Collections teams must contend with a varied and ever-growing set of compliance and risk factors. From the volume of customers to the amount of interest they can charge, to the security of the data they hold, organizations are tightly governed and the consequences of a breach can be severe.
Implementing and maintaining the processes to remain compliant are difficult to achieve without errors occurring, not to mention a drain on time and resources. This is why many organizations are looking to automate their collections compliance requirements.
Compliance challenges in collections and recovery, and using automation to solve them
The areas of risk that a collections team must manage are manifold and vary from country to country, and state to state. Here are some of the major types of regulation that organizations must comply with, and how automation can make compliance more straightforward.
Communication
In recent years, the laws regarding the type and frequency of communication with consumers have tightened significantly. The most recent regulatory change in the US was Regulation F, which was introduced to prevent harassment of customers by collection agencies and teams.
Regulation F introduced a series of new rules, including:
- The “7 in 7 rule” – collectors must not attempt to contact consumers more than seven times in a seven day period.
- Emails and text messages may only be sent to customers with their consent, and this consent must be renewed.
- Consumers must not be contacted before 8am or after 9pm.
- Consumers must not be contacted at their place of work.
Modern, advanced collections platforms like Debt Manager from C&R Software enable guaranteed compliance with laws like Regulation F, by making it easy to create specific rules that execute automatically. Debt Manager is able to do this because it pools all data in a central location, meaning rules can be established for every region and every piece of relevant legislation, and customer communication preferences feed straight into this.
Data protection
The data protection revolution is continuing to garner greater interest and faster pace. Consumers have more rights to data privacy and data security, and organizations have more responsibilities than ever before.
The General Data Protection Regulation (GDPR) came into effect in the EU in 2018 and gives consumers the right to access personal data companies hold on them, rectify it if there are inaccuracies and know more about how their data is used. GDPR also imposes hefty penalties for companies that violate the regulation.
With similar legislation now coming into force in the US, collections teams must be more careful about how they handle customer data, ensure they have the capability to give customers access to their data, and prioritize security to prevent costly breaches.
Debt Manager is routinely updated to meet the data protection requirements debt collection teams face, with built-in capabilities that enable customers to:
- Access personal data. The user interface enables collection agents to generate reports for individual customers with up-to-date personal data.
- Rectify records. Collectors can easily edit or add to personal information through the user interface, while Document Management System integration enables them to add supplementary media including call recordings and legal documents provided by the customer.
- Erase records. Stored procedures in Debt Manager allow all data related to a specified customer to be purged from the archives.
- Notified about how data is used. Organizations that use the Consumer Portal to provide access to the system for customers can include a visible privacy notice to communicate the details regarding the use of their personal data.
In addition, all network communications between the Debt Manager end user and application server are encrypted at the transport layer, providing a strong barrier of protection against criminal groups looking to illegally obtain consumer data.
Interest rates
The interest rates that businesses are able to set on the debts their customers owe can vary significantly from customer to customer, depending on their geographic location and laws governing interest payments in that jurisdiction, and the original terms of their agreement. For instance, some US states limit the amount of interest that can be charged, while others do not, and some agreements allow rates to be changed mid-contract, while others do not.
Debt Manager makes it simple to create specific rules that prevent interest rate increases for customers in regions where this is not permitted, or who have contracts in place where this is not allowed. Automating this process slashes the time taken to manually confirm customers are paying the proper interest.
Debt relief or amnesty
Another factor that differs from country to country is the threshold for debt relief or amnesties. For collections teams operating globally, it’s crucial to have solid processes in place to stop collections efforts when amnesty should be in place.
Debt Manager is able to respond to fast-moving situations and quickly suspend activity for customers whose collection program should be paused. For example, when a hurricane struck Mississippi in 2018, consumer financial transactions were interrupted. Collection efforts with customers unable to make payments because of the hurricane were immediately suspended.
When a state of emergency is declared, it is common for officials to suspend debt collection for this period as well. Most collections and recovery systems would require time consuming manual work to suppress outbound communications. However, with Debt Manager, this can be done simply by creating a rule whereby communication will be paused with all customers in a given region.
Automating with Debt Manager from C&R Software
The examples in this article highlight only a fraction of the automation capabilities of Debt Manager. With collections teams under more pressure than ever before, Debt Manager takes the uncertainty out of compliance and enables organizations to scale more quickly by freeing agents from the complex and time consuming tasks that automation can handle.
Learn more about Debt Manager by booking a demo with the team today.
