I spent several days in Las Vegas last week at the Receivables Management Association conference, which was a great place to meet current and prospective clients. There were a lot of great discussions including the state of regulation at both the federal and local level and potential debt-buying opportunities (i.e., which markets represent the most value). Interestingly, the topic of tech was mostly confined to discussions about how regulations put a damper on your ability to use it.
Here are a few conference takeaways:
Debt Purchase Opportunities in Subprime Auto Finance
- Several new subprime lending entrants who have lent very aggressively in recent years are now paying the price from a loan-loss perspective. This presents a buying opportunity. U.S auto loans total nearly $1.2 trillion — $280 billion of which is subprime and $70 billion is “buy-here, pay-here” deep subprime.
- The movement to used cars among near-prime and prime populations, combined with longer loan terms, translates to higher risk, which is further compounded by pending regulatory headwinds such as state-level regulation of GPS locators and starter disruptors.
Americans with Disabilities Act (ADA) and Applications to the ARM Industry
- The ADA language impacting ARM indicates that agencies and servicers may not deny full and equal access to the goods and services offered at most places of public accommodation. The case was made that websites are not compliant with ADA in this industry (e.g., no speech recognition or reading devices, lack of text-based alternatives to images/video, color contrast, and alternative-keyboard functionality).
Using Big Data and Digital Communications.
- If you’re using large data sets, you should be asking:
- What is the data source?
- Is it reliable?
- Does it qualify as a consumer report under FCRA?
- What variables are used in your data model?What differences in treatment will be dictated by the model?
- Under strict regulatory interpretations, different delivery channels and program offers may be considered differences in treatment. As SMS use expands, there are regulatory risks to be considered, including TCPA/FDCPA and state laws, consent and mini-Miranda, and text charges. And regulatory risk from email can be interpreted as written (from/to lines, required disclosures/links) and verbal (contact at place of employment, inconvenient place/time).
GDPR in California – Does This Apply to Me?
- Effective January 2020, the California Consumer Privacy Act (CCPA) of 2018 only covers California residents. For-profit businesses with one or more of the following are subject to this law:
- Annual Gross Revenues >$25 million
- Personal information of 50,000 consumers
- Sale of personal information accounts for >=50% of annual revenues
- If you have already done GDPR prep because you impact EU citizens, you are ahead of the game. If not, get started on CCPA gap analysis; build out a compliance time frame; solidify deidentification and aggregation practices; hone vendor management practices; and amend third-party contracts where applicable. It’s possible that California is just the beginning, and similar legislation could appear elsewhere.
State and Legislative Regulatory Update
- Political polarization will impact the industry as centrists/moderates are driven from important elected positions. Far left and far right are not far apart in terms of risk to the industry due to their populist strategy. The states that are most at-risk have a Democratic political trifecta (control of both houses and governorship), Democratic attorneys general, and leftward swings in the 2018 election.
- The presenters said the eight states most at risk to an unfavorable regulatory environment are California, Colorado, Connecticut, Illinois, New York, Oregon, Rhode Island, and Washington. These states have numerous pieces of active pending regulations that could impact collections, consumer contact, and data management.
Are Your Calls Getting Through? How Call Blocking and Labeling is Affecting the Industry
- Consumer feedback generally reinforces that digital user experiences (SMS, Email, Web) are positive while call experiences are poor.
- Despite the digital push, phone remains an important channel to discuss high-value transactions, resolve complex issues, and share sensitive information. That said, robocalls and fraud have eroded the public trust in telephony, leading to more difficult interactions for agents and a significant uptick in the percentage of calls that go unanswered.
- With a push to further regulation, telecoms have developed solutions to block/label certain calls, but some legitimate business calls are being blocked or labeled as spam in error. As a result, companies seeking to maximize contact rates need a consistent and accurate identification process for Caller ID and brand control.
I think conference attendees like to identify a few key action items from the presentations and hope to meet some companies that can help them with those pain points. If you think Katabat can help you with our enterprise debt-collections software powered by machine learning technology, please reach out to me at firstname.lastname@example.org.
Matt Butler is North American Sales Director for Katabat. Prior to joining Katabat in 2014, he spent nine years in the Financial Services Industry with a focus on collection and customer contact strategies.