Compliance Tips for Outbound Debt Collection · PDF fileCompliance Tips for Outbound Debt Collection Communications ... requirements for telemarketing and advertising solicitations

IntroductionThe largest challenge to successful collection efforts today is outbound communications compliance. There are many rules to follow, and requirements are continually evolving. Collection organizations need a solution — for predictive dialing, outbound interactive voice response (IVR), and text messaging in particular — that enables them to meet these legal requirements and to dynamically create rules to manage their outbound voice calls to landline and mobile phones, as well as for sending text messages to customers.

This white paper conveys key lessons in collection compliance for outbound communications, including:

• an overview of the compliance landscape in the United States, namely the Fair Debt Collection Practices Act (FDCPA), the Telephone Consumer Protection Act (TCPA), and the regulatory authority of the Consumer Financial Protection Bureau (CFPB);

• legal requirements and restrictions for collection outreach; and

• best practices in obtaining consent for debt collection communications.

Compliance LandscapeCollection organizations and agencies are under intense scrutiny concerning the manner in which they contact consumers, and compliance risks are at an all-time high. There are many different statutes and regulations enforced at the federal and state levels. Additionally, collection organizations often have their own internal governance rules.

Compliance efforts can be complex and time-consuming. At the least, collection agencies should have a communications strategy in place to control the frequency of outbound communications, manage mobile opt-ins, and ensure proper disclosures.

Non-compliance can result in huge penalties, depending on the statute or regulation that may have been violated. Litigation is expensive and potential damages are often in millions, particularly where class actions are concerned. Not only can these cases result in negative publicity and hamper communications with customers, but they can also negatively impact long-term customer relationships.

Compliance Tips for Outbound Debt Collection CommunicationsMeeting FDCPA, CFPB and TCPA Requirements

TABLE OF CONTENTS

Introduction ..........................................1

Compliance Landscape ..................1

Best Practices .....................................3

Genesys Solutions............................5

Conclusion ............................................9

For More Information ......................9

Contributor ...........................................9

BUSINESS WHITE PAPER


Compliance Tips for Outbound Debt Collection Communications / page 2

Debt collection is one of the most regulated industries, with a myriad of rules and regulations governing who, how, and when debtors can be contacted. In the United States, the “Big 3” compliance rules and regulations impacting outbound debt collection communications are the FDCPA, TCPA, and rules implemented by the CFPB.

The FDCPA: The FDCPA statute was enacted in 1977 and is enforced by the Federal Trade Commission (FTC). It governs practically all aspects of third-party debt collection, including how and when collection agencies and debt buyers can communicate with debtors. The FDCPA restricts the form, timing and substance of consumer debt collection communications, with significant focus on prohibiting deceptive, harassing, or abusive conduct. The statutory fine is $1,000 per action.

The TCPA: The TCPA statute was enacted in 1991 and is enforced by the Federal Communications Commission (FCC). It regulates and restricts the use of automated technology to initiate outbound telephone calls. Different rules apply depending on whether the telephone number called is residential or mobile. For residential, the TCPA regulates calls that are initiated using an artificial voice or prerecorded voice message. For mobile, the TCPA regulates calls (including text messages) that are initiated using an artificial voice or prerecorded voice message or made by an “automatic telephone dialing system” (i.e., autodialer). The TCPA does not restrict collections calls made to residential phones using an autodialer or calls made to mobile phones that are manually dialed. There are also Do Not Call provisions and opt-in requirements for telemarketing and advertising solicitations under the TCPA that are not applicable to debt collection communications. Over the past several years, there has been a surge in TCPA class action suits. In California alone, roughly five or more class action lawsuits are filed per week in federal court. Statutory damages for TCPA violations are $500 to $1,500 per unlawful phone call or text message, often resulting in lawsuits valued at (and settled in) the millions of dollars.

Of particular concern for the debt collection industry is obtaining prior express consent to call debtors on their mobile phones for debt collection purposes. As a best practice and to maintain the chain of custody, creditors should obtain consent in writing when collecting customer information and when establishing new accounts. Creditors should specifically request mobile numbers from customers and provide a disclosure that the consumer will be contacted at that telephone number in connection with the servicing and billing of the account by the original creditor, its agents, and assignees.

The CFPB: The CFPB is a powerful new regulatory agency created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). The CFPB shares collection oversight with the FTC; however, unlike the FTC, the CFPB has rulemaking authority under the Dodd-Frank Act. This regulatory authority applies to a host of financial entities in the marketplace, including both original creditors as well as third-party collectors (unlike the FDCPA which does not apply to original creditors). It has more than 1,300 employees, more than half of which are in supervision and enforcement. The CFPB is currently working on the implementation of new rules that would impact the debt collection industry. This new set of rules is expected to further restrict how and when debtors may be contacted.

In its short existence, the CFPB opened its complaint database to debt collection complaints and issued correspondence templates to help consumers respond to debt collectors. It identified Unfair, Deceptive, and Abusive Acts or Practices (UDAAPs) that debt collectors should avoid.



It also issued a bulletin providing guidance on how to comply with the FDCPA and the Dodd-Frank Act, specifically with respect to representations made to consumers regarding the impact that debt payments will have on credit reports, credit scores, and creditworthiness. CFPB violations range from $5,000 per day, up to $25,000 per day for a reckless violation, and up to $1 million per day for any knowing violation.

Best PracticesMaintaining compliance is almost always less costly than fines levied for non-compliance. Every organization must determine a comfortable balance of risk tolerance, time and effort, and the costs of compliance.

While no two organizations are the same, there are best practices that virtually every collection organization should consider. These best practices can help you:

• reduce errors to mitigate compliance risk and costs;

• maintain compliance and enhance the customer experience; and

• improve collection rates and efficiency.

You should obtain proper legal guidance and advice to develop your own compliant contact strategies. These strategies should not only include steps to comply with all applicable legal requirements, but should also include the creation of good recordkeeping policies and a rapid-response complaint system for when problems arise.

In determining what kind of consent is necessary to make automated calls and texts to mobile phones, you must first understand what “consent” means. The FCC has stated, for purposes of the TCPA, that providing a cell phone number to a creditor (e.g., as part of a credit application) reasonably evidences prior express consent by the debtor to be contacted at that number regarding the debt. In other words, “persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.”

Clear disclosures to consumers on the purpose and nature of calls that will be made and by whom as a result of voluntarily providing their telephone numbers, though not legally required for debt collection calls, would provide your business with greater protection against complaints and lawsuits and would help manage consumer expectations. Consumer-friendly disclosures tend to withstand judicial scrutiny and help businesses defeat lawsuits when they arise, especially when consumers are required to affirmatively acknowledge and agree to the disclosures, such as by manually checking a box, initialing a clause, or signing a document.



It is important to remember that consent once given can be revoked at any time. Judge Easterbrook of the Seventh Circuit Court of Appeals has stated that “there can’t be any long-term consent to call a given Cell Number, because no one—not Customer, not Bystander, not even the phone company—has a property right in a phone number.” Though the law is not entirely consistent in this area, the recent trend with respect to consent under the TCPA is that consent can be revoked orally or in writing. In contrast, consent not to be contacted for debt collection purposes under the FDCPA must be in writing. Verbal revocation is not sufficient under the FDCPA.

Best practices include:

• Attempt to obtain consent at the outset of the consumer relationship, or during if necessary, but always before making automated collection calls to mobile devices

• Obtain consent from consumers to make automated telephone calls in writing if possible. Alternately, agents can ask customers for permission to contact on their mobile device

• Use clear disclosures: name the specific creditor, consider naming third-party debt collectors or other agents, consider naming assignees/assigns that may collect the debt, disclose the purpose of the calls, and consider disclosing to consumers that they will receive calls initiated with an artificial voice or prerecorded voice message and/or calls/texts by an autodialer

• Make clear that telephone calls will be made to telephone numbers voluntarily provided and specify text messages if text messages will also be sent

• Require consumers to affirmatively acknowledge and agree to any disclosures

• Be aware of number portability, particularly from residential to mobile, and engage a vendor to identify mobile telephone numbers prior to making automated calls

• Immediately cease contact to a mobile number when a consumer either cancels their mobile phone service or revokes their permission to be called

• Leverage speech analytics to help drive agent compliance

Methods to obtain consumer consent under the TCPA include:

• Traditional paper form: purchase agreements, sales slips, credit and loan applications

• Website: online purchase or sale; login or sign-in process

• Telephone: customer service calls; phone keypress, IVR, voice recording

• Text messages: user initiated and double opt-in consent recommended

• Email: replies to email; redirect consumers to company-controlled website

• Mail: postcards; account statements



In regard to the CFPB consumer complaint database, best practices include:

• Register to know what information the CFPB is receiving about the company

• Respond to complaints within 60 days, as required, or earlier, if possible

• Identify patterns in the complaint data to identify potential loopholes in the company’s compliance strategy

• Address compliance issues quickly and implement market actions, as appropriate, to help moot private actions and minimize penalties arising from a regulatory investigation or enforcement action

Speech analytics is quickly gaining momentum as a tool that you can use to further reduce compliance risk. Best practices for leveraging speech analytics in collections include:

• Evaluate and measure agent compliance systematically

• Analyze call recordings to identify key words and phrases that must be disclosed to a debtor, such as the mini-Miranda, that the call is being recorded, and the name of the company they are calling from

• Use insights from speech analytics to focus training on agents who are not performing to standard and thus help to avoid future compliance issues

Genesys SolutionsSuccessful contact centers deploy solutions that positively impact operations and drive profitability. Genesys Proactive Customer Communications solutions enable your collection organization to send outbound communications over a variety of channels, including outbound IVR, dialer, email, and text messaging. Delivered across cloud, on-premises, and hybrid deployments, Genesys outbound solutions are proven to maximize the return-on-investment of debt collection efforts by increasing contact rates, improving agent productivity, reducing costs, and providing a better customer experience.

To meet governance requirements and maintain compliance your collection organization must also deploy solutions that minimize risk, increase control, and simplify compliance efforts. For example, the Genesys Cloud Dialer allows you to seamlessly identify landlines versus mobile devices, which in turn enables you to create different treatment strategies that allow various techniques, such as predictive dials to landlines and manual mode for mobile devices.



Genesys includes a robust suite of self-service compliance controls as part of its cloud-based Proactive Customer Communications solutions that enable you to create custom outbound campaigns. These industry-leading tools simplify and enable compliant outbound contact strategies throughout the compliance lifecycle:

• Avoid contacting ineligible numbers through automated campaign filters, suppression lists, mobile identification, and integration with mobile opt-in databases.

• Control contact frequency with self-service rules builder to limit contact frequency across channels for a specified timeframe as well as set “do not contact” dates and geographic rules.

• Track consumer mobility and phone portability to ensure proper outreach during allowed hours only with safe contact windows, time zone detection tools, and regional dialing rules.

• Manage customer opt-in database by growing, storing, and integrating your mobile opt-in list into outbound campaigns, including the continued processing of opt-in and opt-out requests, removal of deactivated numbers, and offering an automated opt-out mechanism.

• Ensure agents adhere to requirements through call recordings, monitor-coach-barge control, and speech analytics.

COMPLIANCE

Genesys Provides a Suite of Compliance Controls That Enables Clients to Create Custom Outbound Campaigns

Simplifying Compliance, Increasing Results

One customer who chose the Genesys Cloud Dialer with outbound IVR, predictive dialing, and preview dialing for collections calls, was able to simplify internal compliance efforts and reduce compliance risks through the self-service compliance controls provided in the platform. These features included: restricting contact attempts to state-specific safe dialing windows; using preview dialing mode to call mobile numbers, and limiting contact attempts to five calls and one voice message per day. In addition to simplifying compliance efforts, this helped to decrease agent headcount by 20% while increasing the amount of debt recovered per agent by over 100%.



You can further increase control over outbound communications compliance with the Genesys dynamic rules builder, which delivers maximum flexibility and responsiveness to changing requirements, and lets you validate that your rules are working properly through built-in auditing and reporting. The Genesys rules builder allows you to customize outbound campaigns and meet continually changing requirements by dynamically updating or creating new rules whenever needed. For example, if a new ruling comes into play preventing calls in Massachusetts after 4 p.m., you could easily create that rule and quickly put it into the dialer.

Easily Create Your Own Rules With the Genesys Rules Builder

Real-time compliance features cannot be understated. The tools allow supervisors and managers who listen to call recordings to monitor and coach in real time so they can help agents stay compliant, including ensuring they are stating the mini-Miranda. Genesys also offers an integrated speech analytics solution that enables your business to efficiently look at these recordings and identify places where you may be out of compliance.



Genesys also brings expertise to help you maximize the size of your opt-in database. We work with you to incorporate requests for consent into existing customer communications such as credit and loan applications, account statements, and agent and IVR scripts. We also have deep experience creating new outbound campaigns designed specifically to obtain customer consent and grow the opt-in database.

Genesys Brings Expertise to Maximize Opt-ins Using Both Existing Communications and New Opt-in ProgramsA Genesys banking customer wanted to build their mobile opt-in database by launching large numbers of outbound IVR calls to landlines. Essentially, they asked their customers if they would like to have another phone number on file and whether the bank can send text messages and mobile contacts to those devices. Over 50% of verified customers provided mobile consent, with 10% providing an additional mobile number the bank did not already have on file.



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ConclusionContacting debtors does not have to be a compliance nightmare. Becoming familiar with the various regulations, laws, and government agencies is a step in the right direction. There is clarity, if not comfort, in being aware of the legal requirements and limitations placed on collection agencies, debt buyers, and collection attorneys. Non-compliance is expensive – not just from a financial perspective but because it can have a direct impact on your organization’s reputation and customer loyalty.

Maintaining compliance is almost always less costly than fines levied for non-compliance. Learn from industry best practices and:

1) Be transparent with consumers.

2) Make sure you obtain permission to contact debtors on their mobile phones.

3) Partner smartly with third-party vendors. They can help with compliance and best practices that will support and augment your operations.

Ultimately, every organization must determine a comfortable balance of risk tolerance and the costs of compliance. We hope this paper has provided useful information in guiding your company’s compliance objectives.

For More InformationFor more information, visit http://www.genesys.com/solutions/proactive-customer-communications/payments-and-collections

ContributorLoeb & Loeb LLP is a multi-service law firm with seven offices throughout the United States and Asia. The firm’s dedicated Consumer Class Action and Regulatory Defense Department comprises more than 20 experienced litigators and trial attorneys who defend government enforcement actions, government investigations and private class action lawsuits that allege violations of consumer protection and unfair competition laws. We handle a variety of consumer-related litigation, with a focus on defending economic product defect claims, consumer privacy claims, marketing and advertising misrepresentation claims, and consumer finance-related claims. Visit us at www.loeb.com.

Christine M. Reilly is a partner in Loeb & Loeb’s Consumer Class Action and Regulatory Defense Department in Los Angeles. She represents clients in major litigation in a wide variety of areas, including consumer protection class actions, as well as in investigations and proceedings initiated by the Federal Trade Commission, Federal Communications Commission, and other federal and state government and regulatory agencies. Ms. Reilly regularly counsels clients on debt collection, advertising and media, and compliance issues under various federal and state consumer laws. She speaks and publishes widely on the TCPA and hosts the TCPA Defense Forum on LinkedIn.

Ms. Reilly can be reached at [email protected] or (310) 282-2361.

About Genesys

Genesys is the market leader in multi-channel customer experience (CX) and contact center solutions in the cloud and on-premises. We help brands of all sizes make great CX great business. The Genesys Customer Experience Platform powers optimal customer journeys consistently across all touch points, channels and interactions to turn customers into brand advocates. Genesys is trusted by over 4,500 customers in 80 countries to orchestrate more than 100 million digital and voice interactions each day.

Visit us at www.genesys.com or call us at +1.888.436.3797

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Compliance Tips for Outbound Debt Collection · PDF fileCompliance Tips for Outbound Debt Collection Communications ... requirements for telemarketing and advertising solicitations