Monthly Accounts Receivables Roundup for August 2021

“The Delta Variant Will Slow but Not Derail the Ongoing Economic Recovery.”

That’s the optimistic, and I hope, accurate headline from a recent article in The Hill. You’ll recall that just a few weeks ago things were looking so good for the economy that some were calling for the Federal Reserve to step in and slow things down through tapering its bond purchases and, at some point, revisiting interest rates. What a difference a few weeks can make.

With the COVID-19 Delta variant causing a new wave of infections, especially among the unvaccinated, the concern now is about the economy slowing. “The recent drop in retail sales, decline in consumer confidence and heightened market volatility suggest a slackening in the pace of the U.S. economic recovery,” the article reads in part. “Previously rosy projections of GDP growth during the third quarter of 2021 will need to be reconsidered in light of recent developments.”

The article ends on a cautiously optimistic note: “As it stands, the delta variant poses a serious health risk to the unvaccinated and is poised to add additional pressure on the U.S. health care system. But from a macroeconomic standpoint, the impact of the latest virus surge on the U.S. economy should be quite modest. As long as the labor market continues its rapid recovery and consumer spending stays strong, the U.S. economy will remain on track to achieve a full-year GDP growth rate of around 6 to 6.5 percent (the highest since 1983).”

“Cutoff of Jobless Benefits Is Found to Get Few Back to Work.”

The New York Times carries that headline, which will disappoint many business owners seeking to fill vacant positions. “The cutoff of federal unemployment benefits in much of the country was meant to bring a flood of workers back to the job market. So far, that flood looks more like a trickle,” the article reads in part.

“Advocates for the unemployed say they are worried about what will happen to workers if they lose their benefits, especially as the more contagious Delta variant of the coronavirus spreads nationwide.” Extended unemployment benefits from states, and supplemental unemployment from the Federal Government was credited earlier in the pandemic with keeping consumer debt and defaults lower than anticipated. In fact, CNBC termed this the “Credit Card Debt Paydown Miracle.”

The big question now for our industry is what happens on the collection front as unemployment benefits for many come to an end—without the anticipated rush back to work. The Times quotes Arindrajit Dube, a University of Massachusetts economist who has written on the impact of extra unemployment on the job market: “The idea was that there were lots of jobs—it was just that people weren’t looking. That was the narrative. I don’t think that story holds up.”

“Higher Prices Are Here, Whether or Not You Call It Inflation.”

The Washington Post carries a piece by a Bloomberg columnist under that headline. The author writes: “The answer to the question of whether prices are higher is, of course, yes—5.4% higher than a year ago, as of July—and the answer to whether they will stay that high is almost certainly also yes.” But moderation is expected.

The piece ends: “The current consensus of the many smart people debating and analyzing these matters seems to be that the spiral won’t develop and inflation will settle down soon. I think that’s probably right, although I wouldn’t be too confident about it given that the consensus generally underestimated how bad inflation would get this year. While we’re waiting to find out what inflation does in the future, though, it is undeniable that things cost more now, and that’s no fun.”

For me, the most interesting factoid to pop out of the article was the extraordinary price stability the U.S. enjoyed for more than 200 years. I’ve underlined the most startling element of the quote: “There were several big inflationary episodes in the U.S. before the 20th century, but prices fell afterwards and the overall U.S. price level in 1900 was about the same as in 1776.”

Here’s a Story to Share with Call Agents.

Attorney Eric Troutman, writing for insideARM, provides an extremely instructive story about how a convicted fraudster tried to hoodwink a call agent. The headline tells much of the story: “Justice: Court Filings Reveal How Consumer Tried to Manufacture TCPA Suit Against Credit One–Only to End Up Owing It $286,064.62.”

To provide the inside scoop, Troutman quotes from court documents, including this passage filed by the defendant: “Mr. Lieberman intentionally jammed together a request for calls to his number to stop with another question about ‘what’s cooking,’ in a transparent attempt to confuse the Credit One representative into missing the request that the calls stop. But the agent heard the request and asked Mr. Lieberman to simply verify the number that he wanted Credit One to stop calling. Mr. Lieberman did not want the calls to stop because he was trying to manufacture a TCPA claim.

Stopping the calls is bad for manufacturing a TCPA claim, for which liability increases with every additional call. So, instead of verifying the number that he wanted Credit One to stop calling, he clumsily and falsely changed course claiming things were complicated (they were not) and that he needed to talk to his wife (he did not).”

The story goes on and on like this, including findings by the Arbitrator that the claimant had been previously convicted of securities fraud. The article notes: “Another significant basis for the Arbitrator’s decision was his finding that ‘Claimant along with the attorneys representing him here’ have brought highly similar TCPA lawsuits against six other financial institutions.” In the end, justice prevailed, with the Arbitrator noting: “Claimant decided to bring an arbitration and is seeking compensation in the hundreds of thousands of dollars for what is decidedly a fraud.”

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Ray Peloso, Chief Customer Officer at Finvi, brings 25 years of diverse consumer lending experience, having held executive leadership roles at Royal Bank of Scotland, Capital One, Citibank, MBNA and Katabat. Ray’s prior expertise in consumer credit and lending underpins a clear vision and understanding of the challenges faced by our clients in today’s rapidly evolving digital economy.

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