We’ve all heard of car insurance, home insurance, renter’s insurance, health and dental insurance, business insurance, malpractice insurance and yes, even pet insurance! But how about data insurance?
Our customers have stated that 15-20 percent of a collection agency’s bottom-line goes toward the cost of compliance. Here’s something new to think about: If you currently count data as a cost of compliance, it’s time to reframe that mental model. In fact, data is an investment and functions like insurance against what you’re doing to stay compliant. When it comes to reducing the cost of compliance, you want to invest in the best data out there because high-quality data ensures that, in the end, you are able to reach more of the right people the first time, and collect more debt.
True, data companies don’t actually provide you with an ‘insurance policy’ in the typical terms, but by taking advantage of all that data has to offer, and using that information as a part of your daily collection process, you may be able to avoid the real enemies that are attacking your bottom line, consumer complaints and lawsuits.
Let’s look at some of the most common consumer law suits in the credit and collections industry that may have been avoided with the help of data:
- Bankruptcy Data: McMahon v Ryan [964 So.2d 198,200 (Fla. 5th DCA 2007)]. Shows that even a creditor who is not listed on the creditor’s matrix is bound by the bankruptcy’s automatic stay.
- Cell Phone Data: In the August 2014 TCPA Settlement, Capital One and three collection agencies agreed to pay $75.5 Million to end a consolidated class action lawsuit alleging that the companies used an automated dialer to call customers’ cell phones without consent. [In re Capital One Telephone Consumer Protection Act Litigation MDL No. 2416, Master Docket No.; 1:12cv-1006 (N.D. Ill.)]
- Active Military Data: In the recent $60 Million settlement with Sallie Mae (Now Navient), the complaint alleged that Sallie Mae did not properly provide members of the military the six percent interest rate cap, and that they also violated the SCRA by improperly obtaining default judgments against servicemembers. [Case 1:14-cv-00600-UNA, US District Court, District of Delaware]
So, what can you do to protect your business? Below are three datasets that can help to offer “insurance” in your daily processes.
Bankruptcy data is near and dear to my heart; with over 30 years of experience in the credit and collections industry, and half of those working closely with the Banko product, I have a lot of experience with bankruptcy data and have talked to hundreds of customers about using bankruptcy data in their daily workflow.
To me, this one is a “no-brainer.” If you can quickly identify those consumers who have filed for bankruptcy and remove them from your calling queue and general collection queue and either return these accounts to your creditor client or move them to a special handling queue to avoid contacting the consumer, then why wouldn’t you?
I can’t tell you how many times I’ve heard a customer tell me “we wait until we get a paper notice in the mail or until the consumer tells us on the phone that they have filed for bankruptcy.” However by the time you get the notice in the mail, especially if it goes initially to your client and not to you, it may be weeks until you see the notice, and by then you may have already violated the Bankruptcy Automatic Stay. If you wait for the customer to tell you on the phone – then you HAVE already violated the Bankruptcy Automatic Stay by contacting the consumer. Consumers are getting more and more educated to collection rules/laws, and some are even trying to bait collectors into doing or saying something wrong. Bankrupt accounts are easy ones to remove from your collections queue to help avoid these costly calls.
The largest growing single regulation-based lawsuit class in the past few years has been TCPA suits. Although we are all hoping for changes to the TCPA, or at least clarification on certain parts of it, for now, we need to abide by the Act as it stands today. With close to 40% of consumers communicating via cell phone only (no landline in the home), it’s more important than ever to know what type of a phone you are dialing.
Two of the biggest complaints relating to the TCPA are:
1) Calling/texting cell phones using a predictive dialer or leaving an automated message on a cell phone.
2) Calling the wrong person on a cell phone (you have permission to call Consumer A on his cell phone, but then he changes his phone number and his old number is assigned to Consumer B who you inadvertently call thinking it is still Consumer A’s number).
By scrubbing all of your new placements to get a flag for cell phones, you can quickly remove those numbers known to be cell phones and move them to a manual dial queue. Similarly, if you have cell numbers that you already have express consent to call via dialer by the cell phone owner, it’s a good idea to regularly check to make sure that cell phone number still belongs to your consumer.
Because of porting and more and more consumers going to a cell phone only (either porting landline to cell or removing landline entirely), it’s a good idea to scrub your phone numbers for a cell phone flag at least monthly.
With the recent Sallie Mae (CFPB, FDIC and DOJ Investigation) and Freedom Furniture and Electronics and Military Credit Services settlements (CFPB investigation), the Servicemembers Civil Relief Act (“SCRA”) has been called to the forefront in collections and lending.
While some of the relief afforded to military members via the SCRA has to be proactively requested by the military member, there are still many activities regularly performed by collections that should not be performed on military members, whether or not they have asked for relief, such as repossession, garnishment and foreclosure. Additionally, even though it’s not required under the SCRA, Sallie Mae is now required to proactively scrub their account to look for active military members; something we should all take to heart.
By proactively scrubbing your new placements for active military personnel, you can either flag those accounts or move them to your special handling queue so that collectors know that they are calling on a person, or the family of a person who is on active military status. While you are still allowed to collect on these consumers, you should do so with care.
The collections industry is an important component to the economy. Without it mortgages would be more expensive, credit would be harder to obtain and Interest rates would skyrocket. With the increased oversight by the CFPB, and increased consumer awareness about collections, collection agencies are eagerly adopting business practices that make them better businesses for the long run. High-quality data is an insurance policy against the real threats that you battle every day and are a way to reach more people to drive profitability.
Contact LexisNexis today to find out how we can help insure your company has the best data for the changing landscape of collections. 866-528-0780 or visit lexisnexis.com/risk/receivables-management.