It’s impossible to manually manage call compliance.

Even before Regulation F, companies in recovery and collections had to contend with layers upon layers of call compliance rules, including permissible times as defined in the FDCPA, plus the TCPA and all of the state requirements.

Last year, Reg F added yet another massive set of rules for ARM companies to follow. And companies that fail to integrate Reg F compliance into all relevant business processes will get burned, argues Jesse Bird, the Chief Technology Officer at TCN.

In this Think Differently / Innovation Council interview, Bird reflects on the state of compliance post Reg F, the value of compliance-first tech, the need for just-in-time compliance, and why ARM companies need to "operationalize" Reg F rules as soon as possible.


Highlights include:

  • What it means to "operationalize" Reg F compliance to protect yourself from lawsuits
  • Why creditors outsourcing debt collection cannot assume that they are outsourcing liability;
  • Why compliance-first tech matters; and
  • How first-party audits are changing and why agencies need to show their creditor-clients that they can manage compliance better than those clients could themselves.

Check out the video (or read the full transcript of the interview below).

Full Transcript:

[Erin Kerr]: Hello everyone. And thanks for checking out this episode of Think Differently. Think Differently is a project of the iA Innovation Council, where ARM business leaders converge to solve problems. I'm here today with Jesse Bird, the Chief Technology Officer at TCN. And we're going to talk a little bit about how TCN thinks differently about everyone's favorite topic, Regulation F. Jesse, Thanks for joining me today.

[Jesse Bird]: Oh, you're welcome. I doubt it's everyone's favorite topic.

On Regulation F and New Requirements

[EK]: Yes, there was a bit of sarcasm there. I hope everyone can pick up on that. So let's get started. First of all, what is covered by Regulation F?

[JB]: So Regulation F, it's an extension of the FDCPA. The FDCPA has sort of been the same since its inception in 1977. So, this is really like the first major rules that surround it. And what it really covers is, it starts becoming a lot more explicit about the cans and cannots in debt collection specifically.

So, you have things like the 7-in-7 rule, call provisions about preferences, model validation notices, itemization dates  all sorts of things that are new in terms of how you have to operate your business as a debt collector. So really what it means for the ARM industry is that there are new practices or new procedures or new policies that you have to follow in no order to stay compliant. And if you don't, you may find yourself on the wrong side of an FDCPA violation.

How Reg F Protects Consumers

[EK]: Yes, nobody wants that. My next question about Reg F is: how is it going to protect consumers?

[JB]: Yeah, well, that's really what the FDCPA is all about. Regulation F is an extension and it's going to protect consumers the same way that FDCPA was designed to protect consumers. And that is to try to put some guide rails and guardrails around things that you can and cannot do.

So, specifically it gives consumers rights about defining how, and when they can be contacted, it provides guardrails and rules for debt collectors to avoid excessive calling to say, okay, well, you're not allowed to call outside of certain hours. You're not allowed to call after you've been contacted. There're a lot of rules around this. It prohibits things, especially around text messaging. In 1977, there were no text messages. And so the [original] regulations largely ignore text messages. It [the original FDCPA] largely ignored emails. So, it's providing some rules and guidelines for the proper way to interact with consumers, for text messages and emails, including provisions for making opt out [available to] consumers. So a lot of the rules and regulations that are in regulation F and are in the FDCPA generally really have to do with trying to make sure that every firm is a good actor. And, ideally everyone would just be a good actor, but in reality, oftentimes people push the boundaries of what may or may not be appropriate. So the government felt compelled to tell us what makes a good actor.

What It Means to "Operationalize" Reg F

[EK]: Sure. That makes sense. I appreciate you sharing that insight there. So, this is all about thinking differently. What challenges do you generally see with your clients or the ARM industry generally when implementing regulation [requirements] that require thinking differently?

[JB]: Yeah, well, I mean, there's a lot of new rules. There's a lot of new rules and I'm not even sure that you need to think differently, but you have to be thinking really, really carefully because the rules and the parameters are like defining who and where you can contact someone, defining how often you can call them defining what is appropriate hours to call someone defining, you know, which locations are off limits. Who can you call relatives or not call relatives for making, defining what, what in what entails a harassing or an unwanted text.

You need to define all these things. And Regulation F has done that for you, but then you need to operationalize it. So that's where the real challenge for customers is like, I have all of these rules. How do I make this part of my day to day? How do I make this like living and breathing and drinking and just existing in the course of my business?

Because if it's not ingrained in the lifeblood of your business, if it's not ingrained in the policies and procedures in your every day for your managers and your agents and everybody, it's not gonna happen. And if it doesn't happen, then you're gonna be in trouble. So, that's really the biggest challenge and people really need to stop, and if they need to think differently about it at all, they really need to relearn everything they know about the FDCPA, because Regulation F almost touched all of it.

[EK]: Right. So it's like a total relearn of what's sort of been standard practice for the last 40 years.

[JB]: Yes. Almost. You really, really, really need to be careful that you have policies, procedures and controls around all of that, because that's gonna be the most protection that you can get.

The End of Manual Compliance

[EK]: Right. And I'm sure that you guys,in the space that you occupy within the industry, are inundated with this information from your clients on a day-to-day basis. So, what tips do you have for collections agencies to stay compliant and navigate the changing regulations in the industry? You mentioned policies and procedures, anything more specific?

[JB]: Well, you need policies, procedures, and controls. It needs to be part of your business. You need to have software that does this stuff. You can't do it automatically. I mean, I mean, you can't do it manually. This needs to be part of your controls and your policies and your procedures, and it needs to be automatic.

You can't rely on the behavior of your agent or your manager or anyone for this to happen because the rules are really too complex. I would say that the closer you can get your compliance to the time of call, the more likely you are to be compliant when you make that call. Ideally, you do your compliance checks at the same time as you're executing your call. That's the ideal, but whatever ends up working for you.

And then I would say you also need to make sure that everyone in your business really understands what the rules are and what the changes are so that they can have help. Policies and procedures and controls are good and great if you've written them down, but they're really terrible if nobody knows what they are. So you also need to make sure that everyone knows what they are. Policies and procedures are only as good as the controls that help you monitor them. So, you need to have reporting and auditing and all of these things in place so that you can look back and present to your customers that something is happening.

One of the things that people overlook about Regulation F a little is that if you're a third-party debt collector collecting on behalf of a first-party, the first-party actually has a bit more liability than they used to have. They have some, they need to make sure that they are obeying the rules as you're acting on their behalf. And so you need to be able to say, okay, can I audit my policies? And can I audit my controls? And can I show my customers that we are doing a good job for them? And that's just going to help your business.

How First-Party Audits Are Changing

[EK]: Yeah, absolutely. I imagine that a lot of the first-party audits that are upcoming for some of the third-party debt collectors are going to lean heavily on what's contained in Regulation F, since now those first-party folks have sort of more skin in the game than they previously did. So it's definitely going to be interesting for sure.

[JB]: Yeah. I mean, you're gonna have to reposition yourself. I mean, sometimes in the past people would say, I am sort of outsourcing my liability because I'm outsourcing my collections and now you're really not doing that.

So you need to present yourself. If you're a third party debt collector, you need to present yourself as: I am doing this better than you can possibly do it. And I'm going to have to show you how I am obeying all the rules and regulations. And I'm going to take this off of your shoulders. I mean, it's a two-edged sword there, but if approached right, it can be a real value add to these first-party companies, but you need to show them what you're doing and that you can remove this concern from them.

On the Value of Compliance-First Tech

[EK]: Yes, absolutely. And that's a great point. It’s no longer outsourcing of the liability. So, that's something to keep in mind as we move forward under the new regulation.

Anything else that you'd like to add that's related to Reg F or not related to Reg F?

[JB]: Yes, well, I'm the CTO of a technology company, and I strongly believe that software and automation helps make things better. TCN as a company has leaned heavily into heavily regulated industries and people that need a compliance-first approach.

And I think, when you're out there looking at software, that's what you have to do. You have to find software that takes a compliance-first approach to these sorts of things. And, you know, we've always done that. I don't want to be overly promotional, but I think that you should really look at software like TCN that provides just-in-time compliance. I think that's really, one of the only ways to really make sure that you are doing a good job in what you're trying to do and what you're trying to accomplish in terms of your compliance and policies and procedures and controls.

[EK]: Yes. And I think that's great advice, generally speaking, especially with what's been rolled out under Reg F, things that even TCN doesn't necessarily touch.

When you're searching for a new software company, folks in the collections industry are having to do that more and more frequently because the work, like you said, can't be done manually anymore. So definitely good advice for folks to take away from this video, for sure.

I just have one final question for you. One from our Think Differently stockpile. If you didn't have a search engine, how would you figure something out that you didn't know? In other words, if you couldn't Google it, how would you figure it out

[JB]: If I didn't have a search engine? Well, I think that that's where you have to take a step back and think deeply about things, right? So I'm in a unique position where some of the things that I'm figuring out aren't really searchable.

When you're trying to innovate, even if it's just iteratively over topics, you sometimes don't have the opportunity to see how someone else has done it.

So you need to think and try to define the problem clearly - to put up some guardrails around what the problem really means. What it really touches. And once you figured out what this problem really means, then you start writing out some questions about the problem. And then you probably need to go get some books if you don't have a solution. And then you probably need to start calling people who are experts in similar situations and start having some brainstorm sessions.

But I think that the biggest key to understanding a problem is defining the problem, because if you don't have the problem defined, you can't possibly come up with a solution that's in a reasonable scope.

I find that when people don't understand something, that's often where they're going off cases. They're thinking, well, in order to understand this one thing, I need to understand everything around it. But that's not necessarily true. So if you say, I want to understand X well, really narrow in on X and what it means to you, and how it touches and how it impacts anything that you're looking at. Try to narrow the scope so that you don't have to learn the universe in order to walk up some stairs.

[EK]: Yeah. We like to say on the Innovation Council, and at iA generally, you don't have to boil the ocean. So that's great advice, Jesse. And thank you so much for spending some time with me today. We appreciate TCN and thanks everyone for tuning in. Have a great day.

[JB]: Thank you.


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iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders at the forefront of analytics, communications, payments, and compliance technology. Group members meet in person (and lately, virtually) several times each year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking. 

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