BY SCOTT KENDRICK
Data from 2016 shows the average U.S. household carrying debt of more than $132,000, and with more than $16,000 of credit card debt on average. Student loan debt is also exceedingly high. All of these debts unfortunately mean some borrowers have difficulty keeping up, and that’s where debt collection centers must be involved.
This consistent rise in debt has driven a corresponding increase in debt collection calls, which places pressure on centers to maintain compliance. There are state regulations to manage as well as federal licensing laws under the Fair Credit Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA).
There are thousands of Fair Debt Collection Practices Act (FDCPA) lawsuits filed every year, and consistent year-over-year increases in Fair Credit Reporting Act (FCRA) violations. FDCPA violations are enforced by the Consumer Financial Protection Bureau (CFPB), a national consumer protection agency, and are levied against debt collectors that use abusive, unfair or deceptive practices in the course of business. FCRA offers consumers protection against the misuse or misreporting of credit information, which can cause a lowered credit score, higher interest rates, and denials. Common FCRA violations can include instances of failing to report debts that were discharged in bankruptcy, reporting an account as active when it was closed by the consumer, and reporting old debts as new. Other types of violations are those laid out by the TCPA, which is governed by the FCC and covers the approved use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages, and fax machines.
Debt collection is highly regulated, and there’s increasingly a focus on fair consumer treatment. For collection agencies to succeed, they must find a balance as they stick to the compliance rules and treat consumers equitably and also use best practices to legally collect the maximum amount of consumer debt. Doing this well requires a firm with a high-performing group of agents and a keen understanding about who to target with calls and when are the ideal times to reach various groups.
Staying in Compliance
Speech analytics allows collections centers to audit 100% of the agent-customer interactions, so they can quickly spot non-compliance. This contrasts sharply to the traditional approach of performing compliance monitoring through random call sampling. Random chance means a compliance audit could have picked 20 non-compliant calls out of thousands of properly-conducted calls, or found the converse situation. In either case, the sample size is typically so small that it cannot be trusted.