Category: Compliance

How to Ensure Your Safe Harbor Language is Actually Safe

By on October 24th, 2019 in Compliance

It has been nineteen years since the Seventh Circuit held that a debt collector must include a notice to consumers if the balance in a collection communication would change from day to day due to interest, fees, or other changes accruing on a debt.

However, we still see balance-related issues today under the Fair Debt Collection Practices Act as some debt collectors struggle to provide consumers with the amount of debt owed in a simple, clear manner.  

Since Miller, other courts agree that a consumer must be told if the balance will increase adopting Miller’s safe harbor language. In September 2019, a court in the Eastern District of New York dismissed a case, finding the collection letter adequately set forth the amount owed because the letter included the safe harbor language.

“Additionally, debt collectors should not put the safe harbor language on an account where the balance will not increase.”

In Paracha v. MRS BPO, the fact that the balance on a second letter (mailed six months after the first letter) increased by thousands of dollars did not make the original letter deceptive or inaccurate. This decision was made because the first letter advised the consumer, through the safe harbor language, that the balance may increase over time.

Using (and not using) the right language

Debt collectors must be careful with the safe harbor language and cannot simply add it to a communication when a balance on a collection letter will increase. The safe harbor language must be accurate for the particular account in question. The safe harbor language will only be safe to the extent that it states what may cause the balance to change. 

For example, according to Boucher v. Finance System of Green Bay, Inc., if the debt will increase due to interest—not due to fees or other charges—then the safe harbor language should only advise that the balance may increase from day to day due to interest and not mention fees or other charges. 

Additionally, debt collectors should not put the safe harbor language on an account where the balance will not increase. Doing so could create a false sense of urgency, and a consumer may think that they need to pay the balance immediately or it will increase when in fact it will not increase. Debt collectors are not required to tell a consumer that a balance will not increase. 

Courts have made clear that a debt collector has no obligation to state that the balance will not increase when the balance on a collection communication is static. But, even when a debt is static, a debt collection agency must choose their words carefully when describing the amount of the debt owed.

In Koehn v. Delta Outsource Group, Inc., a consumer sued a debt collector, arguing that the words “current balance” materially mislead and confused the consumer into thinking that the balance would change from day to day. The Seventh Circuit found that the phrase was “common and innocuous” and not a violation of the FDCPA.

Itemizing debt

Debt collectors should be wary of itemizing a debt when the debt collector does not have the right to add interest and fees. The CFPB’s proposed rulemaking does include debt itemization; however, until the rule becomes final, cases like Virden v. Client Services, Inc., suggest that listing “zero dollars” for interest and fees could mislead a consumer into thinking that interest or fees may increase. This deception would, in fact, be in violation of the FDCPA. In Virden the agency included the following itemization:

Balance Due at Charge-Off$1,658.91
Interest$0.00
Other Charges: $0.00
Payments Made:$0.00
Current Balance:$1,658.91

The court found that the least sophisticated consumer could misinterpret the “$0.00” listed for interest and other charges and that one plausible misinterpretation could be that interest and other changes would begin to accrue if the debt was not paid. Since interest and other charges would not accrue on this debt, the court ruled that the information was deceptive.

Agencies need to be careful in choosing what words they use describing the balance owed on a debt. In this context, less is more. Do not add itemizations when not required and only use safe harbor language tailored specifically to the account. 

For more discussion of current balance issues, listen to the most recent episode of Two DEBTicated Attorneys.

TrueAccord Submits Debt Collection NPRM Comments

By on September 19th, 2019 in Company News, Compliance
man_signing_document

In an effort to further improve the debt collection experience for consumers, TrueAccord filed comments in response to the Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Debt Collection Rulemaking. Our experience using mostly email to communicate with consumers about their debts gives us the unique ability to provide detailed feedback to the CFPB on the parts of the Proposed Rule that impacts the use of email, data science, and machine learning in debt collection. 

We know that consumers in debt collection benefit from both email communications and machine learning technologies. Email communications allow consumers to access content at their convenience (including emails that contain legally required disclosures); new machine learning technologies provide additional information and payment options based on the consumer’s interactions to further personalize their collections experience.

What are we suggesting?

Make the transition into collections communication simpler

When emailing a consumer, either an initial communication—one containing the validation notice in the body—or any communication relating to the debt, a debt collector should be able to contact that consumer at the email address that the consumer provided to the creditor. 

The proposed rules do not currently provide this option without causing an undue burden on consumers. TrueAccord highlighted that unnecessary restrictions in the proposal greatly limit the ability to communicate with consumers via email. Consumers who have already provided their preference for electronic communications to their creditor(s) would be forced to take extra steps because they have fallen into collection. 

Define and properly evaluate email as a unique medium

Our customers regularly tell us that email is very different from phone calls and even paper mail. As such, email communications warrant different treatment under the FDCPA and should not be subject to the standard time, place, and manner restrictions that were designed for and apply to primarily oral communications.

TrueAccord asked the Bureau to take this opportunity to further modernize the FDCPA by distinguishing that certain provisions do not apply to email. 

Recognize other, optional forms of electronic communications as legitimate

We raise concerns over the proposed definition of “attempted communication” and “limited content message.” The current proposed definitions have the unintended consequence of limiting digital advertising and other electronic messages that consumers can opt-in to receive. 

What is our goal?

TrueAccord’s suggested changes will increase the proposed rule’s ability to make collections more efficient, provide actual notice to consumers, give consumers immediate access to information, and enable consumers to control how they want to communicate.

The debt collection proposed rulemaking is an opportunity to empower the vast majority of consumers who prefer to communicate electronically. The Bureau must take advantage of this opportunity.

You can read TrueAccord’s full comments here.

Lavallee v. Med-1 Solutions Confirms Common Sense Email Principles

By on August 26th, 2019 in Compliance, Industry Insights

On August 8, 2019, the Seventh Circuit Court of Appeals (7th Cir.) released its long-awaited verdict in the case of Lavallee v. Med-1 Solutions, LLC, 17-3244 (7th Cir. Aug. 8, 2019). The court ruled that Med-1 Solutions, LLC did not properly provide the validation notice as required by the Fair Debt Collection Practices Act.

Additionally, the court held that the first email Med-1 Solutions, LLC sent did not constitute a debt collection communication. Despite the unsuccessful method by which Med-1 attempted to email the initial communication, it is possible to do so in a compliant manner consistent with the current interpretation of the FDCPA.

The court’s decision

The Court held that Med-1 Solutions, LLC did not properly deliver the validation notice to the consumer. Med-1 sent the Plaintiff an email, but the email did not contain the text of the validation notice.

Instead, the email contained a hyperlink to a page where the Plaintiff would have had to enter personal information, and then take four additional steps in order to open a PDF containing the full initial demand letter with the required validation notice language. 

The Court reasoned that Med-1’s email did not constitute a communication because the email did not have any content relating to a debt. The Seventh Circuit reasoned that the “email conveyed three pieces of information:

  • The sender’s name (Med-1 Solutions, LLC)
  • Its email address
  • The fact that it ‘has sent … a secure message.’ ”

The email did not convey any information about the debt so it did not constitute a communication.

The FDCPA requires debt collectors to provide the validation notice in the initial communication or within 5 days of the initial communication in writing. Since the email did not constitute an initial communication, the Court found the initial communication happened over the phone. Med-1 Solutions, LLC, however, did not provide the validation notice during that call or in writing within 5 days because the company believed that their email satisfied the requirement. 

How to provide a validation notice in initial communication via email

When sending an initial communication by email, the content in the body of that email must contain all the validation notice requirements (15 USC § 1692g). It should:

  • Identify current creditor
  • State the amount owed
  • Provide the validation statement explaining the customer’s dispute rights

With the right information provided in the initial communication customer’s are more likely to recognize the account and trust that the email is from a legitimate debt collector. It should contain information on:

  • How to unsubscribe from future emails
  • Telephone contact information
  • The business’ hours of operation

Beyond that, it should comply with any other state, federal, or local obligations such as whether or not to provide a disclosure or other information. These are some of the principals embraced in the CFPB’s proposed debt collection rule. Had Med-1’s email contained this information in the body of the email, the result in the case would have been different.

Limited content emails 

The Seventh Circuit’s decision also highlights a concern with sending limited content communications via email. This case reinforces the importance of developing an email strategy and fully understanding deliverability requirements. This can ensure emails are delivered and not identified as spam and filtered away from a recipient’s view.

A full deliverability strategy may consider several factors including, but not limited to ISP reputation, providing relevant content in the body of the email, and more technical aspects of email such as throttling, bounces, and bulking. These elements can greatly affect an email’s ability to reach its intended recipient and ultimately convey its message.

Med-1 Solutions, LLC did not have a prior relationship with the Plaintiff, they did not remember receiving the email, and they did not click on the hyperlink provided in the email. As the lower court noted in its decision, the Department of Homeland Security warns consumers from clicking on links received in emails from unknown senders. The Seventh Circuit decision showcases the ineffectiveness of using a limited content message to reach and engage a consumer.

TrueAccord and the future of digital debt collection

We work to create a digital environment that places customer experience at the forefront of our collections strategy. This means ensuring not only personalized content delivered through our machine learning technology, flexible payment options, and digital access for customers to manage their debts. We do all of this via software that guarantees compliance.

If you want to learn more about how our technology can change your strategy, reach out to our team here!

How TrueAccord Creates High Performing Compliant Content

By on July 31st, 2018 in Compliance, Product and Technology, User Experience
TrueAccord Blog

In debt collection, the language one uses in customer communications makes a big difference on liquidation rates. At TrueAccord, compliant content is the lifeline of our system. We continuously create, test and revise our content to engage consumers more personably—which drives better results for our clients.

Our Goal: Create a Better Customer Experience

Communication styles in the debt collection industry are typically stiff and unapproachable. Most of the time, it sounds like “legalese,” which can be off-putting, if not intimidating, to many customers. TrueAccord has a digital-first strategy to debt collection, primarily with emails, supplemented by SMS and phone calls to effectively engage with our customers. We strive to make our content informative, actionable, and compassionate.

Our mission is to transform the debt collection industry by helping people regain their financial health. Thus, our content is written to reflect that. It’s not accusatory or condescending, but respectful and empowering. We focus on finding solutions and helping people by presenting options on how to resolve their debt.

How We Experiment with Content —and Continually Improve It

Our proprietary content management system (CMS) was designed to help us craft and edit content based on massive amounts of dynamic data. We track everything from the customer’s balance, creditor, where they are in the debt lifecycle, if they’re in a payment plan, and how long we’ve been communicating with them to craft customized emails.

We constantly run experiments to generate the right content for each person. We try new subject lines to see if we can get more people to open emails. We write different calls to action on our buttons to see what drives better engagement. We also consider how far a consumer has to scroll down in an email or a landing page to get to the call-to-action button. If something’s not working well, we try something else. And our machine-learning engine—which continuously learns from our experiences—helps us customize specific and customer follow-ups that resonate. All of these small experiments add up to get us very high open and click rates from customers.

How We Keep Content Compliant

The debt collection industry is heavily regulated and is inherently protective of consumers, as it should be. We always look at communications content through a customer-focused and thorough compliance lens.

Our system provides code-driven compliance, appending the appropriate disclosures and text to automatically comply with whatever is necessary for each user, such as debts unreported out of statute or specific state disclosures. Our compliance rules dictate the content parameters for each customer, making it easier for our content writers to focus on writing compelling content. And yet, because there is wide variation in our writing styles, syntax and payment options, our content is still engaging.

Our legal team gives our content a final review, and we get very granular to ensure the message is clear for every type of customer. We look at the actual message, the email layout and design (including button placement) and even the size of the font for our disclosures. We write content that engages customers but also clearly lays out the customer’s rights and responsibilities.

This process is highly collaborative. Our content and legal teams work in concert to continuously adapt new scenarios to see how different options might come across. Our communications library constantly evolves as we keep on improving our customer engagement.

Think About What You Can Say

Most of the industry is focused on what you can’t say, but they’re not thinking about what you can say. That’s why we spend so much time perfecting our content and why we end up with such great response rates and overall results.

The Intelligent Alternative to Debt Collection Call Centers

By on March 6th, 2018 in Compliance, Industry Insights, User Experience
TrueAccord Blog

As is often the case in evolving industries, it takes time for technology adoption to begin transforming the way companies do business. For debt collection, many organizations are still relying on an aging and outdated process to pursue debtors and recover revenue – the collection call center. Dozens or even hundreds of collection reps spend their days on the phone lines, methodically and painstakingly pursuing consumers who have racked up debt in the hopes that some will actually pan out.  

Unfortunately, call centers are fraught with challenges that can have a debilitating impact on the collecting organization, the company’s brand and reputation, and the consumers on the other end of the phone, who in many cases truly want to regain control of their financial lives. Among the many problems call centers face:

They’re Reactive and Emotional Environments

When individuals are the driving force behind an emotional transaction like a phone collection call, it’s not hard to have a bad day – especially when reps tend to garner low base salaries and are incented with commissions and bonuses to succeed. If a consumer rudely hangs up on a rep, for example, it’s easy to fall into a retaliatory frame of mind and call back multiple times simply to harass the debtor. Reactive and emotional responses from a rep can lead to bad exposure and higher risk of complaints or even legal action. Even voice analytics systems that monitor language used by reps are not infallible, as reps usually know what trigger words to avoid (such as “garnishment” or “lawsuit”) and how far they can push the envelope and not be flagged.

Even Hiring More Reps Doesn’t Really Scale

Many companies see hiring more reps as a simple solution to get as much coverage as possible. This conventional wisdom looks good on paper, until your realize more reps also means more training, more compensation, more resources and more oversight to monitor every active rep’s calls. Moreover, it is difficult to match staffing needs to varying workflows. If business is brisk and opportunity is high, it makes sense to have more workers. But all companies experience ebbs and flows in business activity, so when it comes time to scale down, they are forced to eliminate call center positions, then scale back up when the demand returns. Such fluxuations create a complex and unsustainable model for smooth debt collection execution.  

Ultimately, It’s All About Risk

Large call centers create the potential for more problem interactions with debtors and a greater probability of complaints and lawsuits, and risks and costs can rise exponentially when you consider how long it takes to manage each incident. Interviewing the violating rep in question, piecing together what happened and facing legal action or an angry regulators all create instability and unpredictability.

Consider Automating Debt Collection – and Making It Smarter

How can you overcome these inherent problems with debt collection call centers? Progressive organizations in the credit card, consumer loan, ecommerce, technology and telecom industries are all turning to a more sensible and intelligent approach to replace the call center strategy: Automation engines that replace most collection activities offer a more proactive system that has compliance, risk mitigation, content and costs all built in.

Here’s what it looks like:

Start with an Intelligent, Machine-learning System

Today’s automated collection systems, like those pioneered by TrueAccord, rely on a process that goes far beyond outbound calls. Combining outbound emails, text messages and other channels with an intelligent machine-learning system that sees what type of interaction each recipient prefers, you create a less obtrusive environment that debtors are more likely to respond to. In most cases, consumers are the ones taking the initiative to call collection reps directly to solve the debt issue, reducing the number of calls you need to make by up to 95 percent and lowering the number of agents you need on staff. And because the TrueAccord platform automatically monitors every call and interaction and uses pre-written and pre-approved content, you’re protected.  

Control and Monitor Your Content

Code-controlled compliance is critical to ensuring that reps are sticking to script and aren’t sending improper content to a consumer. With TrueAccord, compliance is built right into the system. Messaging for emails and other interactions are pre-defined and pre-approved so you don’t have to micromanage every agent’s conversations. The system also makes it very easy to track and measure the effectiveness of your program and allows multiple approvers to oversee and continually improve the process.

Create a Far Better Consumer Experience

Once you begin dealing with consumers on their terms and personalizing the experience for them, you create a more collaborative and cooperative environment – and improve your chances that they’ll remain a customer. Change the nature of the conversation so that’s it’s less adversarial, and you’ll improve customer retention and lock in better recovery rates. There is also less incentive for a rebel rep to push the boundaries because they’ll be working with consumers, not against them.

As the debt collection industry matures, there is a huge opportunity for companies to take a positive step forward, recovering more revenue in less time and changing the nature of their debt collection business along the way.

To hear our CCO and CEO discussing the Perils of Call Centers, check out our podcast.

The Perils of Call Centers

By on February 22nd, 2018 in Compliance, Industry Insights, User Experience
TrueAccord Blog

Call centers are risky: expensive to operate, experience high turnover, training and retraining are increasing overhead, and controlling calls is close to impossible because humans are fallible. In this episode, Tim Collins and Ohad Samet compare and contrast a call center based collection operation with TrueAccord’s compliance management and scale: pre-written content, compliance firewall, and other solutions.

To download the episode’s transcript, click here.

Podcast: Creating a Positive Impact in Debt Collection Using Technology and Building Consumer-Centric Experiences

By on January 29th, 2018 in Compliance, Industry Insights, Machine Learning, Product and Technology

Our CEO, Ohad Samet, recorded a podcast with Lend Academy discussing the positive impact technology is creating in the collections space and the need for more innovation. Will discuss TrueAccord’s unique approach to debt collection using data-driven, digital communications to create deeply personalized consumer experiences.

The podcast also covers the current state of the collections industry and where it’s likely headed as regulatory pressure, consumer preferences and compliance requirements converge.  Will cover how TrueAccord is using machine learning to deliver deeply personalized and engaging experiences for consumers while achieving higher recovery rates across various debt types.

Tune in and learn:

  • The state of the debt collection industry today and where it’s headed
  • How the use of machine learning is personalizing the debt collections experience for greater conversions
  • Why code-driven compliance outperforms traditional collections practices by reducing risk to organizations
  • How understanding consumers’ preferences for easy, self-service options with flexibility empowers  more consumers to pay off their debt and get on a path to financial health 

If you’re rather read the transcript, download it here.

Obtaining Consent In Digital Debt Collection

By on December 13th, 2017 in Compliance, Industry Insights

There are few industries left that are as ripe for disruption as the collections industry is right now. In the case of collections, the old adage of “if ain’t broke don’t fix it” has guided the process for collection agencies for the better part of 40 years. Collectors knew that they could reliably collect on past due accounts by simply sending a letter or two and calling debtors repeatedly until they made contact and then convincing the debtor to pay off the account. Creditors built their customer contracts knowing that the collections model of phone and letter outreach was well established. Today, things are changing and they’re changing fast. Nearly 77% of American consumers own a smartphone. Naturally, consumer preferences on how they want to be communicated with have evolved, and at TrueAccord we’re working hard to stay on top of this trend, while maintaining the highest standard of compliance, and pushing the industry to catch up to the times.

The collections practices set out by the Fair Debt Collection Practices Act (FDCPA) were designed primarily to protect consumers from abusive contact by collectors in person, by phone, and by letter, but gave little thought to new technologies or how they would be used by consumers. It was only last year that the new proposed rules on debt collection were announced by the CFPB referencing new digital communications methods. This announcement has been creating waves for both creditors and debt collectors and now is the time to start thinking about consumer communications preferences and how to leverage new communications tools to contact your customers, even in collections.

The legal standards for how to obtain consent to contact a debtor is outlined in regulations and in basic agency law. In almost all cases consent to contact a consumer transfers to an agency. Most creditors have added to their contracts provisions allowing for consumer contact by mail and phone with some forward thinking creditors including consent language for the creditor to service the account using email or even better, digital communication channels. However, not many contracts underlying a debt that gets placed in collections anticipated a collector wanting to contact a debtor by email or text message.  With new rules coming, now is the time to anticipate this change and create broad consents that incorporate digital channels that currently exist, and that may be created. An example of a broad consent in a contract might look like:

“If we need to contact you to service your account or to collect amounts you owe, you authorize us (and our affiliates, agents, contractors and third party servicers) to contact you at any number you provide, from which you call us, or at which we believe we can reach you, at any email address you provide to us or at which we believe we can reach you, or through any social media or other digital communications platform you may use. We may contact by calling or texting. We may contact you using an automated dialer or prerecorded messages. We may contact you on a mobile, wireless or similar device, even if you are charged for it.”

This clause incorporates phone, email, text, social media, and leaves the door open for new technology like push notices.  Even though there is some uncertainty around the ability to contact consumers using all of these new channels it’s important to think ahead for when the laws catch up to consumer preferences. It’s not uncommon for a consumer to reach out to TrueAccord and ask for us to text them account details and we wouldn’t be surprised if a consumer asked us to contact them using other messaging apps like Whatsapp or Facebook Messenger. With the consent language above a collector could respond to consumer demand and use these channels to contact a consumer in the way they want to be reached. Respecting consumer preferences will open the door to more successful collections opportunities benefiting consumers, collectors, and creditors.

Press Release: Tim Collins Joins TrueAccord as Chief Compliance Officer

By on September 25th, 2017 in Company News, Compliance

TrueAccord, the debt collections technology company, has hired Tim Collins as Chief Compliance Officer. TrueAccord’s platform is powered by machine learning that uses a consumer centric, data-driven approach to help businesses recover more debt online than traditional methods. Collins joins TrueAccord from Convergent Outsourcing, where he was General Counsel and Chief Ethics & Compliance Officer since 2013.  

Collins has more than 25 years of experience in collections, having held leadership roles in legal and compliance at various financial organizations, including Hyundai Capital America where he established a comprehensive compliance system across all areas of the business. In his new role at TrueAccord, Collins will oversee the company’s legal and compliance practices to meet the requirements of the highly regulated debt collections industry.

“Having an industry veteran such as Tim join our team is a testament to the strength of our business and the major clients we represent, as well as our vision for how to transform collections for good,” said Ohad Samet, Chief Executive Officer. “The top 10 banks and lenders who use TrueAccord demand the highest level of compliance. Tim’s deep and relevant expertise will ensure we consistently meet and exceed their expectations.”

“After following TrueAccord for the past few years, I have been intrigued by their unique approach to debt collection, an industry that in my experience is ripe for disruption,” said Tim Collins, Chief Compliance Officer. “With an inspiring vision, a strong product, and an exceptional management team, TrueAccord is well-positioned for accelerated growth and investment. I look forward to contributing to the company’s continued success and to helping shape the future of the collections industry.”

Collins received his JD from the University of Detroit Mercy School of Law, and completed his Bachelor’s Degree in Business Administration at the University of Iowa’s Tippee College of Business. Collins is an adjunct professor at the University of San Diego Law School where he teaches seminars on in-house corporate practice; and he also serves on the Federal Affairs Committee for ACA International, the Association of Credit and Collections Professionals.

About True Accord

Founded in 2013, TrueAccord’s data-driven debt collection platform is disrupting the collections industry by helping businesses collect more debt online than traditional methods. The platform is powered by machine learning, with a decision engine that analyzes consumer behavior and delivers personalized consumer experiences by communicating at the right time in the right channel with payment options that meet their needs. TrueAccord is providing exceptional recovery rates for top 10 financial institutions, debt buyers, lenders and technology companies, and is empowering many of the estimated 77 million consumers who are in debt every year to get on a path to better financial health. To learn more, go to: www.trueaccord.com.

Industry Expert Says: Phone Calls Are Dying

By on September 12th, 2017 in Compliance, Industry Insights, Machine Learning

Yesterday, in an article on InsideARM.com, Tim Bauer, the President of InsideARM, described a somber state of affairs:

The TCPA and the 2015 FCC Rules interpreting the act have effectively eliminated the use of technology to efficiently call cell phones. Land line usage is dropping like an anchor. The CFPB is on the brink of announcing proposed debt collection rules that are likely to reduce the number of call attempts that can be made. Now, add this latest call blocking technology and the industry is challenged again.

This is a strong statement from a prominent thought leader in the debt collection industry. Mr. Bauer pointed out many efforts by different regulatory agencies and how they impact call centers: “anecdotal reports of right party connects down by 15-30%”, as the FCC includes debt collection calls as an “unwanted call” category in it’s “robocall” blocking initiatives.

At TrueAccord, we agree. The industry has been seeing tremendous pressure on its ability to call consumers efficiently, not only because of regulatory pressure – this pressure is driven by consumer preference, and the fact that consumers often opt to not pick up the phone, not to mention opening a letter. As strong advocates for technology in debt collection, with our CEO now part of the CFPB’s Consumer Advisory Board, we will continue to support forward thinkers such as Mr. Bauer and others who call for the use of new technologies in debt collection. It is the consumer friendly, smart, and efficient approach for the 21st century, and we strongly encourage our peers in this industry to begin adopting and utilizing these channels in preparation for the CFPB’s expected Notice of Proposed Rulemaking, expected later this year.