Takeaways From the Northeast Debt Collection Expo

Brian Lane
Baker Tilly

The NEDC Expo was held in Mystic, Connecticut during the first few days of October. The event drew collection agencies from the mid-Atlantic states and New England. Participants shared ideas, caught up with old friends and gained insight into best practices.

The conference began with a welcome address by Patrick Morris, former ACA CEO. He spoke on the state of the industry, including an update on the ACA’s Washington Insights Conference. The ACA team took part in more than 150 congressional meetings. Mr. Morris communicated that ACA strives to hold meetings with members’ congressmen.

Mr. Morris confirmed the organization will continue to have a voice in any regulation of the industry. He went on to let the attendees know about recent rulings congressmen have supported which impact the collection industry, including possible legislation regarding the TCPA. ACA has quickly responded to any bills and regulatory rulings. On July 10, 2015, ACA filed suit in federal court of appeals in the DC circuit seeking review of the FCC’s June 18 declaratory ruling on the TCPA.

The CFPB continues to be active in consumer complaints and is building up their enforcement efforts. The ACA is closely following the advance notice of rule making which the CFPB released in November 2013. Mr. Morris noted the ACA does not yet know when the rules governing the collection of debts will be issued. However, the ACA plans to quickly review and respond to those rules. He expects 2016 to be a big advocacy and regulatory year for the organization.

Mr. Morris went on to provide a state activity update which highlighted the monthly unit leader and lobbyist calls. They are currently tracking over 300 bills throughout the state legislatures.  The ACA is using a grassroots effort at the state level to lobby for the interests of the industry.

The audience then enjoyed a presentation by Matt Jones, known as the seven continent marathon man. Matt has battled cancer three times, relearning how to walk. He provided a very uplifting and motivational speech about persevering and emerging victorious from life’s challenges.

The following session covered what agencies need to know about credit reporting claims in New York. The speaker took several questions from the audience, helping to clarify credit reporting issues collectors have encountered in the state. He noted that the recording of disputes is one of the crucial steps to take in staying in compliance with FDCPA.

The next three sessions consisted of panel that discussed best practices in sending collection letters, a presentation focused on processing e-OSCAR disputes and then a discussion of best ideas in collecting. Panelists recommended communicating clearly to debtors, including the use of consistent, legible font and ink in collection letters. There was a good deal of audience interaction and agencies came away with some clarity on industry best practices.

Day two of the conference started with a discussion of what to expect on the compliance horizon. The speaker recommended having collection letters reviewed by an attorney, risks of collecting on out of statute debt, risks with telephone communications and avoiding communications with a debtor which could trigger FDCPA violations.

The speaker pointed out that an agency should be aware of the obligations being collected, particularly when collecting out of statute debt. Collectors should try to avoid litigation when collecting on out of statute debt and should the threat of litigation against an agency arise, the agency should avoid a jury trial as jury decisions are often not in favor of the agency.

The session also covered how to collect on collection fees without triggering an FDCPA violation. The collector should clarify the debtor does not currently owe the fees but rather will owe such fees once they begin to pay the debt. Another takeaway from the session was that most agencies are including safe harbor language in their letters with regard to interest accruing on an account.

With regard to telephone communications, the emphasis was on taking care in identifying the purpose of the call, including the danger of disclosing the name of the collection agency and leaving a mini-Miranda warning if the other party on the line has not identified themselves as the debtor. Collectors need to be careful in their disclosures about the purpose of the call if the identity of the party on the line is not yet determined. Caution should be exercised both in leaving a message on an answering machine or in a live discussion with a party on the other end of the line. The caller should simply ask whether the debtor is available or when they will be available without communicating the purpose of the call.

The speaker went on to discuss interactions with debtors on social media and text messaging. Collectors should be very cautious. They should not try to friend a consumer with a fake Facebook profile in an attempt to collect information on the consumer. Texting should be viewed as both oral and written communication, involving potential TCPA issues and written communication issues which could violate state laws.

The next speaker at the conference, a compliance officer, reviewed 501r final regulations for charitable hospitals and helped the audience better understand IRS requirements. Section 501(r), added to the Internal Revenue Code by the ACA, imposes new requirements on 501(c)(3) organizations that operate one or more hospital facilities. Each 501(c)(3) hospital organization is required to meet four general requirements on a facility-by-facility basis:

• establish written financial assistance and emergency medical care policies,
• limit amounts charged for emergency or other medically necessary care to individuals eligible for assistance under the hospital’s financial assistance policy,
• make reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy before engaging in extraordinary collection actions against the individual, and
• conduct a community health needs assessment (CHNA) and adopt an implementation strategy at least once every three years. 

The regulations define extraordinary collection actions (ECAs), which include selling an individual’s debt to another party and taking judicial action against a consumer. The speaker went into some further details regarding ECAs and what will not be considered an ECA. Next, she discussed financial assistance programs (FAPs). Hospitals will have to make reasonable efforts to determine an individual’s eligibility for an FAP. There was some discussion of how hospital facilities will apply the rules and how they will impact collectors.

The expo ended with a discussion of training in the compliant age. During the presentation, the speaker shared details about his agency’s training efforts. The agency has been proactive in creating a comprehensive training program that teaches its collectors how to not only remain compliant with the many rules and regulations affecting the industry but also instructs them on developing good customer service skills. The agency devoted significant resources to establish this training program and has realized an improvement in employee personal development and morale. Employees of the agency take courses voluntarily, on their own time and the organization has been pleased to see almost universal employee participation. The employees have learned things beyond debt collection regulations such as leadership skills and learning the Spanish language, which is increasingly important as the Spanish speaking population continues to grow throughout the United States.  One employee expressed their satisfaction with the program by stating “this is better than high school.”

Some of the challenges of the training program have been the significant cost, finding qualified instructors, and the required time commitment by employees and management. As the program developed, the organization has had to periodically modify the program in order to stay current with regard to compliance issues and to consistently keep employees engaged.

While the speaker noted the training requires significant effort and resources on behalf of the agency, the result has been improved employee morale, lower employee turnover, improved client satisfaction and fewer debtor complaints.