Many operators in the accounts receivable management (ARM) industry have been tying down their operations to brace for the hurricane force winds of change that have pummeled the industry in recent years. 2014 proved to be a continuation of new perspectives, regulatory turmoil, increased litigation by the consumer bar and internal office modifications as we look for common ground, understanding and agreement of how our industry should perform our services.
"Management that is mired in the old collection culture will wither and fail."
The culture of collecting money in 2015 and forward will be very different as we become accounts receivable managers versus bad debt collectors and migrate to a very consumer-centric approach. The traditional values of customer service will re-emerge and we will embrace softer consumer communications that offer counseling, advice, direction and payment alternatives. Organizations that are creative and embrace change will weather this storm and emerge strong. Management that is mired in the old collection culture will wither and fail.
Relative to change, it has been said that, “You can survive the old way and you can survive the new way, it is the transition that will kill you”. Anyone that has experienced change both personally and professionally can relate to this sentiment. What has made current industry change painful is both the breadth and depth of the change accompanied by what many perceive as very little light at the end of the proverbial tunnel. What does the future hold in store for us?
If your operation has managed to stay afloat over the last several years then you are on relatively firm footing. The good news is that as regulators like the Consumer Financial Protection Bureau (CFPB) continue to examine the industry and better understand how we operate, we may be able to help craft reasonable rules and expectations that will reduce actions against us.
Many tenured operators remember the introduction of the Fair Debt Collection Practices Act (FDCPA) in 1978. It followed a fire storm of adverse publicity against the third-party debt collection industry, the result of bad operators and legislators that realized that the creation of regulatory teeth was necessitated. Now, as the industry continues exponential growth, a new wave of oversight has been introduced. We survived the FDCPA and we will survive these new levels of regulation if we keep on a positive course.
"We are hopeful that a thoughtful re-write of the FDCPA will provide direction on the industry’s use of faxes, emails, text messaging and other technologies that may assist us in effectively communicating with today’s more technologically savvy consumer."
In 2013/2014 the CFPB solicited feedback from all facets of the ARM industry relative to the modernization of the FDCPA. When the Act was formed many of the technologies that are common today did not exist. We are hopeful that a thoughtful re-write of the FDCPA will provide direction on the industry’s use of faxes, emails, text messaging and other technologies that may assist us in effectively communicating with today’s more technologically savvy consumer. It is also largely believed that the CFPB will use this re-write as an opportunity to re-define “debt collector” and include original creditors collecting on their own behalf under the Act moving forward. Most large creditors have already been training staff and following the basic principles of the FDCPA for many years.
ACA International Inc., the trade association of credit and collection professionals based in Minneapolis, has lead the charge of protecting the best interests of the ARM industry for decades. The encouraging news is on the Telephone Consumer Protection Act (TCPA) front. The ACA, working in conjunction with other industry advocates, feels very positive that there may be changes in 2015 relative to an exception for our industry and the TCPA. The numbers of TCPA lawsuits and class actions has grown substantially and this change, which is over two decades in the making, will be a constructive move forward.
"The best advice is for everyone, at every level of the ARM industry, to embrace a proactive and not a reactive stance. Take compliance seriously and make steps now to create a culture within your organization that trains, tests, monitors, researches and documents not only your understanding of the rules but the effective implementation and management of the culture."
The best advice is for everyone, at every level of the ARM industry, to embrace a proactive and not a reactive stance. Take compliance seriously and make steps now to create a culture within your organization that trains, tests, monitors, researches and documents not only your understanding of the rules but the effective implementation and management of the culture. There are many vendors offering consulting programs today to help guide our internal standard operating procedures in a direction to ensure compliance on all levels of the organization. Creditors must be sure that the ARM industry firms with which they are partnering are at the top of their game, compliance wise, and following industry best practices in order to protect their organizations. Track core issues that are the focus of predatory law firms who file suits, monitor regulatory enforcement actions to determine the direction and mindset of the CFPB and FTC, reply quickly and accurately to Attorney General and BBB complaints and assess the basis of those complaints.
Winds of change are perpetual and solid organizations build firm corporate cultures that ensure survival and growth. Look back to 2014 as a year of re-affirmation of what we need to do to continue profitably, productively and compliantly. Embrace 2015 as the year to reach new business heights by learning from the past and proactively reaching out to the future.
Want to learn more about creating extraordinary vendor relationships? Read this post by Elizabeth Richards, Esq.
How can appropriate debt collection training benefit your company? Find out!
Written by Harry Strausser III - owner of Remit Corporation and Interact Training & Development as well as a past president of ACA International, Inc., the trade association of credit and collection professionals.
This information is not to be construed as legal advice. Legal advice must be tailored to the specific circumstances of each case. Although we attempt to provide up-to-date information, laws and regulations often change. We make no claims, promises, or guarantees about the accuracy or completeness of this document. For legal advice, please consult an attorney.