WHY ISN'T YOUR COLLECTION SOFTWARE READY FOR THE CFPB'S NEW RULE? OURS IS!

We should not keep calling cell phones without prior consent. Ten years after we realized this, most collection platforms cannot identify a cell phone in real-time or update phone numbers when they are ported. Top-tier financial clients first asked their agencies to count calls and limit contact frequency about 10 years ago, and the CFPB has finally discussed this along with inconvenient times to call, text messaging and several other areas.

Hardly anything in the proposed rule-making should come as a surprise, but once again we are acting like deer caught in headlights. What do we now do? Do we think and talk about it for several years like we did with compliance requirements? Having been warned for a very long time, why were we not ready for this? Even better, why did we not implement compliant digital communication and customer service solutions as the world changed? There is only one logical answer. Technology companies were sleeping at the wheel. Although development and software maintenance resources should have anticipated a need for the required solutions, technology companies are making a big deal of the CFPB's rule-making, scrambling to close wide gaps in their platforms, expecting their clients to wait patiently as they promise to update aging software. This is wrong, we do not have too much time, and it is time for someone to speak up....

This article is not to be construed as legal advice!

Ranjan Dharmaraja, CEO, Quantrax Corporation

Innovation gives technology companies legitimate reasons to be wildly successful. Changes in legislation can give them opportunities to profit from leveraging the urgent need for technology changes. When Y2K changes were needed, we offered them as a part of our software maintenance program. When we needed to identify cell phones, we created a real-time cell phone scrub and did not charge for it. We now anticipate some of the most sweeping changes in the collection industry with a need for many new information technology initiatives, but with the warnings we have had, we have no intention of charging our clients for any of the changes. We believe that we are ready for the challenges, we know how we can handle the new requirements, and we have made an unselfish decision to share some of our technology and knowledge with the rest of the industry.

Why would a technology company do this? in 1991, we created an AI-based platform for the ARM industry. We predicted the need for a new generation of collection software after the industry's initial efforts at automation. Over 25 years later, AI is emerging as a "must have" as opposed to a "nice to have". Anxious not to be left behind, technology companies are endorsing the virtues of AI and machine thinking, sometimes too hastily. AI is not a modification to aging technology. It is a different architecture of software that almost requires a complete rewrite in the case of a complete collection platform. We were sufficiently concerned to discuss these developments in an article "HOW DID COLLECTION TECH COMPANIES CREATE AI SOLUTIONS OVERNIGHT? THIS IS A REAL HOAX."

Having served this industry for almost 30 years, without hype or large advertising budgets, we can objectively say that our industry faces a critical period of change. Even though we may be able to justify not using modern digital communication strategies in our operations, we should have been much further ahead in understanding and having these features built and integrated with our collection platforms. Some of these changes will require major redesign. Bolting on 3rd party products will offer limited results without completely meeting tomorrow's compliance requirements. Quantrax invested in most of the required technology during the last 10 years. Larger companies and some smaller companies have successfully used modern digital communication strategies with spectacular results. At a recent user meeting, we asked our client base about the use of text messaging. Most companies said did not use text messaging or had very limited use for it. One company shocked the audience by saying they were sending out tens of thousands of text messages a day! We believe that technology companies have a responsibility to the industry to provide high standards of guidance and leadership. A stronger collection industry will make us a stronger company. We know that many of you will not consider changing software platforms. As the only company already claiming to have systemic, integrated solutions to meet the CFPB's new rule-making, we have made the decision to share our technology with the intention of helping others, even though it may help our competition or we may never make a sale. This paper will serve as the launching site for this unusual decision. We will share our proprietary thinking and knowledge of some of the key areas of the technology that touches the new rule. We are open to providing more information to individual companies.

SUMMARIZING THE TECHNOLOGY REQUIREMENTS RELATED TO THE CBPB'S RULE-MAKING

The new rule provides a framework for some of the most significant changes proposed to Regulation F which implements the Fair Debt Collection Practices Act (FDCPA). In the CFPB's words, "The Bureau’s final rule addresses, among other things, communications in connection with debt collection and prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection."

While it promises to address areas that will help companies to greatly expand their communication options with consumers, it also requires some significant and potentially expensive changes to its technology platforms.

Since the ACA, law firms and collection industry experts have presented the details several times, we will not review the new rule.

TEXT MESSAGING

In the Sound of Music, the famous song "Do-Re-Mi" that Maria taught the children to sing, began with "Let's start at the very beginning, a very good place to start". With regard to any discussion on the CFPB's new rule, text messaging is a very good place to start. Arguably, texting is not an option for collection companies. It is the way every consumer will soon wish to be contacted and we need to take that very seriously.

Quantrax recognized the potential and future for text messaging and initially created a compliant text messaging solution seven years ago. Why do we say it was compliant? Because the conversation was always initiated by the consumer and standard templates allowed 2-way texting between consumers and agents. Although you could, you did not have to use outbound texting, although some companies opted to do this for payment reminders and receipts, with consumer consent.

Fast forward to the end of 2020. We have seen text messaging very successfully deployed in many industries. Since they have successfully utilized text messaging (E.g. banks, credit card companies and airlines), it may be argued that we hid behind the fear of lawsuits, failing to make compliant text messaging a part of our operations, as every other industry had done. In an industry that is centered around contacting its consumers, this had to be a near fatal error. The CFPB's new rule targets text messaging, and it's time for change.

As we prepare to use text messaging in our contact strategy, we must read between the lines and anticipate correctly if we are to avoid problems in the future. We decided that our text messaging feature had to do the following and have created our solution around these requirements.

• Since consumers can have multiple accounts that may or may not be linked in the system (some accounts may be in different companies or databases), consent and opt out requests must be tracked at the phone number level.
• Consent could be implied or transferred from a client (creditor) to an agency. If this is the case, the very first text message you send should indicate you have consent and give the consumer the ability to opt out.
• If there is no implied or transferred consent, based on the compliance requirements, we must be able to ask the consumer for consent to use text messaging. If they do not opt in, we must be able to assume they have opted out. We must have the ability to stop future text messages under these conditions, until the consumer chooses to opt in.
• We must have multiple methods for a consumer to opt in. For example, during a conversation, via a web site, using a pin number or an opt-in word on a letter.
• Text messages must be intelligently constructed, with short URL's and options to go to a chatbot or payment portal.
• Text messaging is a two-way communication channel. The consumer must be able to reply to messages or contact an agency via text, and all incoming texts must must be matched and added to the relevant account and an agent notified in real-time.
• The software must support processes to handle incoming text messages from numbers without consent, and numbers not on your database. Texts must be "worked" by agents or customer service until the messages can be positively matched to an account, at which point the number must be opted in and the messages added to the account.
• The collection platform must be tightly integrated with the text messaging provider. With consent, payment receipts, payment reminders, credit card and check payment "notices" can be sent via text.
• The software must be able to recognize the consumer's preferred language of communication and send messages and recognize opt-out requests in multiple languages (e.g. Stop or Arrêtez).
• Text messages must be tracked like like letters and phone calls. We must be prepared to count and limit frequency in the future. For call counts, we must be able to consider text messages as attempts or contacts, at the company, state or city level.
• We must be able to store and display entire text messages (both incoming and outgoing) at the account level.

Your text messaging provider plays a critical role and must be very familiar with the collection industry. Mobile carriers like AT&T, Verizon and T-Mobile do not want spam to clog their networks, and dictate and control what you can and cannot do with text messages. Should you use long codes? Short codes? What type of language is allowed? The mobile carriers will arbitrarily set and change their standards for defining spam and will block large groups of messages with no warning or notification and this is one of the most critical aspects of text messaging. Many companies can send text messages, but there were many compelling reasons why we selected Solutions-by-Text as our primary messaging provider. Their ability to manage the relationship with the carriers and advise clients on compliant messaging techniques are an invaluable part of our digital technology platform. The carriers do not treat the collection industry in the same way that that they teat other industries. If your texting provider is not an expert, think a few times before you make text messaging an important part of your collection strategy. Click on the image above or here to watch a video from SBT. It discusses a new Carrier Code of Conduct from the mobile carriers, that will impact all industries, moving forward.

LIMITING CONTACT FREQUENCY

This is a critical element of the new rule. Although they may analyze or try to interpret the rules, attorneys are unlikely to make operational recommendations. What is an attempt? What is a contact? If you are allowed 7 attempts a week, how many text messages is too many? Since it is easy to overthink this for years, we opted to create technology that would address the requirements as they change. This took some skillful planning. Here are the parameters we worked with.

• We defined a phone call as either a "Footprint call" or a "Non-footprint call". If the consumer was aware that you called, it's a footprint call. You ring the phone and hang up very quickly - That's a footprint call because the call would be recorded on the consumer's Caller ID. A "Number not in Service" message on the other hand, is not a footprint call. What if there is an answer and it is the wrong party? We don't want to give all our secrets away do we? But you can see how challenging this can be.
• Major creditors will monitor these compliance requirements very carefully. What if you are allowed 3 calls a day and and you have made 2 attempts? What if an agent and a manager in different offices tried to call to the home and cell number at exactly the same time? Our collection software will stop one of those calls!
• We thought about how the rules could change, and calls could be controlled in the future. There could be limits based on the type of phone number (e.g home, cell) and limits for the consumer, considering all the phone numbers on the account(s).
• There could be separate rules for counting attempts and contacts
• There could be rules for the number of messages you could leave, assuming messages can be left by agents or dialers.
• The rules will be different for consumer numbers and third parties.
• We need to be able to define the rules for one day and for different periods (E.g. a week or a month).
• We may be asked to count voicemail messages and ringless cell phone message drops as attempts or contacts. We also have an option to count non-footprint calls as footprint calls.

What does all this look like in a systemic solution?

In our collection platform RMEx, you can set up call limits by client, state or city. If multiple rules apply (e.g. client and state), the most conservative limits are applied. Of course, the underlying technology is complex. Your dialers must be fully integrated with your collection platform to track and count calls in real-time. Standalone dialers, whether premise-based or hosted, can not work in the strictest compliance-driven environments because they do not have the real-time information required to make these decisions.

In the future, e-mails and text messages could be counted as attempts. Our infrastructure is set up to count texts and other digital communications in a similar manner to calls.

Your design must also take care of very complex requirements from larger creditors. What if Client X says "If you make an attempt to a consumer, we do not want you to make another attempt for at least 1 hour". Think about that. What if you have multiple accounts (not linked) for the same consumer for a client other than client X? You may have to wait one hour to call for Client X after you made a call for client Y, or vice versa! Multiple accounts in very different business lines (E.g. early out and bad debt) may not even be linked to each other! How would you identify and manage them?

You can see that this design will cater to most of the concepts recommended within the CFPB's new rule. What about the fact that the call limits are supposed to be per account and not per consumer? While 7 attempts per account per week is not a lot when you you have 3 potential phone numbers and one account, it is more than adequate if you have 5 linked accounts (35 attempts per week). We have listened to many legal experts who seem to be missing the important point that most collection systems identify the existence of multiple accounts, and agents will often talk to a consumer about all their accounts on a single call. Designing your compliance standards for call frequency around the consumer, is arguably a very conservative approach that is more compliant, practical and simpler to technically implement than a "per-account" process.

RESPECTING A CONSUMER'S CONTACT PREFERENCES AND THE BEST TIMES TO USE THEM

A consumer's attorney will probably insist that a consumer can pick the time they like to sleep, and that they have every right to ask that you do not call them during those hours. The new rule discusses "Inconvenient times to call" and the following points were considered in our design.

• The smartphone is now the channel of choice for phone calls and personal contact. Consumers may not mind receiving messages from friends at 11PM, but are very likely to protest if they receive collection e-mails or text messages at that time. Since e-mails and text messages can be received on a smart phone, sending e-mails or text messages outside the standard "Allowed calling periods" (ACP) has to be a huge compliance risk. If as an example our nightly process generates these communications (e.g. post-dated check reminders), our system will queue them for delivery on the following day. They are usually released the next day after 11 AM EST, when it is 8 AM on the west coast.
• The system considers all the phone numbers on a consumer's accounts (may be on multiple linked accounts) as well as the consumer's address to obtain the most conservative ACP. There are rules for handling toll-free numbers, and numbers whose time zone can not be determined from the time-zone tables that are available from third parties.
• What about the times that a consumer says are inconvenient times for contacting them? We can set that up at the consumer-level. We are able to move those accounts into areas where the accounts are not called automatically (E.g. by a dialer). Below is as sample screen for setting up "Inconvenient times to call".

By managing the time when e-mails and text messages are sent and phone calls can be placed, and taking into consideration consumer-supplied inconvenient times to call, we have simple but comprehensive options to give you systemic outbound communication controls.

The areas of contact preference and the best times to use them are referenced in different areas of the rule. This was expected, considering the different digital contact options available to us today. We should not wait for the final rule. We have enough information to design software that will offer systemic controls to handle a consumer's request to be contacted in a certain way and at a certain time. We made some assumptions.

• We must be able to offer consumers all of the potential communication channels available today. How many can you think of? Here is what we came up with - E-mail, calling home phone, work phone, cell phone or any other phone number, self service via conventional web page option, self service via cell phone texting, text messaging, traditional mail, conversational chatbot via web or smartphone, and conversational chatbot via a phone call (from a land line or cell phone).
• Since e-mail can be received on a cell phone and a text message can generate an alert, digital communications must be restricted to times when the consumer is known to be awake. The exception would be the consumer having contacted us, or communicating with an agent at that time. For example, if a consumer on Pacific time calls an east coast collection agency at 9 AM EST (which is 6 AM in the west coast), and asks the agent to text them a link they can use to make a payment, your system should allow that to happen. On the other hand, a system-generated payment reminder should not be texted at 6AM to a consumer on the west coast.
• We are prepared to have a consumer provide preferences for contact methods and contact times. For example, "You can call me on Tuesdays and Thursdays between 2 PM and 4 PM, and text me after 3 PM on Fridays only." Is this going too far? We will be happy to put you in touch with someone who was sued for calling a consumer during their afternoon siesta! We set up rules at the consumer level for each day of the week, each communication channel, along with a preferred time period for the restriction.
• If a consumer says you can contact them on any day using any communication method, but not between 10 AM and 1 PM on Wednesdays, we can set that up too.       

In the case where these consumer preferences needed to be set up, the agent would select an option and set up the rules. Implementing the controls is not simple. Many different areas of the system (dialer campaigns, texting, letters, e-mailing etc.) will need to check these rules before any decisions are made. These are some of the reasons that a well-integrated collection platform is called for.

HOW DO YOU INCREASE COLLECTIONS WITH INCREASED CALL CONTROLS AND NEW RULES?

Phone calls have been at the center of our contact strategy for many years. Every survey confirms that modern consumers prefer to resolve their accounts without talking to an agent. Our working hours are often not the time when consumers like to talk to us. Younger people will communicate when they want to, and their preference is digital communication and chatbots. How do we meet all these new requirements? Agents are your single largest expense and they are talking to fewer right parties every day. How do we connect all those dots? Superior self-service is the answer!

Between IVR's, payment portals, avatars and web sites you have all the technology to offer consumers a wide range of self-service options. Why have these option not become more popular and effective? The reason may be because they have not been truly integrated with your collection technology. A tightly integrated, intelligent collection robot can offer more options than a traditional payment portal and can quickly resolve accounts without the need for a a great deal of manual work. True integration is extremely difficult and it can be argued that the best options will be driven by your collection system. Rather than having separate components or bolting on 3rd party products, our decision was to create a single product for all of a consumer's self-service options.

• Our product is a collection robot called Alex. It can be accessed through your website. The consumer would click on "Pay or resolve my account" and they could be taken to a web page on the CSP (Customer Service Portal) . They would be safely authenticated (with or without an account number) and can view their accounts and choose to make a payment or pick from a wide range of other options. The goal was to allow a consumer to handle every situation that an agent was traditionally needed for. This includes "Will not pay" (disputes), cannot pay, wrong party, attorney is involved, "I have insurance" or "I filed for bankruptcy". The consumer is prompted for more information depending on the option selected, the account is documented and the system will make an intelligent decision based on the circumstances. For example - Transfer the account to client services or a supervisor.
• While the CSP offers a traditional "forms-based" interface, our intelligent chatbot Alex also has a "texting interface". The consumer can key in free form questions or statements (e.g. What is my balance? Who do I owe? I want to set up a payment plan). Alex will respond in full sentences! This interface supports multiple languages, with the robot understanding and texting based on the consumer's language preference.
• Depending on the browser, the consumer can have a conversation with Alex, speaking in sentences in different languages. For security reasons, some information is entered on the screen (sensitive information like credit card numbers).
• The same access is offered via telephone. The consumer can make a phone call from a land line or cell phone and talk to Alex in natural language. With this option, you extend traditional phone support to 24/7/365 self service. The consumer can request an agent. During office hours the call is transferred, and if agents are not available, the account can be queued for the next day. When a call is transferred to an agent, the agent can access the account without requesting account information from the consumer! An agent can also transfer a call to Alex. Of course Alex can pick up the conversation without asking the consumer for the account number (and you have to be wondering "Why can't my phone company or cable operator do the same thing?")
• With today's powerful computers, our design objective was to make our self-service robots as powerful or even smarter than average agents. After several years, most of our clients believe that this has been accomplished. Of course, successful use of these modern technologies require changes in your business processes. With the diminishing results from outbound phone calls, proactive companies are moving from outbound to self-service models, using digital communication strategies to drive consumers to our intelligent chatbots!

If you do not have the technology to implement these collection strategies, the new rule could decrease efficiencies and increase your software costs. If you are prepared, the results could be spectacular.

THE ROLE AND IMPLEMENTATION OF DIGITAL CHANNELS

In this modern age, it is easy to send a text message or e-mail to a consumer. How can you text compliantly and how do you integrate text messaging with efficient collection strategies, rules for limiting attempts and contacts and automatically moving between different digital contact channels? This is a very challenging proposition. We tend to look at these challenges as different business problems. They are a part of the same problem - The need for a unified communication strategy. When they were first designed, today's aging collection platforms did not have a need for managing a contact strategy with letters, phone calls, e-mails, text messages and ringless cell phone message drops. Unfortunately, most of these systems were not redesigned when major changes should have been anticipated, and are now unable to systemically and compliantly handle today's requirements without a major rewrite of the system. The challenge is not using these communication channels. It is in our ability in efficiently integrate them with client and agency-specific work flows, based on scores, balances, account type, recovery rates, unit yield, the length of time you have had the account etc. Our challenge is to make things happen without being mired in manual processes with huge potential compliance risks.

What we needed was a Unified Communication Strategy that allowed users to set up an automated series of options - letters, phone calls, email, text messages or voicemail drops, each step a specified number of days apart.

• E-mail and text message options can be repeated
• The system automatically moves to and runs the next sequence at the specified time
• At each step, the system thinks, making a decision if the strategy should be continued or changed (E.g. Start a different series, move the consumer to client services or a supervisor)
• Consumer behavior (E.g. opening of an email) can change the strategy
• Certain situations (e.g. an RPC, a payment or dispute) must stop the series
• New accounts would simply fall into the current series after the demand letter. Communicating with a consumer when there are multiple accounts is one of the greatest challenges we face. This strategy simplifies that challenge. We can treat the consumer in the same way credit card companies bill their customers. You receive notification of new purchases (the initial demand notice) and receive a periodic statement (via letter, e-mail or text message) that lists new transactions and summarizes your balance.

Here is one of the screens that allows you to control a series of traditional and modern digital communication actions from a simple, single console. The "Type" is where you specify a letter, phone call, e-mail, text message or message drop.

The following shows you how we apply machine-thinking and make intelligent decisions behind the scenes. With RMEx, the great flexibility comes from the fact that your strategy can be based on almost any data point, and because you have the great power of the AI-based system behind all of your processes and decision-making.

LIMITED-CONTENT MESSAGE

There is the introduction of a new limited-content message and the rule identifies what information a debt collector must and may include in a voicemail message for consumers. The example given by the CFPB, of a limited content message was “Hi, this is Robin Smith calling from ABC Inc. It is 4:15 p.m. on Wednesday, September 1. Please contact me or any of our representatives at 1-800-555-1212 today until 6:00 p.m. Eastern time, or any weekday from 8:00 a.m. to 6:00 p.m. Eastern time.”

The industry has been leaving messages for consumers using dialer technology for many years. While the example given does not contain any account data, we can easily adapt if the rule is changed. It has never been difficult to merge standard text with account data and play a message by converting text to speech, and we expect the collection industry to be able to deliver limited-content messages using existing technology. The limited content message offers agencies an excellent new method of driving traffic to their self-service options. Remember that the limited content message applies to voicemail only. We have intelligent chatbots that can be accessed though a land line or cell phone. Alex will talk to the consumer in natural language and resolve an account whether the consumer wants to make a payment, report a bankruptcy or dispute the account. How do we make it very easy for the consumer to call us back based on the message they received? Our clients are leaving messages with Alex's phone number as the Called-ID. The consumer simply calls the number they received the call from, and they can resolve their account without talking to an agent (With our chatbot, the consumer can be authenticated without an account number).

LETTER CONTROLS

As expected, the new rules have several references to written communications. This has always been a complex area and our position has been that each company will choose the way it handles written communication with its consumers. A software company's role is to work with letter vendors to generate any document in any format (E.g. Disclaimers, state information, account details, communication with attorneys, linked accounts, multi-page letters etc.) If all the required data is stored in your collection system, it is a relatively simple process to transfer the information to a letter vendor or to print a letter in-house. Some of the challenges we have faced include:

• Listing multiple accounts on a demand notice
• Listing linked account details when a large number of accounts are involved
• Printing all the installment amounts on a payment arrangement along with the due date for each payment

These challenges are easily overcome when your collection system is designed to store the required information and you have a letter vendor who can do their magic to meet any requirement.

SUMMARY

New rules create challenges. A much-hyped rule from the CFPB that has been coming for many years is disruptive and has the potential to be a significant threat to the industry. How did our automakers compete many years ago when the Japanese were killing them in sales numbers? GAP and Dell successfully competed against much larger companies with "Just in time" inventory control. The automakers looked to robots to build their cars (just as the Japanese had been doing), and clever inventory control was yet another example of technology at work.

In addition to obviously needed operational changes, the industry's response to the CFPB's new rule must be a technical power play. We are not where we should be with the adoption of modern technology. The reasons are not important. This is not a time for blaming, spinning or justifying our positions. It is a time to act. We are not in collections - we are in information systems. We are a heavily tech-driven industry, and the CFPB's rule requires some complex technology solutions. In this article, we have presented credible information for companies to understand some of the ways that one company is ready to respond to the CFPB's new rule. We have tested and proven solutions, and urge companies to use this paper to help them to better understand the implications of the rule and work with their technology vendors to create a positive future for the collection industry.

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?Quantrax Corporation is a technology company that created an intelligent collection platform over 25 years ago. They believe that the ARM industry has been poorly served by collection technology that has not evolved or kept up with the great potential of computing power, or challenging industry changes. Self-funded, Quantrax has continued to successfully develop and deploy technology that offers modern solutions to old problems.

www.quantrax.com – (301) 657-2084