Analyzing the GAO Recommendations for FDCPA Reform
It’s been only a few days since the Government Accountability Office (GAO) released its report on credit card debt collection practices, complete with specific recommendations to Congress on modifications to the Fair Debt Collection Practices Act (FDCPA), (“Government Report Recommends Significant Changes to FDCPA,” Oct. 22).
But the accounts receivable management industry has certainly taken note.
First, if you haven’t had a chance to read the report in its entirety, take some time to do so: http://www.gao.gov/new.items/d09748.pdf. Yes, it’s a long government report, but it’s a fascinating look at how this country’s rulemaking apparatus rationalizes the regulatory environment it creates. There’s some really interesting stuff in there.
Second, understand that the report is directed to members of Congress. The recommendations that are laid out in the document will have to go through the formal lawmaking process.
And that’s the point of one of the recommendations. The GAO said that the Federal Trade Commission (FTC), the debt collection industry’s current regulator, should have the authority to make changes to the law when it sees fit. This would mean that the agency could take input from the industry and consumers and alter the law without having to go through Congress. It would also mean that collection agencies would not need to rely on very rare FTC opinions and case law to interpret some of the gray areas of the FDCPA.
For that and other reasons, ACA International sees the report as a major positive. Adam Peterman, ACA’s government affairs director, told me in a message last week that the group is “happy that they’ve pointed out a lot of the issues we’ve been trying to point out.”
Indeed, the recommendation that stands out the most is the one where the GAO charges Congress to update the FDCPA to “reflect technologies that were not prevalent when the act was originally enacted.” The ARM industry has been noting the antiquated nature of the FDCPA, originally passed in 1977, for years. With the backing of a group like the GAO, the FDCPA may soon clarify issues surrounding the use of cell phones, answering machines, predictive dialers, and even email.
But I’ve also heard some words of caution surrounding the report. The third official recommendation to Congress was that the FDCPA be modified to “help ensure that debt collectors and debt buyers have adequate information about the debts transferred and adequate documentation to verify the debts they seek to collect from consumers.”
A debt buyer that I spoke to last week noted that this language was very scary. Asking specifically not to be identified, he said that Congress could interpret this many different ways. And in the current legislative and regulatory environment – with consumer protection being the operative theme in Washington – he said there is no reason to be optimistic about lawmakers’ interpretation of that recommendation.
When forced to put a silver lining on things, our anonymous debt purchaser said that Congress could put the onus on creditors on the documentation/media side of things.
One thing is clear from the report, however: meaningful reform is coming for the FDCPA.
The FTC in early December wraps up its series of three panel discussions on legal collections in Washington, after issuing an FDCPA report earlier this year. Expect recommendations from the regulator to come quickly in light of the GAO report.
Of course, the whole matter then goes before Congress, where the real battle begins. The industry should definitely view all of these reports and recommendations as a beginning rather than an end.
AP Details Growth of State ARM Regulation and Consumer Woes
Get ready to see an article on the debt collection industry in your local newspaper today.
The Associated Press sent an article out over its wires Thursday afternoon that was innocuously titled, "States raise limits on creditors as debtors squirm." But the main focus of the article is the growing trend of individual states passing laws targeting the accounts receivable management industry that supersede the Fair Debt Collection Practices Act (FDCPA).
The AP article notes that several states or local government entities have already proposed or passed laws stricter than the FDCPA, with most focusing on debt purchasing. More states are expected to follow suit.
The list of states – North Carolina, Idaho, Colorado, New York, Arkansas, Maryland, New Jersey and Massachusetts, along with New York City – is not new to the ARM industry. Many of the changes have been detailed in debt collection media, including insideARM: “ARM Industry Discusses Collection Law Changes in North Carolina,” Sept. 2; “NYC Collection Law Could Signal Problems for the ARM Industry,” April 17; “NJ Bill Would Require Collectors to Send Copies of FDCPA to Debtors,” April 20; “Massachusetts Toughens Rules for Small Claims Collection Lawsuits,” Aug. 12. We’ve even covered some that the AP missed: “Oregon Passes Bill Allowing State AG to Sue Debt Collection Agencies,” April 6.
But that’s hardly the point. What the AP notes, and what professionals in the ARM industry already know, is that the regulatory and legislative tide on nearly every level of government is turning against debt collectors, as if it hadn’t already. And presenting the same basic journalistic formula isn’t helping matters.
In its article, the AP makes heavy use of the “poor consumer” anecdote, giving three paragraphs of space to the story of a North Carolina woman that prompted her states’ tough new measures. The article gives one single sentence to an ACA spokesperson for the ARM industry perspective...near the bottom of the story.
I will say that we were personally pleased with one aspect of the article: the AP cites a survey conducted by Kaulkin Ginsberg, our sister company. In actuality, the survey cited is the insideARM Quarterly Confidence Survey. So thanks, AP. But other than that, we feel that reporting on these new laws should focus on the unintended consequences and additional burdens on jobs that the rules will present.
Interact with Top ARM Vendors Without Leaving Your Desk at EXPO 3.0
Something new is coming to the event world for credit and collections! insideARM.com and Kaulkin Ginsberg are pleased to bring you the industry’s first-ever virtual EXPO.
Think of an online exhibit hall where you can literally “visit” booths, interact with suppliers through group or private chat, see a video introduction of the company or product, and download additional information.
While it will always be important to engage in face-to-face networking, adding a virtual EXPO to your schedule can provide an efficient and cost-effective way to interact with potential suppliers or clients. Because of the expense of travel and time out of the office, many stakeholders in the process of selecting vendors don’t ever attend tradeshows; companies have to make choices about whom/how many to send to the major events.
EXPO 3.0 will be free to attendees, so there are no choices to make; senior management, IT staff, collection staff, or anyone else will be able to attend this show from their desk, at their convenience. Have 20 minutes at 10am and then 30 minutes at 3:30pm? Fine! Come and go from this event as needed.
Suppliers won’t have to make those choices either; so not only the sales team, but management, developers, marketers, customer service team members can all have the opportunity to interact directly with clients and prospects. This is extremely valuable input for your whole team.
Expo 3.0, “the receivables tradeshow evolution,” is coming on February 16, 2010. Learn more about the event at www.insidearm.com/expo.
Stephanie Eidelman is the Publisher of insideARM.com and the Chief Operating Officer of Kaulkin Ginsberg Company. She can be reached at publisher@insideARM.com.
ARM Firms Still Dealing With Weak Performance: Survey
Collection agencies, debt buyers and collection law firms are still experiencing lower than average performance in the year-and-a-half old recession, according to early responses to insideARM’s quarterly Credit & Debt Collection Industry Confidence Survey, sponsored by LiveVox.
The current survey, for Summer 2009, is still open. If you haven’t participated yet, please take a couple of minutes and fill it out here. Once again, thank you to all that have taken it; the response has been just as robust as our previous surveys.
In our last survey, which covered performance in the first quarter of 2009, ARM firms indicated that performance had improved from late 2008 as early tax refunds gave consumers a much-needed cash infusion. But the current survey appears to indicate that performance slipped in the second quarter and is continuing to struggle through the summer.
On a scale of 1 to 5, with 5 representing “Very Strong” performance, ARM firms have rated current collection or liquidation performance an average of 3.23 in the still-open summer survey. This was stronger than the 3.18 average rating given to the second quarter’s performance, but down from the first quarter’s 3.53 average.
By contrast, the average rating for performance in the fourth quarter of 2008 was 2.81. The deep drop in performance late last year, and the slight recovery so far in 2009, was summed up rather well by one comment from a survey participant:
“In October 2008, the recoveries fell off a cliff. We are rebounding from a difficult period. Inflation and unemployment will continue to hold us down and hamper recovery.”
Other participants also had comments on performance trends:
“Liquidation rates are still half to less than half of 2006 to 2007 numbers, but appear to have stabilized.”
“Collections are way down - in single digits.”
“I strongly feel that the good news is we have bottomed out. The bad news is we will ride the bottom for a couple of years.”
“The economy definitely has had a negative affect on collection success and we are finding we must be more empathetic to keep payments flowing.”
We are collecting slightly different demographic information on survey participants this time around as well, mostly focused on geography. More than 80 percent of survey-takers so far are from the United States, with the vast majority of non-U.S. participants in Europe. So far, California is the most popular state, with around 13 percent of participants working in the Golden State.
There is still time to participate in the survey. Please take a couple of minutes and check it out if you haven’t already.
How Strong is Your “Google-Fu?”
In today’s online world, it’s hard not to roll one’s eyes at the myriad of silly catchphrases. Once in a while, you stumble across a good one. “Google-fu” is an amusing term that relates an Internet user’s degree of skill with Google’s powerful search engine. Considering how difficult it can be for an accounts receivable management professional to find relevant information, you’d need some pretty strong Google-fu to get anywhere with a regular search for ARM terms.
However, short of dedicating yourself to studying the intricacies of Google’s search engine, there is an easier way to find ARM information for the industry professional: SearchReceivables.com vertical search.
What is Vertical Search?
A “vertical” or industry search engine is a relatively new tier in the Internet search industry. It only looks through relevant websites to deliver search results, as opposed to Google, which searches every website on the Internet.
Realizing that ARM professionals didn’t have such a tool in their arsenal, we created SearchReceivables.com. If you’ve used the search tool on insideARM.com recently, you might have noticed that your search results are delivered through SearchReceivables.com.
Why doesn’t Google work for ARM professionals?
Research shows that on average, professionals may use the internet for industry research for over six hours a week. Due to a lack of vertical search engines for niche industries (such as ARM), professionals are currently forced to use consumer-focused search engines like Google.
What problems do ARM professionals come across in a consumer search engine?
- Search results that are not directly relevant to your query.
- Too many overall results returned on each search.
- You’re forced to try different engines because of the unfocused nature of consumer engines.
- Studies demonstrate that users only get a relevant result 40% of the time.
Ever try searching for receivables terms on Google? Take a look at this Google search:
Notice that most of these results are simply not useful for a receivables industry professional. If you’re looking for sources of industry information, you probably don’t want to comb through hundreds of consumer-focused search results. You also have no way to quickly drill down or filter by common ARM-related terms to find exactly what you need, nor can you quickly access resources like insideARM.com.
Here’s what you get with a SearchReceivables.com query:
Essentially every link on the page is a tool selected specifically for its usefulness to the receivables industry professional. Instead of just giving you a list of results, you’ve now got access to a variety of search tools that can help you quickly get to the content you are looking for – without filtering through pages of consumer-focused items.
If you’re an ARM professional or doing any ARM research, SearchReceivables.com needs to be an everyday part of your workflow. If not, I hope your Google-fu is strong – you’re going to need it.
Naveen is an expert on web development and the Internet. For insideARM.com, he is focused on improving usability, content, and the online community for insideARM.com readers and members.
