscape of the ARM industry provides for a wealth of educational opportunities.

Never Underestimate the Power of Positive Thinking. Dr. Norman Vincent Peale, told us in his best-selling book, The Power of Positive Thinking, that looking at our personal lives and our professional goals in a positive light leads us to higher levels of success. When you are feeling down or negative, do your best to look at the silver lining that might be temporarily hidden.

No One in the Company is More Important Than Another. We might argue that without the CEO/owner, we have no company. However, those that have been part of successful organizations embrace the notion that everyone is a vital piece of the organization’s ability to build a pathway leading to growth and future existence. No job is beneath another. What impacts your company more, the receptionist or lead payment poster out for the day or the CEO?

Michael Starzec Partner at Blitt and Gaines, PC

Situational Awareness - the case is set for trial and the notes reflect no witness. Is this the time to keep pounding on the payment plan that is completed in 12 months with a large down payment when the consumer has said they cannot do it? Or do you take the offer that is within parameters or follow up with the client to see if you can accept it.

Ron L. Brown President and CEO of CSI Group

What Not to Ask. When dealing with a consumer never ask them if they can pay the debt. Ask, “how soon can we expect the balance in our office?” If you do not get a positive reply ask simple questions such as “why” or “why not.” The professional collector must know the consumer’s circumstances before they can set up a payment arrangement.

Leave Room to Renegotiate. After ascertaining the consumer cannot pay a balance in full and a payment schedule is being worked out, never set payments up at a given amount for more than 90 days. The consumer’s circumstances may change and if you have a $500 account set up at $50 per month you have locked yourself in to that amount. Each 90 days a professional collector should review the consumer’s circumstances and attempt to increase the payment amount.

Keep Data Fresh. A professional collector will constantly strive to update the consumer’s data in the collection file. Never use phrases like, “do you still work down at Ajax Plumbing?” or, “does your wife still work at Baptist Hospital?” This type of questioning encourages the consumer to just say, “Yes.” Ask outright, “Who is your current employer and what is a number there that we can contact you?” or “Where is your wife currently employed?”

David Olefsky Partner at Blitt and Gaines, PC

Better Understanding the Customers Dispute: It is common for a collector to focus on shortening a call with a consumer after they identify securing a payment or an agreement is not possible. Notes for consumer disputes are far too often short and without detail. It is crucial that each manager have a script of questions for their team to ensure we can accurately report to the client.

Preventing the Call Transfer: We all have collectors who transfer a call to another collector as it doesn’t positively impact their money. The bottom line is all call transfers impact the consumers experience with your office. We need to focus on strategies to encourage our collectors to handle all calls within their abilities while balancing the impact it could have on inbound calls for their assigned client.

How to Avoid Lawsuits

Having your agency sued is one of the most costly single events that can occur. To make the sting even worse, it can be triggered by the mere uttering of a poorly selected phrase or even word. One way to avoiding this and other legal incursions is to focus on the source from which the majority of lawsuits emit. Jack Gordon, CEO of WebRecon, spends his days accumulating and observing this information and attributes lawsuits to the most active attorneys.

gordon jack“One thing you can do is be aware of the names on that list,” said Gordon. “Make sure that every collector that is talking to a consumer has a copy of those names. When any of those names from that list are mentioned, that’s a red flag. Not that that’s necessarily a very common thing to happen but boy, I’ll tell you, if going back and reviewing the recording from a lawsuit, if I was dealing with someone who had a Sergei Lemberg come up in the call and that didn’t trigger any kind of management action or review, that would be a really frustrating one. That would have been one that could have been foreseen if not prevented.”

Top 10 Most Active Attorneys of 2015
By Consumers Represented
1. Todd M. Friedman
2. Craig B. Sanders
3. Sergei Lemberg
4. David H. Krieger
5. Suren N. Weerasuriya
6. Craig Thor Kimmel
7. Adrian Robert Bacon
8. Mohammed Omar Badwan
9. Daniel A. Edelman
10. Amy Lynn Bennecoff Ginsburg

Training to avoid infractions under such attack is imperative. The best defense is teaching collection professionals the signs of calls meant to bait them into illegal territory. Such a sign is the consumer sounding like he/she is on a speakerphone. A speakerphone would allow a consumer to record the call or share the conversation with their attorney. Collection attorneys have advised collection professionals to hang up or pass the call to a seasoned professional if it is suspected that this tactic is in practice.

Many infractions leading to lawsuits are also fairly common and ones the CFPB has been working to prevent.

“Setting aside the biggest cause of consumer lawsuits being aggressive consumer attorneys marketing their services and recruiting clients, the data [collected by WebRecon] actually shows that false and misleading representation involving the a.) character or amount of the debt, b.) methods used to collect them, c.) threats to take actions that cannot legally be taken are big areas,” said Gordon.

Such a litigious environment can create an uneasy feeling. However, the use of strategically implemented software can help ease the burden and keep collection professionals on the right path in the occasional absence of human guidance. Courtroom proceedings can be more positive for an agency if the proper electronic records are maintained. Gordon recommended software features that could help.

“There are two that come to mind,” said Gordon. “One of them is call recording. That’s gone from a luxury to a necessity. The ability to confirm or rebut consumer allegations I think is definitely a necessity. Even when the agency is in the wrong it would certainly expedite the process of settling suits and getting them out of the way. Another one is call analytics where you can analyze recordings automatically and then have those analytics identify potential problems. Maybe someone forgot to say the mini-Miranda or voices got raised, tensions were high, key words were used. Analytics are able to identify not only potential violations but tension or poor handling of a call and then can systematically address those violations.”

Top 10 District Courts of 2015
By Lawsuits Filed
939 Illinois Northern - Chicago
671 New York Eastern - Brooklyn
612 Pennsylvania Eastern – Philadelphia
497 California Central – Los Angeles
379 Florida Middle – Tampa
316 New Jersey – Newark
288 New York Eastern – Central Islip
275 California Southern – San Diego
247 Georgia Northern – Atlanta
215 Nevada – Las Vegas

Being aware of where the danger lies and implementing the correct training will help keep your agency out of one of the top ten courts illustrated in the chart where the most consumer lawsuits were filed.

All statistics are gathered by Web - Recon. This and more is available at dev.webrecon.com/category/fdcpa-casestatistics/.