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Last week, one of our Research Assistant members told us that SoloSuit contacted their collectors directly with offers of financial incentives for settling accounts. SoloSuit claims to provide a settlement negotiation platform for consumers (for a 19% fee, of course). In its communications to collectors, SoloSuit offered collectors 3% paid to them directly for any deal with a SoloSuit client. Debt collectors should be aware of this outreach from SoloSuit and consider updating their policies and training accordingly. Further, debt collectors should evaluate potential legal, ethical, and operational risks before engaging (or allowing collectors to engage) in this type of relationship.
Policies and Training Enhancements
It’s important to note the historical context of SoloSuit. Prior to its launch of its SoloSettle platform which purports to be a debt settlement tool, SoloSuit had been known to take adversarial positions against the debt collection industry. Though they now seem to offer a platform that claims to serve both sides, their website and marketing materials suggest otherwise
Debt collectors should be aware of this issue and consider how their policies and training should be updated to prevent unnecessary risk.
The Research Assistant member who raised this issue learned about it from his collectors because the collectors showed him the letters they received from SoloSuit. It’s a stretch to think that all collectors for all agencies will disclose these communications to management of their own volition.
Another issue this brings up is that debt settlement companies are considered third-parties and collectors typically understand that they cannot communicate with these third parties without a consumer’s consent. That said, will collectors remember this point when they can earn a 3% fee from SoloSuit on top of their compensation from your office?
Collection agencies should consider getting in front of these issues by updating policies and training to advise collectors what they need to do if they receive this type of correspondence.
Legal, Ethical, and Operational Risks
The CFPB has been on a soapbox about fairness in recent years. Debt collectors have long wondered whether the services offered by debt settlement companies are fair, since consumers can typically achieve the same settlement outcomes—at no cost—by communicating with the debt collector directly. However, since negotiating with debt settlement companies has typically been an arm’s length transaction with debt collectors following the request of the consumer, fairness concerns are usually set aside.
SoloSuit, through its SoloSettle platform charges a 19% fee for consumers. By paying a 3% fee to collectors, is the debt collector they work for no longer far enough removed from the transaction that they would then bear some responsibility as to whether the consumer has been treated fairly? That is a question each individual agency will have to answer based on their own risk tolerance, but at a minimum, perhaps there’s an opportunity for agencies to more clearly advertise their direct negotiation options, emphasizing that consumers can often resolve debts without additional fees.
Consensus from RA members
The consensus among our group was that any vendor acting as a debt settlement company or an intermediary facilitator, regardless of how they position themselves, should be treated as one. This means adhering to the same protocols we use for traditional debt settlement companies, including verifying consumer authorization before sharing any information.
The group also agreed that when evaluating third-party debt settlement platforms, it’s critical to weigh the legal, ethical, and operational risks. Engaging with such vendors without clear consumer authorization could expose agencies to legal liabilities and reputational harm.
At the same time, it’s worth exploring ways to better inform consumers about the free negotiation options available through our agencies. By proactively addressing these issues, we can protect consumers, uphold industry standards, and minimize unnecessary risks.
Documents and Crowdsourced Materials:
Top Reads:
Upcoming Webinars / Other Announcements:
- Upcoming Webinar– RA Compliance Corner: Managing the Mental Strain of Compliance December 4, 2024, at 2:00 E.T. Register here.
- Important Announcement: All AI Notetaking Bots will be removed from Research Assistant Peer Group Meetings. This is to maintain the confidentiality of our peer members.
- Have topics you want to discuss during the peer call? Please send them to Sara_Consultant@roundtables.us by Thursday to ensure it makes it on our agenda!
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