Collection Advisor January/February 2017

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HOW LEGAL COLLECTION SOFTWARE IS UNIQUE

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CFPB STRUCTURE DECLARED UNCONSTITUTIONAL WHAT IS YOUR COST OF COMPLIANCE? COMPLIANCE: TECHNOLOGY ALONE WILL NOT PROTECT YOU

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Nicole M. Strickler and Joseph S. Messer

LEGAL COLLECTION CHECKLIST

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FINDING A WINNING FORMULA FOR PREDICTIVE DIALING COMPLIANCE VS. OPERATIONS THE INVISIBLE WEB - PART 2 TCPA LITIGATION BOOMING

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Sam Eidson

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Debra J. Ciskey

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Fred N. Blitt

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Ron Brown

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Harry A. Strausser III

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Sam Edens

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Nick Jarman

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T. Steel Rose, Editor

THIS ISSUE MADE POSSIBLE BY: CDS Software.............................. Inside Front Cover Call Evo.........................................................Back Cover IDI, Inc................................................................... Page 3 MicroBilt............................................................. Page 5 VeriFacts.............................................................. Page 7 CSS IMPACT........................................................ Page 9 Cornerstone Support.................................. Page 11 DAKCS................................................................. Page 13 CCC of NY........................................................... Page 19 Quantrax........................................................... Page 24 Advanced Payment Systems..................Page 25 Collect!................................................................Page 25 VoApps...............................................................Page 25 PDJ Services..................................................... Page 27

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January/February 2017

LEGAL COLLECTIONS

e m o c l e W H

appy New Year! Of all the resolutions you make this month, let compliance and effective debt collection be included. Our resolution for 2017 is to help you along that path. This issue of Collection Advisor is chock full of material to educate and facilitate. Such material is the Law Firm Spotlight where we talk to Nicole M. Strickler about compliance and mistakes to be avoided.

This issue also features the big 2017 Collection Resource Directory placing vendor services and contact information at your fingertips.

This issue also features Compliance Advisor Debra J. Ciskey who reveals some intentions the CFPB has for the future. Skip Tracing Advisor Ron Brown discusses the invisible web revealing more places to obtain consumer information. Legal Collection Advisor Fred N. Blitt answers questions he has received on numerous occasions about the cost of remaining compliant in today’s collection environment.

Technology Advisor Sam Edens discusses how to go about setting up a fully compliant and secure environment for individual clients. Benchmark Advisor Harry A. Strausser III describes the best way to purchase debt since the debtbuying environment changed. Agency Advisor Sam Eidson discusses finding the delicate balance between compliance and operations. Nick Jarman makes his return to Collection Advisor’s contributing columnists as the Collection Industry Advisor and describes in great detail the recent SBREFA hearing with the collection industry and the CFPB. As your CFPB Advisor, I review the PHH court case ruling which found the CFPB must review its $109 million penalty.

Next issue Collection Advisor will highlight the popular topic of skip tracing. We will also be reviewing skip tracing services and call recording. Until next time, we look forward to hearing from you.

T. Steel Rose CPA, ACS Editor

editor@collectionadvisor.com

Checklists and Training Tools

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CollectionAdvisor.com ACCESS ONLINE

USING TECHNOLOGY TO EMPOWER COLLECTIONS

January/February 2017

ADVISORS

Volume 17, No. 1

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AGENCY ADVISOR

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Compliance vs. Operations Sam Eidson

COMPLIANCE ADVISOR

Compliance Tips Courtesy of the CFPB Debra J. Ciskey 8

Legal Collection Software Checklist JOSHUA FLUEGEL

Law Firm Spotlight

Strengthening Collection Litigation

Nicole M. Strickler, shareholder of Messer Strickler, Ltd.

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SKIP TRACING ADVISOR The Invisible Web - Part 2 Ron Brown

Finding a Winning Formula for Predictive Dialing

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BENCHMARK ADVISOR

Thinking About Buying Some Debt?

Harry A. Strausser III

JOSHUA FLUEGEL

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How Legal Collection Software is Unique Comparison Chart

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TECHNOLOGY ADVISOR

JOSHUA FLUEGEL

26

Compliance: Technology Alone Will Not Protect You Sam Edens

COLLECTION INDUSTRY ADVISOR A Play-By-Play of the CFPB SBREFA Hearing Nick Jarman 18

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2017 Buyers Guide

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CFPB ADVISOR

LINDA STRAUB JONES

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What is YOUR Cost of Compliance?

Fred N. Blitt

CFPB Structure Declared Unconstitutional T. Steel Rose

TCPA Litigation Booming

LEGAL COLLECTION ADVISOR

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FEATURES

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Collection Advisor’s 2017 Buyers Guide

DEPARTMENTS

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Welcome

Collection Industry Top Product Nominees January/February 2017

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Compliance vs. Operations

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Remember the days of collecting money first, the days when compliance was an afterthought? Things sure have changed over the last 40 years due to the FDCPA to the last five years of the CFPB. Now every word spoken or written is critiqued by clients, regulators and plaintiff attorneys. Most collection laws and rules are ambiguous and can be left to interpretation which enables attorneys to send mass TCPA and FDCPA demands or file lawsuits with the hopes of no resistance. I guess I can’t blame them so long as our courts are allowing this. Why not pick the low hanging fruit? Unfortunately, many courts are split on what Sam Eidson practices are legal, unfair and deceptive leaving much uncertainty within the credit and collection industry.

Regulators, courts and most politicians don’t care about develop them into what you expect. This includes side-by-side what’s unfair to businesses because it’s all about consumer pro- monitoring, call listening sessions, random call monitoring and tection. Industry practices such as blitzes and closeout are be- classroom training. Scheduling training can be difficult for comcoming a thing of the past because collectors shouldn’t press pliance departments because operations has goals to achieve and harder due to the time of day or month. There’s really no such most of the aforementioned training requires the collector to be thing as a least sophisticated consumer with today’s technology, off the phone. internet, social media, attorney billboards, TV and radio comCompliance departments must work with operations and mercials. Collectors are at a disadvantage and must be aware of schedule certain times throughout the month where training their every move. Collectors have been given a bad stigma for can take place. This dynamic is crucial for your company to years and while there are bad actors, be successful and it takes the leadmost licensed and insured agencies ers of your organization to make it “Insured agencies are ultraconservative are ultraconservative and provide work. I deem compliance violations a professional, respectful service to as one of two things, ignorance or and provide a professional, respectful consumers and clients while playing intentional. If the violation was service to consumers and clients while a major role in our economy. due to ignorance, meaning the colFive years ago creditors and lector didn’t know their actions playing a major role in our economy.” agencies had to create compliance were a violation, the collector can departments ultimately affecting be coached on how to properly do their bottom line. Some ended up going out of business because their job compliantly. If the violation was an intentional act, you they couldn’t sustain additional overhead. Those who were able may have to make a decision as to whether the employee is the to survive reaped the benefit of less competition and a pool of right fit for your organization. collectors needing employment. Even some collectors were not As a compliance officer I seek first to understand and then able to transition to the new way of collecting and had to find a to be understood. Why are changes being made? How are they new line of work. Most incentive plans are no longer based on benefiting our organization? Once I understand everything in its how much is collected but also how the money was collected. entirety, I seek to be understood and ensure the consequences As the years have passed creditors have heightened their don’t outweigh the benefits. Anyone can come in and tell you oversight in order to mitigate risk and protect their brand. Reg- what you can’t do. It takes a true leader in the field of compliular call calibrations as well as monthly, quarterly and annual ance to come in and tell you what you can’t do while overshadaudits have become the standard. Even client scorecards have in- owing that with everything you can do. If you take a tool out of corporated compliance to ensure they are monitoring how agen- one’s toolbox, replace it with another. As we all know, complicies are collecting. An agency’s performance can be affected if it ance is here to stay and so long as we embrace change we can suctakes too much of a conservative approach. While you can never cessfully build the lives of employees and consumers by turning let the tail (compliance) wag the dog (operations) both are essen- difficult circumstances into positive experiences. tial in today’s environment. Most agencies constantly struggle to Sam Eidson is the Director of Compliance for Delta Outsource balance compliance with their operational goals.

Group, Inc. He also serves on the Board of Directors for the MisIn order to ensure collectors are compliant you must souri Collectors Association.

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Agency Advisor

January/February 2017

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COLLECTION & RECOVERY Keep your skip tracing & debt recovery efficient and effective.

800-884-4747

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Compliance Tips Courtesy of the CFPB

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While we await official rules related to debt collection from the Consumer Financial Protection Bureau, we are expected by the CFPB to conform to the debt collection-applicable requirements it places upon defendants in its enforcement actions. Director Cordray and CFPB staffers in the Enforcement division have made their position regarding this expectation quite clear.

This review of 2016 enforcement actions provides compliance expectations as expressed by the CFPB in the enforcement actions related to debt collection announced in 2016. Each tip references back to the applicable enforcement action and page number in the action. All can be found at www.consumerfinance.gov under the Policy & Compliance tab.

The following consent agreements were reviewed in development of this information: • Navy Federal Credit Union, 10/11/2016 (NFCU) • Pressler & Pressler, LLP, 4/25/2016 (PP) • Solomon & Solomon, P.C., 2/23/2016 (SS) • Fredrick J. Hanna & Associates, P.C., 1/16/16) (H)

Controls/Policies and Procedures

• Maintain adequate compliance controls related to debt collection communications. (NFCU 18) • Maintain appropriate procedures for monitoring consumer debt collection communications and take corrective action where appropriate to ensure compliance with applicable Federal consumer financial laws. (NFCU 19) • Conduct annual compliance audits and report to the Board or appropriate Board committee and all appropriate managers to ensure policies and procedures are in compliance with applicable Federal consumer financial laws. (NFCU 19) • Maintain policies and procedures requiring compliance with applicable ethical and procedural requirements for the submission of truthful and accurate evidence in connection with a collection suit. (P& P 17) • Implement effective controls to review and approve standardized court pleading templates that comply with applicable laws, rules, and court procedures. Document such processes in writing, and make available to employees.

(P& P 17)

Training

• Provide adequate training to staff regarding debt collection communication. (NFCU 18) • Document training activities and review and update training programs at least annually. (NFCU 19)

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Compliance Advisor Debra J. Ciskey

Debt Collection Practices

• Do not misrepresent, expressly or impliedly: - your legal authority or intention to take legal action against a consumer, - garnish a consumer’s wages, - contact a consumer’s commanding officer or employer concerning a consumer’s debt, - that a consumer can repair his or her credit reputation by contacting you, - that you issue a credit rating, - that a consumer’s decision to settle or pay a debt will result in repairing or improving the consumer’s credit history, - that the consumer’s delinquency or default will make it difficult or impossible for the consumer to obtain additional credit from other creditors. (NFCU 16, 17) • Do not disclose a consumer’s debt to a third party. (NFCU 16)

Collection Litigation Activities

o not threaten or initiate collection suits without the following D in your possession: (P& P 12, 13, 14) (H 6) • Original account-level documentation reflecting the consumer’s name, last four digits of the account number associated with the debt at the time of charge-off.

• The claimed amount, excluding any post charge-off payments unless claimed amount is higher than the charge off balance, in which case you must possess original account level documentation reflecting the charge off balance and explanation of how the claimed amount was calculated and why such increase is authorized by the agreement creating the debt or permitted by law.

• If suing under a breach of contract theory, the applicable contractual terms and conditions.

• A chronological listing of the names of all prior owners of the debt and date of each transfer of ownership of the debt January/February 2017

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beginning with the name of the creditor at the time of chargeoff, if initiating a collection suit on behalf of a debt buyer.

• Properly authenticated copy of each bill of sale or other document evidencing the transfer of ownership of the debt at the time of charge-off to each successive owner, including the debt buyer on whose behalf respondents initiate a collection suit, including a specific reference to the particular debt being collected upon.

• Either a document signed by the consumer evidencing the opening of the account forming the basis for the debt, or original account-level documentation reflecting a purchase, payment or actual use by the consumer.

Attorney whose name appears on the complaint must: (P& P 14, 15) (H 8, 9) • Be able to demonstrate having reviewed original accountlevel documentation, the bill of sale (if the account is a purchased debt), document evidencing the opening of the account or actual use by the consumer.

• Confirm that the statute of limitations has not run on the account, it is not subject to a current bankruptcy proceeding nor is discharged in bankruptcy.

• Confirm the consumer’s correct identity and current address, the location of the consumer’s real property if the

action is to enforce an interest in real property to determine the appropriate venue for a collection suit.

Attorney must not submit deceptive affidavits in which: • Affiant misrepresents personal knowledge of the validity, truth, or accuracy of the character, amount of legal status of any debt. (P& P 14, 15) (H 10) • Affiant misrepresents an affidavit has been notarized. (P& P 14, 15) • Attorney knows the affidavit contains an inaccurate statement. (P& P 14, 15) • Misrepresents the affiant’s review of any original accountlevel documentation or other documentation that would support the debt that is the subject of the collection suit.

(P& P 14, 15) (H 10) • Misrepresents the date of execution of any affidavit, sworn statement certification of proof, or declaration. (S& S 8) • Misrepresents the amount of the debt. (S& S 8) • Misrepresents the fact that the debt is supported by competent or reliable evidence. (S& S 8) • Misrepresents any material fact to consumers. (S& S 8) Debra Ciskey is the Compliance Officer at Wakefield & Associates.

Inc. She is a member of the board of directors and a certified instructor for ACA International.

What is YOUR Cost of Compliance?

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I have written extensively about compliance related issues and consent decrees over the past few months and wanted to take a different approach with the topic of compliance. For purposes of this article, we will define “cost” as employee expenses, benefits of efficiency, costs of key management, “pushing back” and opportunity cost of noncompliance.

I have been asked repeatedly by clients and colleagues about the costs to me and my law firm relating to compliance in today’s hyper-regulatory environment. So let’s start with the easy stuff, the direct employee cost. For example, if you hire a new chief compliance officer for $100,000 annually, that cost is easy to see. But what about those costs that are not so visible?

The costs related to your key management team are also significant. The days of having lower level staff work on testing, training and compliance are gone. Compliance management systems are administered and supervised by a chief compliance officer who works with the compliance committee or board of directors. Frequently, compliance issues are those that hit the “top of the funnel” from a staffing standpoint. As a managing partner of a law firm, I can tell you that many of the significant compliance issues come to me, my partners and key managers. Consequently, time spent on these issues takes away from time spent on issues that actually increase revenue!

Proper management of your compliance team will help keep these costs in check.

I believe one of the less visible but major costs of compliance is that of “pushing back.” We all want to receive accounts from our clients in the proper format with the correct information.

Recent consent decrees have caused us to change the manner in which we accept new placements. Frankly, some clients are better than others at providing everything needed at placement in a usable format. A significant amount of time is spent working with our clients to create better efficiencies. While clients are not always happy with this “push back,” they know it needs to be done. Client delays add another layer to this expense. If a client places files that you need to put on hold for insufficient account level documentation, the time spent keeping them organized and compliant could become significant.

There are so many other costs of compliance today that are not so obvious. An example is the cost of hiring the wrong people. Another example is the cost of hiring the right people and having them in the wrong role. Both scenarios increase risk, which in turn results in increased compliance costs. The costs can be very tangible like the costs for defense, or much more intangible such as the interruption to production flow. Yes, this

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Legal Collection Advisor Fred N. Blitt

is an issue for any company; however, hiring for the compliance area requires a person who is detail oriented and requires much more training than hiring for a functional role.

The cost of an internal audit person or team is important.

While this may be expensive, having the ability to identify areas of opportunity in policies, procedures and training is invaluable. It provides an avenue to test whether client specific and firm policies and procedures are being followed. Testing has also taken on new meaning today. Our staff has taken tests for many years but today’s testing looks nothing like the testing we used 5 years ago. The testing is so rigorous now that we have had new hires leave the firm prior to finishing testing as they knew this job wasn’t for them!

Finally, what about the opportunity cost of noncompliance? Compliance costs are impacting all collection law firms and each of us needs to make the business decision that works best for themselves. There really isn’t a middle ground. Either make the effort to be compliant or risk suspension or termination of a client relationship. Having a well-thought-out compliance management system is a key component for most client relationships today.

This article is not to necessarily imply doom and gloom for collection law firms. It is more about a reality check for people to account for their expenses as they relate to compliance. There are many benefits from meeting today’s compliance requirements in the form of opportunities for new business and overall firm efficiencies. That being said, we all need to be aware of the risk and benefits of these items and work with our staff and clients in a positive way. Compliance can be cumbersome. It is timeconsuming and costly but proper management and communication can make your processes more efficient, identify potential problems and lead to more success in the long term.

Fred N. Blitt, Esq., is a partner with Blitt and Gaines, PC in Illinois and Couch, Conville and Blitt in Louisiana. He is past president of NARCA. January/February 2017

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TCPA LITIGATION BOOMING

BY LINDA STRAUB JONES

T

he Telephone Consumer Protection Act celebrates its 25-year anniversary this year. It was introduced to address consumers “outraged over the proliferation of intrusive, Linda Straub Jones 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 con-

sumers using modern communication technology without inadvertently exposing themselves to enormous liability risk,” the white paper stated.

Ever Tighter Certainly the FCC’s De-

claratory 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

July/August 2015 www.CollectionAdvisor.com .com January/February 2017

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 Continued on page 11

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The Invisible Web - Part 2

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In the last issue we began a journey down a little known and seldom traveled path, the invisible web. As a brief refresher, the invisible web is a zone that contains thousands of times more content and is estimated to be 500 times the size than the much-utilized visible web. It can certainly be classified as a treasure mine for a professional tracer. In the last issue I provided two mega portal sites and received a few calls advising the sites did not work.

As is now the language of the web media LOL… you just have to understand how to reach these sites so let me be your guide.

Infomine

Go to http://infomine.ucr.edu/ and you will bring up the UCR website. Hover the mouse over “Research Services” revealing a dropdown menu. Select “Databases” from the dropdown menu.

There is a wealth of data here and I would suggest you fully navigate the site.

VLIB

Go to http://vlib.org/. I usually use the data from “Information and Libraries,” but again, I advise you to explore this site in depth.

Now that we have that out of the way let me provide you a little more insight into the workings of the invisible web and we will look at some more ways to get inside that treasure mine of data.

Conventional search engines like Yahoo and Google have proven very efficient at locating current and visible web content but their shortcoming is their ability to locate and index the vast amount of data that isn’t hyperlinked and immediately accessible to even the best web spider. No one seems to be able to tell me if this may or may not be intentional but I have found that data located behind a paywall or in an unpublished blog post is actually hidden in the invisible web.

I have also found that the invisible web contains data that must be accessed by a specific search interface, it is password and subscription protected or the data pages that are not linked to any other page and oddly exists outside of conventional http:// or https:// protocols.

The scale and diversity of the invisible web is mind-boggling. There is one other appeal for the professional tracer. That appeal is the fact that users and activities on the invisible web are anonymous. This attribute is being mentioned because it’s been an important tool for various branches of the U.S. government.

I would like to, now, provide you with a few more confidential online resources to access on the invisible web that are utilized by professional tracers. Many of these sites cannot be found

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Skip Tracing Advisor Ron Brown

using conventional search engines. It is my hope that these sites will assist you in accessing resources that the skip guessers never even know exist. As of October 2016 these sites were operative.

• Alexa - http://www.alexa.com/ Once at the website, select “Features” and then “Top Sites.”

A website that archives older websites that are no longer available on the Internet. For example, Alexa has about 87 million websites from the 2000 election that are, for the most part, no longer available on the Internet. Use the Alexa web services tab for information sources.

• International Program - http://www.census.gov/ipc/www/ An unbelievable source of data maintained by the US government on an international level with information ranging from business owners to frauds and scams to news releases and much more. This is a great site for any tracer who searches on an international level.

• The Directory of Open Access Journals - http://doaj.org/ Another full-text journal searchable database which covers over 125 countries utilizing over 9000 journals and containing in excess of 2,300,000 articles.

• FindArticles - http://findarticles.com/ Indexes over 10 million articles from a variety of different publications and appears to be maintained by CBS News.

To access this site, I just typed in findarticles.com.

I hope you enjoy navigating and exploring the information provided at these very advanced data sites with the clear understanding that they are not designed for the novice in our industry but rather the seasoned and skilled tracker. We will continue on our trek down the fascinating path of the “Invisible Web” in our next issue. Until then, good luck and good hunting.

Ron Brown is a member of the National Association of Fraud Investigators and the author of “MANHUNT: The Book.” Contact him at rbrown2150@aol.com.

January/February 2017

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“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.”

TCPA Litigation Booming Continued from page 9 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 ac-

tion 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: • A void 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 .com

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

January/February 2017

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 ftp://ftp.fcc.gov/pub/Bureaus/OSEC/ library/legislative_histories/1420.pdf 2 http://www.commerce.senate.gov/public/index.cfm/hearings?ID=7FDEF85EBF1F-475C-BE3F-1E011EA5A909 3 http://www.acainternational.org/files. aspx?p=/images/39929/aca-wp-modernizetcpa_final.pdf 4 https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-72A1.pdf 5 https://apps.fcc.gov/edocs_public/attachmatch/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 linda.straub@lexisnexis.com.

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Thinking About Buying Some Debt?

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In the very early 1990s I was actively working in my family’s collection firm in central Pennsylvania. We were experiencing some respectable growth with medical clients in our regional market. There was always conversation about where we could secure more business and continual searches for that golden apple client that could change our operation dramatically. We were fortunate to have some good, respectable competitors in our market that were also friends from the industry. On occasion a fly by night firm would surface and their actions would concern all of us. Dad used to proclaim, “That firm is so bad, they couldn’t buy a client in our area!” Then, the debt purchase industry emerged, and they could do just that!

My Dad came from a financial background working in finance companies early on and was contacted by a close friend about the emerging debt purchase market. He decided to get on board with the concept and by 1992 we transitioned his firm into a 100% debt buying/servicing entity. He was active in that market until he passed away in 2009.

I often encounter agency owners that ask, “How does debt purchase work?” and “How can I get involved in buying debt today?” By the early 2000s the debt buying market exploded.

Hundreds of millions of dollars worth of deals were being transacted. It was a huge wave and many rode that wave to much financial prosperity. Now, after the economic crisis of 2008 and entry of the CFPB, the market is a virtual shell of what it once was. But there are still some opportunities. The biggest change in culture has been the prohibition of the resale of many portfolios on a state basis, which was the primary culture.

Here is how you might get involved today:

Partner with a Buyer

There are still opportunities where large debt buyers partner with regional firms to collect their investments on a contingency basis. If you plan to enter this tier of the market be prepared to be audited by the buyer as they are under pressure to conform to CFPB mandates and must assure the regulators that standards their partner upholds are the same standards as their parent organizations.

Reach Out to a Debt Broker

The number of debt brokers has reduced substantially, but there are still regional deals being shifted from sellers to buyers via these industry players.

Fresh accounts are harder to find but if you engage with a broker they can assess your areas of expertise and keep a watchful eye out for opportunities. There are currently huge portfolios of judgment accounts available that remain from the earlier days of robust purchasing.

Approach Your Contingency Clients One of the safest

and most successful ways to enter the market is to approach one

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Benchmark Advisor Harry A. Strausser III

of your current clients about buying their receivables. A common opportunity arises when a doctor you have represented for years decides to retire. They are often interested in just liquidating their accounts. If you have worked with them for some time you know the recovery metrics on the accounts and may actually already have the data in your system. You can also secure these deals pretty economically as the dollar figures may not be huge and the pricing can be in the 1 to 3 cents on the dollar range.

We were recently approached by a doctor who was retiring. He was a client for only one year. We bought his receivables for the past four years, about $300,000 worth of accounts for 1 cent or $3,000. They even boxed up all of the patient statements for us!

Become Educated

Learn as much about the mechanics of the debt purchase process as possible before embarking on a purchase. Reach out to DBA International Inc., the association of debt buyers. They have much to offer and produce an annual conference in Las Vegas each February. You can access them at www.dbainternational.org.

Benchmark with Colleagues

There is a good chance you know an agency owner in your market that has made a purchase or two. Reach out to them about their experiences, both the good and the bad.

Most agencies I encounter in my travels are looking for new streams of business as they navigate the tough competitive nature of our industry. Buying debt, although a longstanding practice, might be a new opportunity for your organization. Like Dad used to say, “If you can’t land a client the traditional way, maybe you can buy the business!”

We encourage our readers to submit a “best practice” idea for inclusion in this column. Until next time, I’m in a collection office near you!

Harry A. Strausser III is president of Remit Corporation/Interact Training & Development. Contact him at harry@remitcorp.com.

January/February 2017

.com

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January/February 2017

13

Compliance: Technology Alone Will Not Protect You ROUTING SLIP Initials

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Every day, I receive around a dozen emails detailing some aspect of compliance and data security. Some I immediately delete, some I briefly scan over and others I really dig into.

There is no formula behind this. It simply depends on the timing of the email. Looking back at the history of the ARM industry, compliance is certainly one of the newer topics of conversation. The conversation has been steadily growing and the concerns surrounding compliance have exploded in recent years. On most days, it seems one could attend several compliance webinars covering everything from implementation strategies to costs.

Technology changes very rapidly and in many cases, technology introduced today will be outdated in fewer than six months. That statement is not enlightening for any of us but what we may overlook is how much technology is taking over the everyday aspects of our lives. For example, think about how we communicate, receive our news, and manage finances.

With such a dependence on technology and increasing regulation surrounding compliance and data security, what is an agency to do?

Many agencies have taken the approach of staging a fully compliant and secure environment for individual clients, for different lines of business or for employee training purposes.

I recently visited a client that prepared this type of environment for their Department of Education accounts and it has allowed them to control the data and access to sensitive data.

Furthermore, the environment can be cloned and the data can be masked or scrambled to create a fully compliant and secure environment for training, related to an individual client or business line. This is a sound approach but there are several considerations before making a move like this.

Evaluate Costs

First, costs should be evaluated. The raw costs to start up another environment, purchase additional licenses from your software provider, and add more support and maintenance is easy to calculate but do not neglect the costs of working the business. Costs such as staff training, integrating with outside service vendors, and completing security audits need to be added to the raw environment costs and then compared against

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Technology Advisor Sam Edens

anticipated revenue from working the business. You may find it difficult to justify.

Access

Second, if costs can be justified, access to the environment and certain data elements within the environment must be a top priority. Even if employees have all the necessary training and clearance permissions, they probably do not need access to everything in the environment. Utilize user profile features and permission sets in your software to control user access and to ensure users can only access the information necessary for their job.

Up-To-Date

Finally, ensure your software is up-to-date with the latest upgrades and releases from your software provider. Included in this is the operating system and software running on your servers and employee workstations. In most cases, updates and upgrades are simple to retrieve and install. Be careful though and make sure you have a testing plan in place for upgrades and a rollback procedure in the event the update or upgrade fails or takes longer to install than anticipated. Running the latest software versions will help protect your organization from cyber-attacks and data breaches.

Agencies, as they should, want to benefit from technology investments but when it comes to compliance, you must recognize that technology alone will not protect you. Even the best and most detailed compliance practices can fail without collective buy in from the members of the organization.

Sam Edens has been with Emprise Technologies since 2006 and is currently serving as Vice President. Prior to his time with Emprise, Sam designed and developed performance and flow management software for UPS. January/February 2017

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MORE ONLINE

Legal Collection Software Checklist

CHECKLISTS & TRAINING TOOLS

he following is a checklist collection professionals can use to help objectively determine which legal collection solution to select.

Agency decision makers (evaluators) rank each one of the listed features on a scale from 1 to 5 in their respective column based on the feature’s importance to the agency (1 being least important and 5 being essential). Then in the “Software Possesses Functionality” column, decision makers can check off whether or not each feature is possessed by various prospective collection solutions.

T

AL

1 EV

AL

UA

R TO

2 EV

AL

U

O AT

R3

ITY RE ES NAL A S W S O FT SE TI SO POS UNC F

BUDGET: _________________ DATE OF RE-EVALUATION: ________ DECISION MAKERS: ______________________________________

Can you relate accounts across clients (or sub-clients)?

General Features

EV

UA

R TO

Related accounts viewed simultaneously Customized formatting of statements Can individual clients be set up as either gross or net remittance clients?

Recommends goals and scripts for collection calls Offers automated phone dialing Designs custom reports on operator level Online, real time coaching Goals Feedback in real time Secure and customizable remote access for collectors Secure and customizable remote access for debtors Secure and customizable remote access for clients User-definable client access interfaces Built-in collection agency templates User-defined client access interfaces User-defined balance buckets User-defined payment types

Legal Collections Functionality

Integrated with pre-legal collections Integrated with Microsoft Word Track multiple cases for each account Multiple, configurable lines of legal business History of legal actions Held billings Release/approve billings for invoicing View legal documents history Unlimited number of liable and non-liable parties Individual case party statuses Track party garnishments Track party services Track party judgments

Recovery Functionality

Pre charge-off collections Post charge-off recovery Agency/attorney management Asset sales Automated file processing Repossession tracking

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January/February 2017

15

A Play-By-Play of the CFPB SBREFA Hearing ROUTING SLIP Initials

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Date

Collection Industry Advisor

Since the inception of the CFPB on July 21, 2011 it has done quite a bit of talking pertaining to debt collection and debt buying. This summer the CFPB was put in a position it hasn’t been quite used to, listening. When Congress created the Nick Jarman CFPB and its, well let’s just call “unique structure,” it forced the CFPB to comply with a provision of the Small Business Regulatory Enforcement Fairness Act (SBREFA) before issu- the most knowledgeable and well-known CFPB expert in the ing new rules. In theory, the SBREFA process is designed to entire industry, John Bedard, Jr. of the Bedard Law Group in help protect the little guys from being forced out of business Atlanta. He graciously accepted my invitation to partner with by over burdensome and costly regulations by having a voice me in the CFPB SBREFA process. We were off to the races and playing a part in the process. But in reality, many believe from there. the SBREFA process is merely a figurative box the CFPB is I can sum up the entire process in one word: whirlwind. attempting to check off as quickly as possible to move forward Immediately after being notified of being selected to serve on with their agenda and predeterthe panel we received a package mined rules. Personally, I decided containing preparation materials to approach the entire process opfor the in-person meeting at the “I am confident the debt collection timistically, with an open mind, end of August along with several and debt buying industry dedicating whatever time, effort, studies conducted by the CFPB energy, and resources needed to and its narrative justifying its bewas extremely well-represented ensure we provided the CFPB a lief for the need of additional rules and showcased just perspective it couldn’t ignore while for debt collection. It was clear proposing solutions that would they believed debt collectors were how great our industry is.” help accomplish its same objectives excessively collecting debts that through different means. Whether were not owed while at the same or not we truly made a difference would be determined af- time harassing consumers. Therefore, it was important as we terward, but for the time being the process was going to get went through the process to debunk and invalidate their comeverything I had to offer. pletely false and erroneous presumptions. The one roadblock we ran into is it wouldn’t be the forum to do such. The objective and directive from the CFPB was clear: how will the outIt was June of last year when I was notified that I was selected as line of proposals impact our organizations independently and a finalist to serve as a Small Entity Representative (SER) for the what would the financial implications be. This is ultimately CFPB’s Debt Collection Rule Making process. One month later where the CFPB was able to somewhat pull a bait and switch. on July 28 I received the formal invitation from the CFPB to They knew the SERs would be compelled to protect and speak serve on the panel. I was honored to have been selected to serve the truth, but the CFPB knew they didn’t have to listen beand represent our industry at such a critical juncture. Being at cause the objective of the SBREFA process didn’t require such. the table in the midst of the largest overhaul of debt collection Once we dove headfirst into the Outline of Proposals it rules and regulation in forty years was something for which I was was clear that while the CFPB focused on third parties and certainly proud and prepared to be a part. debt purchasers, the overwhelming majority of the proposEach SER was permitted to select an advisor to help guide als being put forth required first-party creditor involvement. them through the process. The first phone call I made was to Without first-party creditors at the table, little movement, if

Selected

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January/February 2017

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“Therefore, it was important as we went through the process to debunk and invalidate their completely false and erroneous presumptions. “

any, would be made. While they went back and forth with their answer, two out of three times they confirmed an additional SBREFA panel would be convened with just first-party creditors at some point. Most of the SERs for this panel explained and urged the CFPB to include first-party creditors at the present time so we could have an active and engaging discussion. However, that was not accepted. Ultimately, the final list of representatives would consist of 19 individuals made up of three debt collection attorneys, two debt purchasers, and fourteen collection agencies. At the end of the day, we had less than one month to provide feedback on an outline of proposals that was four years in the making.

Communication Galore

The first week of August we had an introductory conference call with each individual selected for the panel (several of which didn’t attend), members from the CFPB, Small Business Administration, and Office of Management and Budget from the White House. From that point on it was complete chaos. In the span of three weeks I attended dozens of conference calls organized by numerous entities, few of which any of us found productive and many of us left frustrated with the lack of organization and fundamental knowledge of the overall process. For John Bedard, Jr. and I, we were in communication multiple times per day through phone calls, emails, and texts.

While I already knew he was the leading subject matter expert when it came to the CFPB and, for that matter, most any other debt collection acronym related laws, working with him for a solid month straight cemented the fact. Our approach was simple, he provided the legal aspect and considerations of the proposals while I focused on the operational and applicability.

Together we put together a solid game plan that would lead us through the entire process.

As for the CFPB, it held three separate conference calls during that month. It was initially stated the calls were strictly informational to prepare SERs for the in-person meeting and ensure logistic and technical questions were answered beforehand in order to make the in-person meeting as productive as possible. That shifted quickly as the CFPB switched from providing information to inquiring about numerous aspects of the industry that hadn’t been addressed earlier. As a matter of fact, once the SERs were told how the in-person meeting would go and for what we needed to prepare, we received an email from the CFPB with 17 additional pages of questions. Some .com

January/February 2017

of the questions were the same but many new ones ultimately threw a curveball to everyone with less than two weeks before go time. It was back to the drawing board making sure we added all the additional questions and subsequent answers to our prep work and ensured we had answers, questions, and solutions for each.

The Meeting

Finally, in late August it was go time for the in-person meeting. While 17 SERs showed up in person, two attended via phone. There were several representatives from the CFPB along with a couple others from the Small Business Administration and Office of Management and Budget. The meeting was led by John McNamara of the CFPB who did a great job of leading the discussion, sticking to the agenda and keeping everyone on point. As each topic was put on the screen, all SERs were then allowed to comment. The regulators remained quiet for the most part.

But on some occasions they were inquisitive and asked followup questions to learn more about a particular topic. Those from the SBA and OMB were much less interested and as a matter of fact, one member of the SBA spent more time drawing a caricature picture than they did paying attention to the dialogue going back and forth. At the end of the daylong meeting we were greeted by Director Richard Cordray, followed by his deputy assistant, who came in and greeted the SERs to say a few words as he mingled with the group for a few minutes.

After the meeting, we had a little over a week to put our research, verbal remarks, analysis and comments into our formal written remarks to be submitted for public record. I went into the process encouraged and hopeful. As we await the CFPB’s final report to the SBA I remain as such. While I’m not naive to believe this process would not have happened if it were not required by Congress, I remain cautiously optimistic the time, effort, energy and resources invested in the entire process by the industry’s brightest will be of value to the CFPB, SBA and OMB. I am confident the debt collection and debt buying industry was extremely well-represented and showcased just how great our industry is, how important what we do is, and why it is in the best interest of consumers and collectors alike that the CFPB be open-minded and considerate in their rulemaking process.

Nick Jarman is the owner of RightAway Consulting & Coaching. Jarman served the last three years on the Board of Directors for ACA International and is the past President of the Missouri Collectors Association.

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CFPB Structure Declared Unconstitutional

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The 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.”

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ROUTING SLIP Initials

Date

CFPB Advisor

T. Steel Rose, Editor 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.

January/February 2017

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FINDING A WINNING FORMULA FOR PREDICTIVE DIALING

BY JOSHUA FLUEGEL

S

teps taken in a collection campaign with a predictive dialer must be cautious ones. The authority of the CFPB and dated nature of the TCPA have made the use of a predictive dialer a gamble in the eyes of many collection professionals. However, given the efficiency of a dialer, many collection professionals cannot help but simply proceed with caution.

This has led to many philosophies when it comes to using a dialer. Each collection agency seems to have their own unique sauce when it comes to establishing sound compliance strategy.

“In today’s environment a true dialing philosophy begins with risk assessment,” said Lex Patterson, president of DAKCS Software Systems. “Each scenario can Lex Patterson then be mapped according to the desired outcome. Begin with an internal assessment and ask yourself these types of questions: • Do we have “prior expressed consent” to dial cell phones?

• Is there a way to gain expressed consent on cell phones through our clients’ initial contact with the consumer?

• Are we verifying the consent and best form of communication on every call?

• Are we scrubbing for cell phones and isolating them in the system?

• What is our process to handle wrong or reassigned numbers?

• If choosing to leave messages on voicemail, what is the appropriate message to leave?

• Should we be leaving messages on answering machines?

will help in maintaining compliance as well as providing key performance indicators you will want for measurement, analytics and tracking results. Once you have your process map complete, building a workflow that optimizes contact results while minimizing the risk of non-compliance can be more easily achieved and successfully evaluated.”

Asking the correct questions can certainly put an agency on the correct path. However, compliance is a moving target. Once a winning formula has been implemented for predictive dialer efforts, a new rule on increased concern may surface. Working with the leadership and compliance teams is key at this point.

“Communicate,” said Terrel Bird, CEO of TCN. “Without giving advice on what you should do, I think it is important to communicate with debtors, agents, Terrel Bird management teams, and attorneys alike. This will allow an open dialogue with all parties if a dispute were to come up. It also will alleviate the pressure agents put on debtors.”

Developing a philosophy for the compliant use of a predictive dialer is a difficult task every collection agency must undergo. It is a reminder that successful debt collection without compliance is an impossibility.

“Although it will take time to re-evaluate your operations and call handling, it

TCN

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January/February 2017

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L a w F i rm

Agency Spotlight

Strengthening Collection Litigation

BY JOSHUA FLUEGEL

A

n ideal world would be accompanied by an end to hunger, no traffic and everyone paying their bills.

Unfortunately, the world is not ideal.

This means consumers and businesses will attempt to evade their responsibility to a creditor or merchant. The fact that the world is not ideal is the reason attorneys and collection law firms must be at the top of their game to restore balance to our economic system.

One such law firm is Messer Strickler, Ltd, this issue’s law firm spotlight. Collection Advisor talked to Messer Strickler shareholder Nicole M. Strickler Nicole M. Strickler about today’s legal collection environment and received insight on what regulators are currently focused on and costly pitfalls into which she thinks collection agencies and law firms must stop falling.

Why did you become an attorney and what brought you to collections? As an undergraduate business major in college, I knew I wanted to work in the corporate world. However, I wanted to find a career that fit both my personality and my interests. The law is interesting because it is a constantly evolving creature subject to different interpretations. In my opinion, practice in the law truly gives one the opportunity to change the way people see the world and each other. And, in all honesty, the advocacy and analysis required in litigation has always been a matter of deep

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interest. I fell into the legal credit and collection industry by chance. As I canvased job opportunities in the corporate world after law school, I came across an opportunity with a law firm that was beginning a growing collection practice.

From there, I honed my skills to help develop the firm into a formidable member of the credit and collection industry.

service provider, which showed a woman with the same last name as the patient on the account. After some digging, we located her, deposed her, and discovered the debtor had incurred the debt for his daughter. She even provided evidence she had paid the debtor back for the money loaned. Needless to say, the debtor’s defense did not go as expected.

What kinds of collection law do you practice and do you see any trends in the particular branches of collections? Our major clients include not only first-party originators, creditors and debt buyers but also other law firms, attorneys and collection agencies. They operate in a wide variety of industries, including consumer loans, medical accounts, credit cards, and utility accounts. On the collection end, I see a renewed interest in first-party, as opposed to third-party, work. On the litigation defense and compliance-counseling end, I see an increased focus on statute of limitations issues as well as documentation of chain of title.

What are some metrics that should be tracked?

What performance issues should an agency or law firm look out for? It depends. Obviously, if you are in legal collections you can track things like service rates, post-judgment success and type of post-judgment success; what works better in your jurisdiction than say another jurisdiction.

What was a particularly interesting case and what knowledge did you take away that you think is very important? Certainly, my most colorful cases are the result of interesting defendants. I had a case not too long ago where the debtor staunchly maintained that he had no recollection of the account and claimed identity theft. Strangely though, he refused to file a police report or complete an affidavit concerning the theft. Instead, he filed an FDCPA claim against my client. In turn, we subpoenaed the original

What are the most dangerous pitfalls in legal collections and how do you avoid them? One of the most dangerous pitfalls in legal collections is the lack of solid written policies and procedures. Taking the time to consult with outside counsel to develop the right policies, along with pushing staff to implement them in practice is key.

What is a technological update you think collection law firms and collection agencies need to make? Privacy and security of debtor personal information is on the minds of both regulators and clients. Agencies need to develop processes and procedures designed to safeguard this information from both external and internal threats.

What are some particular processes or areas where agencies are most vulnerable?

January/February 2017

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“Attorneys and collection law firms must be at the top of their game to restore balance to our economic system.”

Anywhere you have human interaction with information. It depends on your firm or business. At the same time, anytime you have people involved there’s always going to be room for error. That’s why it is important to look at the PCI standards and other laws that regulate information and payment processing to make sure you have processes and procedures in place to safeguard the information.

My personal opinion is it’s not so much about hacks but information should be secure in the transfer from your client to you and back including communication. There are internal issues as well, such as making sure you are hiring the right people so there is no risk of someone taking any information, particularly payment information or consumer information that could cause problems.

What is a recent occurrence in collections you feel will influence the industry? How? Certainly recent consent orders concerning large collection law firms are in the process of changing the way collection law firms process and litigate their files.

Many firms are using these consent orders as a policy road map for the future.

What is something every collection manager should be doing to help enforce compliance?

To ensure compliance, every collection manager must assist in accountability.

The use of compliance incentives on the floor helps to drive home the fact that the world of collections is not just a numbers game.

What do you think is the easiest thing a collection agency could do to avoid being sued? Collection agencies should make sure outside counsel reviews their letters. And, by outside counsel, I mean one with actual industry and preferably defense experience. This is crucial because you want guidance from someone who has been through the trenches and recognizes .com

where the litigation trends are headed.

What are common missteps collection agencies have made in their letters? I think it is things as simple as identifying the original creditor to things like including language in the letter that would constitute overshadowing of the validation notice.

In the legal collections context sometimes I see statements that may give the consumer an impression that the case’s litigation process is a little further along than it actually is which could potentially be misleading.

What is your greatest achievement thus far in your career? A recent win in the Seventh Circuit Court of Appeals sticks out.

Being named one of the most influential women in credit and collections for 2016 comes in as a close second.

am an explorer, so I love the opportunity to take time with my family and discover new places. One of my favorite trips was Costa Rica, which was interesting. I’ve always been a fan of Italy. I have been there a few times; wonderful food, wonderful people. I’ve been to Amsterdam, which was interesting with all the canals.

What inspired you to travel? It probably comes from when I grew up. My mom was a flight attendant for a long time at United Airlines and so we traveled as a family often. I’m sure that probably had something to do with it. I really enjoy exploring new cultures and new things and it just fits well with my personality.

Describe your win in the Seventh Circuit Court of Appeals. That one was an interesting one because it dealt with the intent a collection attorney must have when filing a case.

That was something we fought. There was almost what I would call a scourge of cases that argued that collection attorneys couldn’t file lawsuits without the intent to take that lawsuit to trial. It doesn’t recognize the practicalities of any type of litigation. That was a particularly interesting case and I think it was pretty valuable to a lot of collection attorneys in the industry.

At least in the seventh circuit it kind of put a stop to that theory. I’ve seen it elsewhere as well.

Do you have any tips for attorneys/collection professionals who find themselves in such a situation? Do your research. Make sure you are familiar with the procedure because appellate courts are very strict when it comes to the rules.

What do you like to do in your free time?

When I have free time, I love to travel. I

January/February 2017

Strickler at the Leaning Tower of Pisa.

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HOW LEGAL COLLECTION SOFTWARE IS UNIQUE

BY JOSHUA FLUEGEL

M

uch like a carpenter has several variations of the same tool for different needs in the workshop, collection professionals must have technology to suit their particular vertical in debt collection. In addition to many of the traditional collection functions, legal debt collection software is fortified with additional features and protective parameters to help collection professionals navigate the particulars of legal debt collection.

“A few years ago, attorneys played a very different role from other collection operations,” said Deborah Collins, chief operating officer of Quantrax CorpoDeborah Collins ration. “All that has changed. Thanks to the CFPB, the rules have changed. Law firms are now held to the same work standards and compliance requirements as other agencies.

Legal collection software cannot handle today’s compliance requirements. As a result, collection software catering to the specific needs of legal collection professionals is arguably more viable than conventional legal collection software.”

Aside from bearing the added stress of the CFPB, legal collection software can also help collection professionals with workflow and business processes that make legal collection such a unique entity.

“Individual law firms have various litigation processes requiring their legal collection software to have an adaptive toolset to meet those operational Lex Patterson needs,” said Lex Patterson, president of DAKCS Software Systems. “Legal collection software’s greatest improvement is to utilize the

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integrated tools in a software solution to positively impact their business workflows and increase the productivity. Solution examples include: • Ability to attach courts, attorneys, and process servers to legal suits.

• Create and track multiple accounts within one suit.

• Ability to customize screens to fit your type of business.

• Track important legal dates such as date filed, date served, judgment date, etc.

• Use of legal transactions including user defined charge codes and dates to reconcile legal costs and charges.

Margaret Darden Hubbard, chairman/ president of Hubbard Systems explained the unique compliance demands of legal debt collection and how upgrades can be writ- Margaret Darden Hubbard ten into legal collection software to safeguard against exposure.

Hubbard specifically cited an example within the trust accounting feature. Legal collection software can, “individually track the disbursement, reimbursement and the recovery of court cost and other cost expenditures, ensuring the proper record of trust accounts,” according to Hubbard.

Legal debt collection is known for the vast amounts of documentation it accrues.

Incompatibilities in software can cripple a firm costing great deals Chris J. Roberts of time and money.

Chris J. Roberts, president/chief operating officer of Sentinel Development Solutions stated integration with interfaces and interface formats so that information

can be readily transferred is imperative to successfully managing all vital data in legal collections.

An account being worked by a legal collection professional can see many updates of its lifespan. Legal debt collection requires particularly careful trackJefferson K. Kim ing. Jefferson K. Kim, president of CDS Software, listed several abilities legal collection software possesses to improve the process.

“The capability to set up and track judgments, said Kim. “The ability to set up separate sets of interest accrual on the various categories of debt (principal, fees, etc., as permitted). The ability to apply payments to specific defendants associated with a legal case. The ability to automate and track legal dates, such as hearing dates and other court dates, dates served, etc. The ability to set up, and apply, various court costs, attorney fees, etc., based on predefined court fees configured by specific court locations.”

Making do is not an ideal philosophy when utilizing any type of collection software. To borrow an old adage from carpentry, there is a tool for every job. Choose yours wisely.

LEGAL COLLECTION SOFTWARE CDS Software DAKCS Software Systems Hubbard Systems Quantrax Sentinel Development Solutions

January/February 2017

.com

LEGAL COLLECTION SOFTWARE COMPARISON CHART

PRODUCT NAME

Beyond ARM

CollectOne

Collection PartnerÂŽ

eCollections

RMEx

COMPANY NAME

DAKCS Software Systems

CDS Software

Hubbard Systems

Sentinel Development Systems

Quantrax

Accounts can be related across clients (or sub-clients) Automated phone dialing Designs custom reports on operator level Online, real-time coaching Goals feedback in real-time Secure and customizable remote access for collectors Secure and customizable remote access for debtors Secure and customizable remote access for clients Champion-challenger tools

Yes Yes Yes No Yes Yes Yes Yes Yes

Yes Yes Yes No Yes No Yes Yes Yes

Yes Yes Yes Yes Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes Yes Yes Yes Yes

User-definable client access interfaces

Yes

Yes

Yes Yes Yes No No Yes No Yes No Other-Standard & Multiple Forwarder Interfaces

Yes

Yes

Integration with Crystal Reports

No

Yes

Yes

No

Yes

User-defined account matching criteria User-defined balance buckets User-defined payment types Account and related tables can be extended

Yes Yes Yes Yes

Yes Yes Yes Yes

Yes No Yes Yes

Yes Yes Partial Yes

Yes Yes Yes No

Integration with pre-legal collections Integration with Microsoft Word Tracks multiple cases for each account Multiple, configurable lines of legal business History of legal actions Held billings Release, approve billings for invoicing View legal documents history Unlimited number of liable and non-liable parties Individual case party statuses Track party garnishments Track party services

Yes No Yes Yes Yes No No Yes No Yes Yes Yes

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Yes No Yes Yes Yes Yes Yes Yes No Yes Yes Yes

Track party judgments

Yes

Yes

Yes

Yes

Yes

Case tasks scheduled automatically Multiple check requests based on court requirements Multiple legal documents based on court requirements

Yes Yes Yes

Yes Yes Yes

Yes Yes Yes

Yes Yes Yes

Yes Yes Yes

Yes Yes No Yes Yes

Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes

Yes Yes No No Yes

Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes

GENERAL FUNCTIONALITY

LEGAL COLLECTIONS FUNCTIONALITY *

RECOVERY FUNCTIONALITY Post-charge-off recovery Agency/attorney management Asset sales Automated file processing Repossession tracking

PRE-CHARGE-OFF FUNCTIONALITY Pre-charge-off collections Dispute/deduction codes can be assigned Identifies, tracks problem invoices Coded problems separate from other receivables Customer and invoice-level notes

* All systems permit related accounts viewed simultaneously, customized formatting of statements, will set up clients as either gross or net remittance, recommends goals and scripts for collection calls, generates automated letters by client with flexible triggers, and built-in collection agency templates.

Information on this table is derived from information posted on the Internet and direct questions. The company is the ultimate source and should be contacted directly.

.com

January/February 2017

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Collection Advisor’s 2017 Buyers Guide

Analytics & Data Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

Lyons Commercial Data Financial Institution & On-Demand Verification

CODIX iMX Collection, Legal and Recovery Solution codix.us/debt_collection bquinn@codix.us 404-790-0998 iMX is a complete centralized debt collection and recovery software solution. Based on the latest technologies, iMX Debt Collection includes all the most advanced business functionalities supported by native tools.

Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

ECONOMIC STIMULUS

Attorney Referral Service The National List of Attorneys Attorney Referral Service

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

FOR YOUR BUSINESS

Our economy and our industry undergoing unprecedented Theare Computer Collection Software Manager, Inc. change. It has never been more important that we understand

DAKCS Software

Systems Beyond.Net dakcs.com sales@dakcs.com 800-873-2527 DAKCS Software Systems has been an industry leader for over thirty years. Headquartered in Ogden, Utah, DAKCS provides a one stop shopping solution for a diverse client base. DAKCS is committed to providing their customer community with all the tools they need to succeed in the ever changing ARM business, today and in the future.

Quantrax Corporation Inc.

RMEx quantrax.com marketing@quantrax.com 301-657-2084 Quantrax is a high-end collection technology company that has marketed and supported an intelligent collection software platform for over 25 years.

ROYDAN Enterprises Ltd. Debt$Net Collection Software Alpha IT Servicesand efficiently operate our businesses.

Bloodhound® Software debtnet5.com Accounts Receivable Software For almost 40 years our innovations have been a partner • No obligation efficiency analysis sales@debtnet5.com in our client’s success. We’re committed to providing Sentinel • Credit for your existing software 800-552-8397 Beam Softwarefresh ideas and developing creative solutions. As partSince 1987, Debt$Net collection software has provided Development • Free data conversion of that commitment we’ve developed the CollectOne BEAM Accounts Solutions, Inc. collection• agencies, lawcollection firms andsoftware in-house collection Feature rich Stimulus Plan, a cost-effective opportunity to help you Receivable eCollections departments with one of the most comprehensive col• Deferred payment options ensure that your business is best managing change.

Management Software, ecollections.com lection systems in the industry.

• No interest financing options Beam Cell Phone Identification Software sales@ecollections.com Learn more about CollectOne • Free third-party interfaces beamsoftware.com | Software 515-564-0585 Comtech Systems and our Stimulus Plan offer at info@beamsoftware.com The result of 20 years of industry of industry-leading colCollect!• Free CollectOne Web Portal www.collectone.com/stimulus 800-212-2326 | Web Portal • Free CollectOne legal software lections/recovery platform development, eCollections is a or call us at 888.816.3333. Credit and Debt Collection Software BEAM™ is a suite of software for collections, recovery and • Commitment to client care comprehensive enterprise collection system with flexible collect.org | Dialer purchased receivables management thatChange is available a from it.info@collect.org • Improved bottom line is here.as Profit configuration, ease-of-use, powerful payment features, hosted or on-premise solution. workflow automation, and unparalleled reporting and 800-661-6722 tracking.

Collect! combines ease of use with total integration CDS Software of functions. Accounts are efficiently tracked from CollectOne Simplicity Collection Software Minimize costs. Maximize results.the time you receive them until activity is concluded collectone.com simplicitycollectionsoftware.com and they are closed. Collect! keeps track of critical info@collectone.com 866-791-0224 information automatically.

Total integration provides A CDS Software Solution 888-816-3333 for seamless and accurate month end invoices and CollectOne is an award winning suite of debt colTenemos statements with full account histories. lection solutions that provides a feature-rich set of Lifecycle Management Suite automated business processes designed to minimize Comtronic costs and maximize results.

Totality Software, Inc. Debtmaster Totality Debt Collection Software & CallThru debtmaster.com 800-414-2814 The Debtmaster® Software along with our industry leading Cloud-Hosted environment gives you a reliable, powerful, cost-effective collection solution right at your fingertips.

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January/February 2017

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Compliance LexisNexis® Risk Solutions LexisNexis ® Accurint ® for Collections lexisnexis.com/risk/receivables-management 866-528-0780 LexisNexis Risk Solutions assist debt recovery professionals with increasing workflow efficiencies, gaining greater insight into debt portfolios, collecting more in less time and achieving greater profitability.

Compliance Calling CallEvo CallEvo callevo.com sales@callevo.com 800-478-1084 CallEvo is the only fully compliant TCPA calling platform designed and engineered specifically to address EVERY item in the TCPA. Stop Scrubbing and Start Calling!

Collection Support Services Applied Innovation Inc

Client Access Web appliedinnovationinc.com sales@appliedinnovationinc.com 800-589-5651 Applied Innovation, Inc has redefined collection agency workflow with revolutionary client portal technology, document management system, and a unique “virtual collector” for online payments.

Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

Cornerstone Support State Licensing and E&O Insurance cornerstonesupport.com info@cornerstonesupport.com 888-445-8660 Cornerstone Support is the premier licensing and insurance provider to the collection industry; professionally trained to assist you with all of your state licensing needs.

VoApps DirectDrop Voicemail voapps.com sales@voapps.com 855-737-1596 VoApp’s patented DirectDrop Voicemail service delivers a voice message directly to a consumer’s voicemail server – without calling the phone in question.

Collection Agencies ACS Financial, LLC Collection Agencies

United Collection Bureau, Inc. 1st and 3rd Party Collection Services ucbinc.com 954-236-6027

UCB, Inc. provides national debt programs for creditors in all markets from fully-secure, high performance collection centers located in the U.S. and Latin America.

Electronic Payments Advanced Payment Systems

Credit Card & Check Processing Merchant Services apsofga.com jennifer@apsofga.com 800-482-4561 APS provides a full range of electronic payment solutions, including credit, debit & HSA cards, check, and ACH transactions, along with multiple software integration options, web payment portals, and the IKEY Product Suite with the attorney endorsed Reg E compliance solution.

Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

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Collection Advisor’s 2017 Buyers Guide

Continued from page 27

Electronic Payments cont’d.

Payment Savvy, LLC Free Payment Processing (CC & ACH) PaymentVision Electronic Payments

High-End Collection Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

IVR Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

Legal Software Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

Mail Services PCI Group Printing/Direct Email/ E-Delivery pcigroup.com choosepci@pcigroup.com 803-578-7700 PCI Group provides mission critical, compliant communication for the collection industry with Custom Printing, Direct Mail, E-Delivery and transparent, real-time tracking of your letters.

Medical Collection Software Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

Mid-Range Collection Software Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

Predictive Dialers Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

28

January/February 2017

.com

‘

2016 Collection Resource Directory LISTINGS AVAILABLE CALL 888-610-1144

January/February 2017 Volume 17, No. 1

Skip Tracing IDI, a cogint company idiCORE ididata.com sales@ididata.com 855-842-1410 Trusted for over a decade by collection agencies and collection attorneys. IDI provides fast, accurate and cost-effective consumer verification and skip-tracing solutions via online, API, and batch processing.

Reduce Cost, Not Quality.

Innovis RPC innovis.com 855-601-1915 Innovis is a leading provider of consumer identity information. The company’s RPC solution provides collection agencies with tools to improve contact and recovery rates.

LexisNexis® Risk Solutions LexisNexis ® Accurint ® for Collections lexisnexis.com/risk/receivables-management 866-528-0780 LexisNexis Risk Solutions assist debt recovery professionals with increasing workflow efficiencies, gaining greater insight into debt portfolios, collecting more in less time and achieving greater profitability.

MicroBilt MicroBilt Collections Suite microbilt.com 800-884-4397 MicroBilt is the leading data provider for collections, skip tracing and provides multiple alternative and collections-specific credit reports, as well as bank account data.

U.S. Tracers Proprietary Place of Employment ustracers.com 800-360-5601 VeriFacts Payroll Promise verifactsinc.com sclark@verifactsinc.com 800-542-7434 Payroll Promise is designed to support a legal strategy by locating verified full time places of employment.

The information returned is 100% guaranteed to be accurate.

Small Office Collection Software Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

Virtual Collections Collection Solutions Software, Inc. CSS IMPACT! HD™ 2.0 cssimpact.com carlb@cssimpact.com 818-593-4830

CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading ARM | Collections & Compliance Platform delivering decades of deep rooted industry acumen for the ARM, Collections & Compliance sectors. IXP (Lite) also available.

Voice Broadcasting

PDJ Services Collection Solutions Covert Record Software, Inc. Retrieval CSS IMPACT! HD™ 2.0 pdjservices.com cssimpact.com contact@pdjservices.com carlb@cssimpact.com 800-298-1153 We specialize in Telephone, Cellular, Nationwide Bank 818-593-4830 CSS IMPACT! HD™ 2.0 (Enterprise), the industry’s leading & Verified Current Employment Locates. When you ARM | Collections & Compliance Platform delivering decades want 100% verified accurate information for unlisted of deep rooted industry acumen for the ARM, Collections & & cellular phones, people locates, bank & employment Compliance sectors. IXP (Lite) also available. locates...you’ll call us!! .com

January/February 2017

Editor T. Steel Rose, CPA, ACG editor@collectionadvisor.com Managing Editor Joshua Fluegel josh@collectionadvisor.com Copy Editor Myrna Nelson Advisory Board/Columnists Fred N. Blitt Ron Brown Debra Ciskey Sam Edens Sam Eidson Nick Jarman Harry A. Strausser III Publisher Angie Rose angie@collectionadvisor.com Advertising Chelsea Patterson chelsea@collectionadvisor.com Production Andrea Bergeron Paul andrea@collectionadvisor.com Subscription Changes Joshua Fluegel josh@collectionadvisor.com The opinions given by contributing authors are their own and not necessarily the opinion of our staff and ownership. All trademarks used are the property of their respective owner.

Collection Advisor (ISSN# 1556-0813) is produced six times a year by Abide Media, P.O. Box 92342, Southlake, TX 76092, 888-610-1144. Standard Mail postage paid at Sussex, WI 53089. ©2017 All Rights Reserved Magazine Publishing Group, Inc. Printed in the U.S.A.

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