Utilizing Your Collection System to Support and Document your Compliance Strategy

Compliance is now mandated across many areas of a collection agency, law firm or debt purchasing organization. Compliance means not only meeting the requirements presented by the CFPB, FTC and state’s attorneys general, but being able to demonstrate and document that the organization meets and is able to maintain a state of compliance in many areas. One of the best defenses against regulatory action and frivolous lawsuits is being able to demonstrate that you have created a detailed set of policies and procedures, that you have implemented processes for following these policies and procedures and that you have operational controls and technology in place to be able to clearly demonstrate a state of compliance.

Regulators are now mandating that large issuers and buyers perform a detailed audit of their service providers to ensure the service provider understands their obligations with respect to compliance before making placements. The prospect of losing placements from a client, or worse, facing a civil investigation demand from a federal regulatory agency should make anyone want to comply with their clients’ requirements. This begs the question; “How flexible is your collection system when it comes to meeting today’s compliance requirements?”

Here are a few examples of how your collection system could be used to demonstrate several common compliance challenges.  While any collection system can be modified to work in a customized way, the following examples represent some of the most basic operational challenges to compliance and should be handled without any customization in even the most basic collection software systems today.

Example #1 – Verifying Licensing Prior to Contact: If you were not licensed to work in a specific state and received a placement in that state, does your system have the ability to automatically “close” that account? If a collector later attempted to access that account, would the system stop them or warn them that the account should not be worked?

Example #2 – Rules Based Logic to Stop Excessive Calling on a State-by-State Basis: States, and some cities, have started to pass legislation that limits calls and messages to consumers. Can you limit the number of calls placed to a consumer or an individual phone number during a day or a specified period of time? (e.g. no more than 4 attempts per consumer per day or 20 attempts in 30 days). How would you test this? Set your system as required. Set up a test account. Call the home number 4 times. Now try to make a 5th call. Did the system stop the 5th call?

Example#3 – Managing Calling Rules Across Collector Queues: In the above example, does the system handle “unusual” agent behavior? In this case, set up a test account with the 4 call maximum per day and a home and work number. Make 3 calls to any of the numbers. Now have two different users go into the same account. Have one call the home and another, the work number, at exactly the same time? Does your system stop one of the calls?

Example #4 – Managing Time-of-Day Calling Rules Against Multiple Phone Area Codes for the Consumer: A consumer in the state of Texas has the following possible home phone numbers on their account (559) 448-7012 and (972) 862-1254. The first is a number in California while the second is a number in Texas. What does your system say is the allowable calling period for the consumer, based on that information? The answer (without complicating it with daylight savings time) is 11 AM to 10 PM EST. Do you know why?

What if in the above example, the phone numbers were the same but the consumer’s state was Virginia? What is the allowable calling period? The answer is 11 AM to 9 PM since Virginia is in the eastern time zone and 11 AM to 9 PM is the time period that meets the requirements of California, Texas, and Virginia.

Example #5 – Rules Based Calling Periods for Toll Free Telephone Number: In the example above, if the work number was (800) 678-9000 and you wanted to be safe by considering all numbers when the allowed calling period was computed, what does your system say is the allowed calling period for this example? The answer our system comes out with is 2 PM to 5 PM, if the most stringent option is selected. This is a conservative and safe answer since the 800 number could be in one of many different time zones. Of course, a less conservative setting could ignore the 800 number in time zone calculations.

Example #6 – Collector Queue and Account Access by Role Hierarchy: A large client insists that only the 25 collectors who work their accounts should have any access to their accounts. Can you set up your system to only allow those 25 collectors to call up one of the special client’s accounts?

Example #7 – Phone Number Calling Order Priority Rule: How do you deal with the fact that some states require you to launch a call to a home number and wait a specific number of days before calling a work number?  Does your system control this?  Does it permit a call to a work number within seconds of a call to a home number, inviting a potential lawsuit?

There are many more examples of areas where your collection technology can help you demonstrate compliance in your collections operations. If your current database driven collection system cannot do all or at least some of these things, your current system may be exposing vulnerabilities in your compliance strategy. Try creating a sample scenario for the seven examples listed above to see how flexible your current collection software is when it comes to maintaining and demonstrating compliance.

Ranjan Dharmaraja is the founder of Quantrax Corporation and has 25 years of experience in the collection industry. Quantrax has developed the first collection software program powered by artificial intelligence. To learn more about the Receivables Management Expert from Quantrax, visit their website at www.Quantrax.com.