Survey Says?! What First Party Collectors are Saying

Editor’s Note:

First party collection activity is becoming a larger segment of ARM industry business every year. Virtually every type of business does some amount of first party collections, whether handled internally or outsourced.  This week insideARM is featuring two excellent articles about first party collections written by Linda Straub Jones from Lexis Nexis Risk Solutions.

Reminder: The insideARM 3^rd Annual First Party Summit is being held June 5-7 in Frisco, TX. This is the ARM industry’s only conference dedicated to first party activity – from customer care, customer service, to collections. If you want to learn more on this topic register here now.

I recently participated in a webinar for the First Party Collections industry entitled “First Party Collections, How to Survive the Regulations”.  We had a great turnout of over 500 participants.  We asked 3 polling questions relating to the participant’s companies, and their knowledge of certain regulatory information.  The results are insightful, and some surprising. 

Question #1: Do you regularly go into the CFPB’s complaint portal and download the complaints related to your company?

Results:
305 votes
40.7% = Yes
59.3% = No

This one surprised me a bit.  The CFPB’s consumer complaint portal contains a wealth of free information, available for creditors to use to gain insight into their customers.  While we can all agree that the CFPB’s consumer complaint portal is not 100% accurate and could use some updates, the raw data and the information you can obtain from that data is critical for creditors and collection agencies alike to use. 

If you haven’t been in the portal before, here’s a quick tutorial:

• Go to consumerfinance.gov
• At the top, click on “Data & Research”
• Click on the icon for “Download Options and API” in the middle of the page
• Choose the product/services option(s) you would like in the report
• Choose your format (on the right)
• Click download
• Be patient – it’s a big file and may take a little time to download

Once you have that data, you can slice and dice it any way you want.  I suggest downloading into a ‘csv’ (excel) format.  Once you have that, you can sort by the various columns to narrow down to your company name, and then sort by the type of consumer complaint. 

This is where you can start looking for trends, issues, and potential CFPB concerns.  The CFPB has stated on many occasions that one of the main factors in deciding what companies to audit is their consumer complaint portal.  They are looking for trends and issues here as well.  Get ahead of the curve by discovering your trends, and if necessary, retraining employees, updating your policies and procedures, or taking other actions to lower your complaints. 

Question #2: Were you aware that the CFPB will be issuing collection rules specific to First Party Collections in the new future?

323 Votes
70.9% = Yes
29.1% = No

I was happy to see that the majority of first party collections personnel were aware of the upcoming rules, but about 30% of them were still unaware. 

Don’t be caught off guard when it comes to the CFPB’s collection rules relating to first party collections.  While we have not yet been given a preview of first party rules, we can assume that many of them will be the same as, or similar to, the third party rule suggestions that were circulated by the CFPB in July 2016.   If you haven’t read through that outline yet, I urge you to click here and take some time to review them.  

One thing to specifically note is the proposed debt substantiation rule for third party agencies.  This advises that debt collection agencies have certain information from first parties before they can start collection activities on an account.  Additionally, there is a suggestion that if a creditor withdraws and subsequently places the debt with another agency, information pertaining to the debt while it was with the first agency must be transferred back to the creditor, and then the creditor must forward that information to the new agency.  This will create a new recordkeeping and paper-trail requirement that you may not have in place today.

In addition to the substantiation and data transfer rules, there are also suggested rules relating to your letter content, credit reporting litigation disclosure, contact frenquency, calling restrictions and debt sales restrictions. 

Question #3: Do you have data analytics integrated into your compliance management system?

225 Votes
40.90% = Yes
59.1% = No

Our final question related to the use of data analytics as a part of your compliance management system.  Applause to the nearly 41% of the attendees who are currently using data analytics. The other nearly 60% should strongly consider doing the same.  The CFPB is by their own definition a data driven organization, and they look for data when auditing and/or examining a company.  But aside from pleasing the CFPB, there is much to be learned from analyzing your own data, as well as adding outside data to the mix.

Internal data analysis can help to quickly identify cases where calls are being made too frequently, not frequently enough, or being made to accounts where there could be a compliance issue (for example if the consumer has filed bankruptcy). 

The addition of external data can also help with your compliance analytics.  By adding external data, you can quickly identify situations where your own data may be missing the boat. Take for example bankruptcy. If you are relying solely on your own identification of bankrupt accounts, you may miss situations where the bankruptcy notice was sent to the original creditor, or sent to your payment processing center, and that notice hasn’t made its way to you yet. There are many many more ways to use your own internal data and external data to help with your compliance management. The question is, are you taking advantage of data analytics?

This is a great opportunity to take a look at your own compliance management and make sure you are doing all you can to protect consumers and avoid potentially hazardous situations.

If you are interested in listening to the webinar mentioned above, you can listen here.