5 Ways to Improve Your Reputation Among Clients

Tennis player Andre Agassi once marketed a Canon camera with the slogan, “Image is Everything.” For any collection agency, “Reputation is everything”

Agencies are obligated to protect their own reputation in order to protect their clients reputation. Here are 5 positive steps you can take to improve you image and your reputation at the same time.

• Produce a video for your website to tell the world the important part you play in a credit-based economy.

• Write an article about how important compliant recovery is to you

• Write a press release about a recent accomplishment of your agency

• Find and implement a Reputation Guide Checklist

• Participate in an A/R Pro Best Practices Forum with other leaders.

Fortunately, Collection Advisor has made all of the resources required to take these steps available with the A/R Pro Network.

As Henry Ford once said, “You can’t build reputation on what you’re going to do.” Take the first proactive step to build your reputation before someone else destroys it. Unite with other collection professionals to make the reputation of our industry stronger.

Accounts Receivable Professionals Protected by FCC Rule

The FCC “one-free-pass” rule still prevents liability for calling a cell phone number when a caller originally obtained consent, but now the number has been reassigned to another person.

The caller bears the burden of showing he or she had no knowledge of the reassignment and there was valid consent to call the number. So it makes sense to scrub the phone number against those known to be reassigned prior to sending any messages. A single caller is defined as the caller and its company affiliates, including subsidiaries. Two affiliated entities may not make one call each; but can collectively make a single call.

One solution recommended by at least one law firm is to send a single text message and invite the recipient to “opt-in” to further text messages. If the recipient of the text message does not “opt-in,” the number will be sent no further messages until expressed consent is obtained.

CFPB Structure Declared Unconstitutional

rose steelThe U.S. Court of Appeals for the District of Columbia Circuit ruled the structure of the CFPB unconstitutional in October. Judge Brett M. Kavanaugh ruled the structure of the agency as a “concentration of enormous executive power in a single, unaccountable, unchecked director.” In its 2-1 decision, the court said the agency’s structure, “represents a gross departure from settled historical practice,” referring to multi-member oversight used to keep independent agencies in check.

The ruling said the CFPB structure, “not only departs from settled historical practice, but also poses a far greater risk of arbitrary decision making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.” However, Kavanaugh’s remedy was nothing more than a change in the “for-cause removal restriction.” Prior to the ruling the president could only remove the CFPB director for cause. While the president is still the only one who can remove the director, Kavanaugh’s ruling dictates that the director may now be removed by the president at will, meaning for any reason whatsoever.

Kavanaugh issued his opinion on PHH Corporation v. Consumer Financial Protection Bureau. The court ruled the CFPB had to re-review the enforcement action it took against PHH. PHH objected to the CFPB’s allegations it violated the Real Estate Settlement Procedures Act when it referred customers to mortgage insurers who in turn bought reinsurance from one of its units. The judges ruled the lender was within the law. The CFPB said its administrative action did not need to respect a three-year statute of limitations on the alleged violations. The court did not agree. The final ruling dictated reversal of the $109 million disgorgement award issued by CFPB Director Richard Cordray as well as the three separate legal holdings. While this ruling by the nation’s second most powerful court will not halt the CFPB’s operations, it is the first major legal challenge to the CFPB’s power.

Kavanaugh stated in his 100+ page opinion, “the CFPB is the first of its kind and a historical anomaly…Indeed, within his jurisdiction, the director of the CFPB can be considered even more powerful than the president.”

U.S. Sen. Elizabeth Warren from Massachusetts and one of the first administrators of the CFPB released a statement saying, “This split decision — which bizarrely relies on a mischaracterization of my original proposal for a new consumer agency — will likely be appealed and overturned. But even if it stands, the ruling makes a small, technical tweak to Dodd-Frank and does not question the legality of any other past, present or future actions of the CFPB.”

Warren, who was rejected by Republicans as the CFPB’s first director, lashed out at the ruling saying, “continued Republican efforts to transform the agency’s structure or funding should be seen for what they are: attempts fostered by big banks to cripple an agency that has already forced them to return over $11 billion to customers who have been cheated.” This statement is contradicted by fact. Plaintiff, PHH, is not a big bank nor will this action cripple the agency’s current functionality. PHH is a New Jersey mortgage lender asking the court to review the $109 million it was fined by the CFPB for allegedly accepting kickbacks from mortgage insurers.

PHH’s pleading for the CFPB to halt its operations until Congress passes legislation reforming its structure was rejected. “With the for-cause provision severed, the president now will have the power to remove the director at will and to supervise and direct the director,” Kavanaugh wrote. Cordray currently has a five-year term lasting through 2018.

Since this ruling was a the three-judge panel, and there are 17 judges on the Court of Appeals, the CFPB may request the entire appeals court to conduct an “en banc” review of the case, meaning a review with all of the judges. Another possibility is before or after such review the ruling may be appealed to the U.S. Supreme Court.

The D.C. District Court also has before it another case challenging the CFPB’s structure and operations, which had been held in part by that court pending the decision to be handed down in the PHH case. State National Bank of Big Spring v. Lew, No. CV 12-1023 (ESH), 2016 WL 3812637, at *1 (D.D.C. July 12, 2016). State National Bank in Big Spring, Texas, filed a motion for summary judgment in its case to seek a declaration that the establishment of the CFPB, as well as Cordray’s appointment as its director, are unconstitutional.

In July, the Court of Appeals issued an appellate opinion saying State National Bank has standing to challenge the constitutionality of the CFPB and Cordray’s recess appointment.

Technology is the Debt Collection Hero

rose steelIn the economy where one in three Americans have a debt in collection, it is essential to collect debt to avoid passing the losses on to paying customers. While debt collection is essential for financial responsibility, the trick is to collect debt without alienating the customer, reduce complaints and avoid lawsuits. I say reduce complaints because they are inherent.

Debt collection is an area for constant complaints and has been, long before the CFPB permitted the posting of every complaint, legitimate or not. (The CFPB handled over 1.08 million consumer complaints by January 1, 2017.) Whenever I say I am editor for a magazine about debt collection technology and receive a negative response, I realize I am talking with one of the 35% of people who got behind on a debt and received a communication from a collection expert. Right away, we are on the defensive. We want to protect our honor, to say we are financially responsible. At the same time, who wants to pay a debt not owed? I know I don’t, but I have. I know people who pay the IRS just to stop fighting them and get back to work.

A scrutiny of debt collection complaints explains this notso complicated predicament. The complaints fall into four major categories: debt already paid, debt not owed, debt amount not verified and the wrong amount collected as debt. In many cases the financial professionals in banking created the problem and the financial professional in receivables catches the complaint. Data coordination is needed to enable debt collected by agencies to have a first-hand account of the facts. Companies contracting agencies need seamless technology to ensure accurate facts are passed on.

Technology becomes the hero in debt collection again. Data coordination is necessary between big data analytics, predictive analytics, process automation, mobile technology and social media.

Big Data

Big data analytics segregates data to answer key questions about a consumer: What is her intent to pay? What is her ability to pay? What will change her ability to pay and over what period? What is the likelihood of the change? Demographic data combined with the time of the day a consumer will respond to a call increase rightparty- contacts and talk-offs for debt collection agencies, the group we refer to as accounts receivable financial professionals (ARFP).

Big data opens up possibilities like speech analytics on every debt collection call. Advanced language-recognition programs track keywords during phone conversations and identify emotions of debtors and collection agents. If emotions rise and cursing begins, prompts steer conversations back on track. Supervisors see color-coded boxes on call-center computer monitors. A box turns red and expands when a call contains expletives. If there are long silences a supervisor can take over the call or whisper in the agent’s side of the call.

Small green boxes represent routine conversations when agents are reciting mandatory “mini-Miranda” statements. Ideally the program guides the agent to express appropriate empathy and then provides phrases to produce payments. The end result is a score to rank ARFPs (top collectors).

Predictive Analytics

Predictive analytics uses data mining, machine learning, artificial intelligence and statistical modeling to predict future events to gain reported increases of 50% in three months. Process Automation in debt collection replaces manual tasks with an automated process or a self-service portal. Efficiencies are gained by automating skip tracing, payment follow up and lining up the right phone numbers at the right time of day for a call.

Decision Automation

Decision automation is gaining strides by teaching a machine to think, plan and act like an agent. While data science builds models based on past history of debt collection automated agents learn how to interact, follow up and close pending collections with debtors. Using email, SMS and chat the channels provide private, one-on-one discretion. The ubiquitous mobile phone permits debt collectors to reach debtors wherever they are while technology determines which calls are permission based and not on the Do Not Dial list. Mobile phone payment apps surpassed other forms of payment this past Black Friday.

Social Media

Social media is used to trace and prioritize customers for collection through their Facebook and Twitter accounts. While a debt collector must have considerable empathy and persuasive skills, technology can make the process faster and more accurate. Systems that cut down human intervention in the process these are merely tools at the financial professional’s disposal. The “art” of debt collection comes into play when these tools are utilized in concert to achieve the ultimate result, account paid.

A compliant call resulting in account paid or a payment plan puts the consumer on the road to restore financial responsibility and credit worthiness needed to make the next significant purchase of goods or services.

TCPA Litigation Booming

jones lindaThe Telephone Consumer Protection Act celebrates its 25-year anniversary this year. It was introduced to address consumers “outraged over the proliferation of intrusive, nuisance calls.”1 A quarter of a century on, it’s fair to say it’s not been wholly successful. Plenty of outrage remains – and not just on the part of consumers.

TCPA litigation is now a booming business, as a Senate Committee heard earlier this year.2 With 3,710 cases in 2015, TCPA cases are the second most common type filed in federal courts. Consumer complaints to the Federal Trade Commission, the agency responsible for implementing the act, meanwhile, number hundreds of thousands a month.

For collections, the TCPA constitutes a substantial challenge: in June, one large bank agreed to a $16.3 million settlement over debt collection calls to mortgage borrowers; in May a top debt buyer agreed to pay $18 million. ACA International’s white paper notes in 2014, average attorneys’ fees for a TCPA class action settlement were $2.4 million while the average individual consumer received $4.12.

“The stark disparity in the damages received by consumers relative to the fees retained by attorneys undermines the initial purpose of the TCPA, rendering it more a tool for attorney enrichment than consumer protection,” ACA’s white paper argued.3

Part of the problem, the white paper notes, is the 1991 Act is outdated, while the FCC has taken an expansive approach to its interpretation.

“This combination, an outdated statute and impossible-to-comply-with regulations, has created an uncertain environment for businesses struggling to decipher how to communicate with consumers using modern communication technology without inadvertently exposing themselves to enormous liability risk,” the white paper stated.

Ever Tighter

Certainly the FCC’s Declaratory Ruling4 on the TCPA issued last July hasn’t helped. Far from easing the burden on businesses by bringing clarity to the rules, the FCC significantly tightened restrictions on business.

The ruling is particularly tough on calls to cell phones – a key issue since half of Americans, and most millennials, have no landline. Keeping track of cell numbers is also complicated by consumers who frequently change carriers and old numbers are reissued to new users: over 100,000 numbers are reassigned every day.5

The TCPA was updated in 2013 to require consumers’ express permission to call their cell using an automated telephone dialing system (ATDS). The FCC’s July 2015 ruling strengthened this, though, confirming that text messages counted as calls and adding burden on businesses in a number of other ways.

First it stated consumers could revoke consent in any way they find reasonable, and the business can’t limit this. A consumer may revoke consent to a bank, for example, just by asking a teller not to call anymore.

Second, the ruling refused to limit the definition of an ATDS. According to the FCC, it should include all technologies that have the “capacity” to dial numbers without human intervention – whether they have the “present ability” to do so or not. It ruled out a rotary dial telephone as an auto-dialer, but not much else.

Finally, for reassigned numbers, it gave businesses a “one-call window” to learn of the reassignment; the second call results in liability – even if the first was unanswered or the person (or voicemail) answering failed to state the owner of the number had changed.

“If you have the bad luck of inheriting a wireless number from someone who wanted all types of robocalls, we have your back,” as the FCC chairman Tom Wheeler put it.

Working Within the Confines of the TCPA

ACA launched legal action against the FCC within hours of the Declaratory Ruling being issued, and others have joined in the fight. Those collecting government debt received a pass from the TCPA in December 2015. Others probably shouldn’t count on any immediate relief, however.

Legislative help looks unlikely. Despite the case load in courts, there remains significant support in Congress for the TCPA – “one of the preeminent and most loved consumer protection statutes we have”, as one senator said during the recent committee hearing.

“[T]he idea of allowing greater access for robocalls to consumers’ cell phones without their consent is an idea that is dead on arrival with the American people,” he added.

This ignores the millions of consumers with no other way of being contacted, and who actually want to take care of their debts. Nevertheless, it indicates the political opposition to any significant relaxation of TCPA rules.

For now, therefore, businesses have little option but to try to comply, and employ best practices for working within the confines of the TCPA:

• Avoid Using ATDS with Cell Phone Numbers Alternative dialer technology that requires manual intervention – some of which courts have confirmed meet TCPA requirements – already exist. So do outsourcers that manually dial the phone number and transfer on answer. Before either, though, businesses need to ensure they’re scrubbing portfolios on a daily basis to remove cell phone numbers from their ATDS.

• Try to Ensure Reassigned Numbers Do Not Trip You Up Existing databases are not comprehensive, but scrubbing cell phone numbers for current ownership will minimize the risks. If the company only has a cell phone for a consumer, it may also be worth doing a phone search for a landline to call via ATDS.

• Companies Must Have Good Systems and Procedures to Track Revocations of Consent This will be much easier if they proactively put in place services they can offer and encourage (but not require) consumers to use for revocations by phone, email, mail, online or in person.

There is no panacea. The challenges posed by the TCPA are stronger than ever after 25 years. However, businesses that want to see the next 25 have little choice but to try to ensure their systems and controls are strong enough to meet them.

1 library/legislative_histories/1420.pdf
2 index.cfm/hearings?ID=7FDEF85EBF1F- 475C-BE3F-1E011EA5A909
3 aspx?p=/images/39929/aca-wp-modernizetcpa_ final.pdf
4 FCC-15-72A1.pdf
5 FCC-15-72A1.pdf

Linda Straub Jones is the Director of Market Planning for Compliance Products with LexisNexis Risk Solutions. She can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..