Moderator: Thomas Kane, FTC
Manoj Hastak, American University
Loraine Lyons, FMA Alliance
David Pauken, Convoke Systems
Ira Rheingold, National Association of Consumer Advocates
Larry Tewell, Wells Fargo
Thomas Kane: What do contingency collectors typically receive?
- Depends on the type of debt and the sophistication of the creditor.
- Name of consumer
- Phone number
- Very minimal requirements that are going to be contained.
- In some cases we have access to the creditor’s system for this data.
- We want to contact the right consumer and collect legitimate debts.
- There is a constant flow of info between us and the creditors we work with.
- Will notify creditor client when there’s a request for verification.
- As a contingency collection agency, we do not own the debt.
Thomas Kane asked Larry Tewell: do you sell and also place?
- Creditors have four primary options: (1) Work debt internally inside the bank; (2) place with agency; (3) might sell it into debt buying ecosystem; (4) work with attorneys for litigation.
- The industry in general provides enough info for a consumer to recognize the debt.
Thomas Kane asked Ira Rheingold is the info agencies receive sufficient?
- I don’t have actual information about what’s being transferred.
- Our main concern is the debt buying industry.
- Original contract needs to be provided, credit history, etc.
- Information is not provided to consumers.
- That information, to start with, is very essential.
- The information gets worse every time you move a step away from the original creditor.
Thomas Kane: What do debt buyers obtain when they buy debt? What information does a debt buyer generally obtain at the time they purchase the debt?
- Referencing FTC Debt Buying Report: name, account number, social security number, phone number, last known address, date account opened, date account charged off.
- If we could have uniform national standards, it would go a long way towards allowing this system to function well.
Thomas Kane: Tell us briefly how the debt buying system works. (Who hires, where does the data come from)
- Credit issuer sells to a debt buyer
- Following sale, they would unload to Convoke all the info Larry mentioned (name, account number, social security number, phone number, last known address, date account opened, date account charged off)
- Different issuers have different approaches to delivering documents.
- Some might provide last 6 or 12 months of statements. Others wait for a request.
Thomas Kane: Any sorts of documents that your database could hold that aren’t being asked to h0ld?
- We can capture just about any document necessary.
- Charge off statement, and last statement that reflects either payment or charge.
- We can deliver nearly 100% of those in a short period of time.
Thomas Kane: Ira, is that info sufficient?
- Is the initial information from the creditor even reliable?
- Can credit issuers even maintain good information?
- In terms of info being sold: if this info is so good, why is it being sold so cheaply?
- If you’re providing valuable info that is useful and reliable, it would be worth a lot more than two or three cents.
- The information being transferred to the debt buyer is insufficient.
Thomas Kane: You question the data, but for our purposes, what kinds of docs/info should debt buyers get that they’re not getting now at the time of sale?
- I don’t know why that info isn’t provided initially. Why wait for the moment of dispute.
- Many debt buyers have a model of Take Debt and Litigate.
- A lot of the issues we see today would be mitigated if the info was provided at initial moment.
Thomas Kane: Should everything be provided at time of sale?
- Basic premise: it’s not a matter of infomration availability. It’s a matter of information variability.
- Two basic things that we can do as leaders of our industry: (1) create rational standards; (2) see some discipline around test and control.
- The basic premise of getting it right is a goal we share.
Thomas Kane: What are the benefits to having debt buyers have more info?
- It makes the process work.
- It would cost more money.
- Make it easier for debt buyers to collect debt.
- When you provide original notice, you can solve some of the problem about disputes when the data is provided.
Thomas Kane: Any technical solutions?
- There’s no reason why tech can’t help.
- This information should be in a useful and legally reliable form and be able to transfer it.
- The question has to be, “What is this industry going to look like five years from now?”
- No willingness from creditors, though, to make that work.
Thomas Kane: Any suggestions about national standards?
- The industry is very interested in providing consumer info.
- There can be confusion around original ownership and who is owed the money.
Thomas Kane: Information conveyed to consumers? Validation? 1692-G notice? How can these disclosures be improved?
- An area fraught with challenge and frustration.
- Disclosures must be tested. There’s a reluctance to test disclosures.
- Many look pretty clear on the face of it.
- Different audiences are looking for different things from disclosure.
- Better information will improve consumer choice.
- Disclosures need to be tested in order to understand their value.
Thomas Kane: What sorts of information are debt collectors currently providing to consumers in validation notices:
- Provide information required: name of creditor and amount due.
- Some industry members have gone beyond that. List original creditor and current creditor.
- We want consumers to understand why they’re being contacted.
- We need uniform national standards based on research and best practices.
Thomas Kane: Doesn’t more info make collection easier?
- Not necessarily. It didn’t make the debt more collectible or more valuable.
- We can embrace new tech and interfaces that will improve collection process.
- We’ll need
- Minimal info is being provided — and it’s intentional.
- No need to provide any more.
- You can’t ignore the fact that the reason the info is scant is because its best for the current business model of debt buying.
- As we move to a new system where courts won’t rubber stamp millions of new cases, that data will become necessary.
Thomas Kane: Any useful information that debt collectors can convey to consumers?
- Be consistent between collection call and letter.
- We’re all consumers
- Original creditor name in the proper context.
- Last payment, last payment date.
- It’s not that we don’t want to provide the information; there is a risk of providing too much information and overwhelming the consumer.
Thomas Kane: Validation notices?
- Dealing with long, complex disclosures.
- One of the issues with long disclosures is to use it as a vehicle for consumer education.
- Verbal disclosures are also very challenging.
- Testing is the only way.
Thomas Kane: Is the info that collection agencies convey to consumers in a validation notice different from the info in the early communications?
- Not necessarily. We’re going to state we’re a debt collector, etc.
- We’re going to say the same thing in a call. We’re going to identify ourselves.
1) Concrete information abotu incremental costs in uploading information?
- All tech has costs. It’s not free.
- To provide info, there’s a cost. Issuers incur cost to deliver. Debt buyers incur cost to pull it in.
- When we think about providing info in a more efficient way, it also has to be cost-effective.
- We think it can be done at a price that is efficient for all involved.
- I’m not concerned about the cost. If it adds value, we’ll find a way to do it.
- When we move data, are we safeguarding the customer’s information?
2) Can you comment further on advantages/disadvantages of using creditor system v. agency’s own?
- Varies by sophistication.
- Benefit to using creditor system if it’s the better system.
- Does it have more information that is meaningful?
- If that info can be passed, then we’re in the same position.
- You have to look at parties involved and type of debt.
3) Do you think consumers would identity debt more readily if a charge-off statement was included?
- A breakdown of the cost would be the most useful thing for a consumer to have.
- The more info you provide that gives context is beneficial.
4) How many unsophisticated consumers can understand validation notice as written in FDCPA?
- Not my area of expertise.
- Almost nothing in a Google search about what validation is.
5) Do contingency or debt buyers get info about disputes?
- Don’t see a lot of that happening.
- The customers we’re working with, there’s a high level of interest.
- Finding a tool for an efficient and effective way.
- A consumer may dispute, and may be right, but when it gets sold, the next down the line does the exact same thing.
- That history has to be part of information that gets included.
- My experience is that there’s an exchange of information.
- The initial agency would submit info to creditor and the dispute is investigated.
- Disputes are either justified or unjustified.
- Developing good disclosures is a challenging activity
- Testing is only root at successful disclosure
- Standardizing disclosures is a good idea, but presents significant challenges.
- Standardized notice: our industry would welcome model language, uniform to all consumers.
- That will help improve level of confidnece
- By and large, there’s interest in improving processes that benefit consumers.
- They’re doing a good job of trying to understand issuer and collection-side of things.
- It’s in everybody’s common interest, when debt is sold the information it’s sold with is complete.
- The only want the system work is if everyone has access to trustworthy information.
- In common interest to do what’s best for customer.
- We want to provide all info that helps a customer identify debt.
- Test and control is very important
- Uniform national statnds relateive to data and media when interjected will benefit all participants — mostly consumer
- Consumer education