The Supreme Court unanimously ruled this week on an FDCPA case expected to have a major impact on debt buyers. The Court ruled that the FDCPA, enacted by Congress in 1977, does not apply to debt collection practices of a debt buyer who buys defaulted loans from a creditor.
The plaintiffs in the case of Henson v. Santander Consumer USA were four Maryland residents who defaulted on their auto loans. They sued Santander in 2012 for predatory collection practices including bypassing debtors' lawyers. But because Santander owned the debt and was servicing it, the court said Santander and companies like them couldn’t be sued under FDCPA.
The Citicorp auto loans was sold to Santander, a Dallas-based vehicle-financing and lending company owned in part by a subsidiary of Banco Santander (SAN.MC), the euro zone's second-largest bank by market value.
The 4th U.S. Circuit Court of Appeals in Richmond, Virginia threw out the lawsuit previously saying the law applied only to debt collectors, and Santander became a creditor when it purchased the loans.
The case hinged on the definitions of “creditor” and “debt collector” and whether a company that buys debt should be treated as a creditor and therefore not subject to the law.
The struggle to juggle both consumer and client relations is a very real one in government collections. The scrutinizing eye of the government in government collections is validated by the fact that a third-party agency is an extension of government authority. But how can a collection professional obtain payment when so many actions could be labeled as a misstep? However difficult, agencies have found a way. Such an agency is Capital Recovery Systems and its president, Craig W. Klein. This issue’s Agency Spotlight asks Klein how they got into government collections, discovered the means to operate successfully and still be labeled “the nice people” by clients.
How did you become involved with Capital Recovery Systems and collections?
I founded Capital Recovery Systems (CRS) in October of 1996. My wife Cindy and I actually were the two CRS people who went through the installation of our collection management system in the first week of February 1997. Andre from CR Software spent three days with us installing and training us. At that time we were operating with four dummy Wyse terminals and one shared PC for Internet use. I initially got involved in collections in 1991 with GC Services with their educational recovery services arm. At 34 years old I had gone back to school to finish my degree at Ohio State University. When time and money ran out on me I reached out to my long-time friend Dennis Johnson who was managing the ERS division at the time and he gave me a job as an entry-level collector. I spent five years or so learning as much as I could from Dennis and went through what I think is one of the best management training programs. I was intrigued by the industry and I thought there were some things I could do differently that went against the stereotypical view of the industry. My agency was going to be the one “with nice people” and operate in a complaint-free environment. You have to think you can change the world (whether or not it’s realistic) when you take on starting a new business. We didn’t change the world, but I am unbelievably proud of our compliance record and zero FDCPA litigation against us in over 19 years in business.
As a collector of government accounts, is Capital Recovery Systems audited?
If so, what do you do to make sure the audits go smoothly and do not hinder the collection process? We are audited. When they audit us on-site it has never been a problem whatsoever. Our bookkeeping and reporting processes and our daily remitting of money collected make it easy for our clients to perform those audits. Up-to-date technology gives us an opportunity to make our clients very happy by providing the opportunity to perform audits, report payments, run reports, place accounts and close accounts remotely. We provide them what is called our NAVIGATE System, via our FICO software, which gives them complete access to their accounts and any and all data they need to perform all of those functions. NAVIGATE helps keep our folks focused and a feeling of being held accountable. When your clients have the ability to see anything and everything you’ve done with their accounts, you better being doing things right, doing what you sold them and meeting any due diligence they may require. The same goes with our call recordings. Our clients have access to every call, inbound or outbound. In that situation, you better know that your staff is treating your client’s constituents with professionalism, kindness and accuracy. Our clients are elected judges, law directors, clerks of court and mayors. In fact, it is important that we act almost as ambassadors for those elected officials. Our folks are taught and trained to always keep in mind that the people they are working with are voters who determine who our clients are going to be.
What is something Capital Recovery Systems does to ensure things run smoothly in upper management?
Just like other successful organizations, businesses and teams, communication is the key. Our upper management team thrives on communication. When you have great people in leadership positions and you empower them with the ability to make decisions, you have the brainpower of multiple experienced people. Our upper management is a total democracy. Rarely, if ever, are decisions made without the input of the entire upper management team. We keep that communication going with off-site meetings and planning sessions where we can mix a lot of work with a little play and fun over a day or two. And of course we meet on regularly scheduled intervals and urgent topics are discussed as they come. Again, having a democracy in a situation allows us to respond and deal with a bad or negative situation with a lot of thought and input from multiple viewpoints.
What is something an agency might do that would guarantee failure in government collections?
The kiss of death for a business like ours is when our clients are hearing negative things from their constituents. In this industry everyone has to be proactive in complaint prevention and great at reacting to complaints when they happen. I think that holds especially true for anyone in the government-only arena and is even more important than if we were collecting mainstream consumer debt. Our clients are very sensitive to each debtor. Whether or not they owe money, they are a taxpayer and a potential vote. If an agency struggles with complaints they will have poor client retention, which will eventually lead to great difficulty in obtaining new clients. These local governments all have their own associations and word spreads quickly among them. That word goes in both directions. If you’re doing a great job, it is the best and most effective marketing you can have. If the agency is creating complaint calls and shows a penchant for negative treatment, clients will run like the Amazon River during rainy season.
With compliance on the forefront, what are some special compliance considerations for government collections?
For me, one thought goes a long way in success. If you do things the right way and establish a culture that thrives on it, just about everything you want will work out. The biggest part of being compliant starts with how you treat people, in our case taxpayers and constituents, on the phone and in any verbal communications. Secondly, make sure that all of your written communications are compliant. One of the great things the ACA offers is the Collection Notice Review (CNR). Even if you have on-staff attorneys like we do, having your written communications get the approval via the CNR is providing a self-assuring redundancy to something that is critically important in avoiding law suits, sanctions and fines by regulatory bodies. Another important component of keeping compliant is call recording. I don’t just mean simply having the ability to record calls, but to use those recordings not only for compliance but for training and to help resolve complaints. I can’t tell you how many times we have had a client call, tell us of a complaint that a defendant registered that was nowhere near the truth, and we forwarded the call to the client. Most of the time we were able to turn a negative situation into a positive because we gave the client a picture of how we treat their constituents. I hear comments like, “Hey Craig, listened to the call, not only was he/she lying, but I was really impressed with how your representative handled the call.”
How does an agency maintain successful working relationships with government clients?
I like when I’m asked this question. During one of our off-site getaway meetings, we started off by asking ourselves that same question. “What do we have to do to ensure that our client relationships stay solid, long term and mutually beneficial to our agency?” Upper management staff just sort of began shouting out single word thoughts. As I was listening. I was jotting these single word ideas down. Before it was over we all agreed that flexibility, responsiveness, accessibility, tailoring, professionalism, accuracy and kindness would be our buzzwords. If we can meet the meaning of each of these words relative to our clients, we would have successful customer client relationships. One other area which I think is not normally used as part of a business plan or policy setting ideas is this: If we set our policies and guide our procedures in a way that guarantees that “What is good for us has to be good for our clients” never set a policy or process that no matter how good it might be for your business, if it does not enhance our clients’ business or make it better, then we will not set that process. It may seem difficult or you’re not focused enough on your own business, but I have found it to be not only simple but it creates enthusiastic discussions. It’s also energizing when someone comes up with an idea that another one of us can shoot down, because it does not enhance the client’s organization. It is actually a great way to discuss policies and procedures and also think things through thoroughly and completely.
What is the best way an agency could get into government collections?
The easiest way to answer that question is simply to say it is a difficult and tedious process where there is no such thing as immediate satisfaction. I will also say it takes some luck. As we all know, luck is when being prepared and opportunity end up in the same place. The vast majority of government collection RFP’s require prior experience with clients of similar size and scope. However, there are many opportunities to take advantage of where a competitive bid process is not required. These situations always occur in the local government arena. You have to put relationships to work with a solid plan to show the potential client (maybe your friend the mayor) how you can produce revenue that otherwise will never be collected. These can be very good times for agencies trying to break into government collections. “Starving” is the best one word description I would use if asked, what is the current status of local governments’ revenue needs? In fact the same applies to all levels of government from townships all the way through the Feds. Another positive aspect is even when revenues are good and government entities have rainy day funds, in the world of government revenues, there is never enough and the folks responsible for generating and spending those revenues will continue to look for ways to generate more. If I had one piece of advice to give relative to breaking into government collections it would be to start off at the local level, soliciting potential clients that do not have an RFP process or a current RFP. Again, use relationships to get in the door. Based on pricing structure, there are many opportunities to break-in without going through a competitive bidding process.
Are there any games or morale boosting practices you use to keep collectors happy and productive?
We do a lot of what the rest of the industry does as far as daily contests giving away gas cards, cash and gift cards. CRS uses a different type of bonus program than what the mainstream or majority of agencies use. Based on the fact that we are more of a customer service organization for local governments as opposed to a true collection agency, we use a quarterly profit sharing as the biggest incentive. Each quarter we take a percentage of total profits and divide it up among the revenue generating employees. Our folks on the phone are called customer service representatives (CSR) as opposed to “collectors.” We even advertise job openings for CSRs rather than collectors. This style of incentive really promotes team work. When others are responsible for the amount of “extra” money that goes into your pocket a culture of holding each other accountable is a blessing for us. In addition we have bowling night out five or six times a year. We provide food, beverages and all the bowling you want for four to five hours. Our staff really looks forward to these nights. We normally base them on office-wide performance. However if the numbers are not great, we tell them we are going to have a bowling night because their effort was great. Sometimes the greatest effort does not produce the end result you hope for.
How is Capital Recovery Systems involved in the community?
Our involvement in the community is mostly centered around education. We provide scholarship money for students going to accredited four-year colleges. We have a pretty strict criteria in awarding those funds. We have been doing it for the last 15 years.
One of the things I think we do differently is we go to great lengths to be active in our clients’ locations. Last year we raised money from our staff and CRS matched their funds times two. That enabled us to donate to an Alzheimer’s event in Knoxville, Tennessee, where our only tie was our client. CRS participated in nine fundraising events in 2016 in locations where we have clients. Our clients really appreciate our participation in their local charity activities. I am personally partial to homeless and hunger issues and we are active in those activities locally. We try to build a culture within this organization for our staff to see the value in, believe in and live by the words, “you get what you give.” It’s not easy in this day and age when funds for everyone are tight. But our group has been amazing in the level of participation.
We have a very high participation rate in the local United Way payroll deduction program. This program allows them to pick what charity the United Way directs their funds to. My younger brother is very active and a volunteer leader for a South Carolina chapter of Special Operations Wounded Warriors (SOWW). They serve Wounded Warriors of the United States Special Operations Forces with charitable outdoor events, mostly getting disabled veterans out in the field to hunt, which they would never be able to do without SOWW. I’ve seen the guys when they get back from the hunt and it looks like they have just been given new life. We hold a fundraiser each year and for the past five years CRS has been very active with them. Two of us just signed up to participate in their annual golf outing in Myrtle Beach, South Carolina.
One thing I am extremely proud of is how our employees really stand up when a co-worker suffers from a difficult situation. One example of many is one of our staff had their home broken into two days before Christmas. You can imagine that every gift under the tree, among other things, was stolen. This bunch came to her need and made sure that her children had a Christmas. 100% of the staff helped out in some way or another and they saved the family’s Christmas with next to no time to get it done.
What do you enjoy doing in your free time?
My biggest enjoyment comes from working in my yard and gardens. It’s relaxing, satisfying and very therapeutic for me. I’m also a big fan of high school football and go to games locally and throughout the state of Ohio. Most recently my wife and I have taken up handgun training and shooting. It is really a great hobby and a way to have an activity with your spouse. We go to the range two to three times a week. Of course it has turned into a competition which makes it twice as fun… when I win that is.
Is your resume preventing you from being considered by not addressing how your previous experience makes you qualified for the position based upon the requirements set forth by the hiring entity? In today’s competitive market it is important to stand above the rest. As a professional looking for a job change you must clearly state an objective and summarize experience in the beginning of the resume. This includes even the most senior candidates. How else do you expect the reader to understand the message you are looking to convey? Resumes are broken down in separate sections and the structure might vary; however the overall premise is to list your achievements chronologically and honestly. But most important is to offer what you have achieved and what you would like to achieve in the future.
Let’s say you are a collections sales executive applying for a commercial sales role and have not worked in a business-to-business environment for several years. You need to initiate the resume with an attention grabber. It doesn’t even have to be elaborate. For example, you can simply state:
“15 years of collections sales experience in a consumer and commercial capacity looking to transition into a commercial sales role.”
An excellent opportunity to provide this information is in the objective or career summary portion of your resume. Providing this information tells the hiring manager you have what it takes to get the job done!
In essence, a resume is a like a personal advertisement and any good advertisement should be tailored to a specific audience. Honesty is equally important when creating a resume. Never claim that you are something you are not. In a personal ad, if you try to attract someone by stating you are athletic and like to climb mountains, you had better be prepared to strap on the climbing gear and prove it.
It works the same in the workplace. Don’t call yourself a “collection manager” if you have never managed a group of employees. If this is something you are striving towards, you can state you are a candidate with 10 years as a collector looking to step up into a management role.
There is also an importance for keeping a standard chronological format. This provides the reader with your most current position working down through the years. A resume that does not follow this progression can be misleading. I also advise candidates to realize they should not limit themselves to just one resume. You should adapt your resume for every role you apply for.
Accomplishments are another huge piece in the resume puzzle. I often see resume’s that read almost exactly as if they are a job description. It is crucial to not only list what you were tasked to do but to clearly state what you actually accomplished. I also ask for both quantitative and qualitative accomplishments. My question is, and the question you should ask yourself is, why should my client hire you?
Additionally, in the new landscape of prevailing social media, it is quite important to ensure your exposure on the Internet mimics your resume. If you are a director of collections, make sure that however it is stated on your resume is carried through to your LinkedIn profile. While we are on the subject of LinkedIn, it is necessary for you to make sure if you are in the job market that you don’t just list jobs, years and titles. Recruiters and hiring managers are looking for specific keywords that through an algorithm will pull up your resume/profile in their search. For example, let’s say you are a dialer administrator and you specialize in FACS/Artiva systems. If you state you are dialer administrator and do not have the specific words “FACS” or “Artiva” systems, you won’t be found by the individual searching those key words.
Another factor on LinkedIn is realizing that who you are connected to and the groups you belong to and are engaged with will also promote your exposure. If you are looking for your next dream job, join in discussions and connect with people with similar backgrounds, even if they are a “C” level with the competition. Don’t be shy to send a connection request or engage in conversation. This could really aid you in standing out above others.
Of course, working with an industry specific recruiter is a great way to offer you a window into potential new roles in your career path.
A quality resume is clear, concise and without error. By stating what job you are looking to achieve early on, you will entice the reader to focus on how your experience qualifies you for consideration. This will capture the hiring authority’s attention and get them to read on. After that, you can close with a great interview.
Susan Burden is an Executive Recruiter from Executive Alliance with 14 years of Recruiting for Collection Agencies, Collection Law firms, Creditors, Debt Buyers and the vendors who service the industry.
DBA International completed its 20th annual conference in February and changed its name to RMA, Receivables Management Association. Collection Advisor caught up with Executive Director Jan Stieger to learn more about the changes taking place at RMA.
“The name change recognizes our members and our certifications,” Stieger said. “We have law firms, agencies and international members, many of whom are working with debt buyers. The members agreed on the name change.”
RMA represents 548 companies who purchase performing and nonperforming receivables on the secondary market. Its Receivables Management Certification Program and Code of Ethics is designed to set the global standard within the receivables industry due to its rigorous uniform industry standards of best practice which focus on the protection of the consumer according to its website. The association was founded in 1997 as Debt Buyers Association and is headquartered in Sacramento, California.
The challenge is optimism and hope for fair and balanced regulation for the professional, ethical collection of legitimate debt. “We have conversations with clients who may be selling debt again,” Stieger said.
Newly elected association President Mark Naiman announced the new name as part of a change in the association bylaws during the association’s annual conference. “We started as the Debt Buyers’ Association with our membership being primarily debt buyers,” Naiman said. “Our membership has now expanded and also includes collection law firms, collection agencies, creditors, vendors, and brokers. Our goal was to represent all of our member groups.”
The association took prudent steps to explore a variety of options for its new identity. The association will gradually roll out the new branding over the remainder of the year. Those wishing to contact RMA can still use the website and email addresses of DBA International.
The growing variety of membership is due in part to the association’s certification program, which is available for debt buyers, collection law firms, collection agencies and now, brokers. It was launched in 2013.
“Our certifications are for members and non-members,” Stieger said. “The RMA advocacy is managed in house with a robust volunteer group in each state to make sure precedents are not set”
The certification has been obtained by 122 debt buying companies, 11 law firms and eight collection agencies. “There are 221 individuals certified,” Stieger reported. To qualify for a two-year certification, 24 education credits must be earned. Candidates repeat the ethics and current events test in addition to a background check every two years. “An individual can then get a firm certification based on how they operate,” according to Stieger. The certified company must have a chief compliance officer (CCO) with the name of the CCO on their website as the person affected consumers have to call. They also need a CFPB portal. “We are on version five of the certification,” Stieger said.
There are 14 standards to which every company must comply. Some are self-attested but RMA tests some standards. A background check is done on the firm owners. There is a compliance audit every three years which goes to RMA at the same time as it goes to the firm. “There is self audit, full audit and a limited compliance audit based on complaints,” Stieger said. Vendors are responsible for the behavior of their clients to maintain data security. “We have the most robust data security requirements and documentation orders from CFPB consent orders,” Stieger said. “They have to have a complete chain of title, will not sue on out of statute debt and can’t sell debts which are in dispute, especially identity theft,” Stieger continued. Many rules are stronger than state or federal requirements. “The commission must not be only on dollars collected,” Stieger said.
Plans for more certifications are currently in place. “Broker certification was just rolled out, and we are working international later,” Stieger stated. “We will go further into the organizations already certified.” The 24 credits are offered by RMA. There are also credits provided by others like NARCA, ACA and ten others. A certain number of the credits can be taken live such as the 17 credits offered at the DBA International convention. Credits may be earned at an executive summit in the summer and other events when new laws come out. There are also webinars and recorded events.
There has been much coverage lately about credit unions potentially receiving a pass from the CFPB when it comes to rule making. But the same isn’t true for TCPA regulation. Every company that calls consumers on cell phones, no matter how big or small and no matter what the reason for the call, must comply with the rules of the TCPA.
Recently I participated in a webinar discussing the TCPA and credit unions, and was surprised to learn that the bulk of the webinar attendees are not being proactive when it comes to TCPA compliance. During the webinar, attendees were polled about their current TCPA compliance. The first question related to proactively identifying cell phone numbers in their accounts.
Of the attendees, 44% were not currently doing anything to identify cell phone numbers in their accounts. We live in a litigious society. Being unaware of which numbers in your accounts belong to cell phones could result in a violation of TCPA regulations—especially if your credit union has automatic dialing technology. Calling a credit union member on their cell phone without their express consent is a violation of the TCPA if you are placing that call via a telephone system that has automatic dialing capacity. Even if you are not presently using the automatic dialing function on your calling system, and even if your system doesn’t currently have that plug-in, you can still be in violation of the TCPA.
Another question asked in the webinar pertained to whether attendees keep up with what is going on with TCPA cases and settlements in the news.
Again, the bulk of the attendees said they do not pay attention to what is happening in the news relating to the TCPA. This could also be a costly mistake. Even if your fellow credit unions aren’t hitting the headlines with violations, it doesn’t mean the same rules don’t apply to you, or you shouldn’t take time to be aware of what is going on in the credit and collections industry relating to TCPA activity.
It’s no longer only the regulators for which you have to watch out. Consumers are becoming much more savvy about screening incoming calls on their cell phones. We’ve seen a recent case where just one phone call to a consumer resulted in a lawsuit. In Sussino v. Work Out World (Case No. 15-cv-5881 (PGS)(TJB), United States District Court for the District of New Jersey), the plaintiff sued based on one phone call made to her cell phone, which she did not answer. However, a message was left, and she claimed that the one minute and six seconds it took her to pick up that message caused nuisance and invasion of privacy, trespass and interference with her rights and interest in her cell phone, intrusion on her seclusion, aggravation and annoyance, a waste of her time, loss of the use of her phone while listening to the message and depletion of her cell phone battery. While we may agree that these claims are ridiculous—in fact, the judge thought so, too—the defendant still had to pay an attorney to defend those ridiculous claims.
There are many companies that offer cell phone identification. A simple scrub of your database to get a baseline, and then a monitoring solution to watch for changes in the status of phone numbers, can be a great insurance policy for your credit union. You can no longer afford to be in the dark when it comes to cell phone numbers in your portfolio.