In the wake of the Hunstein case, we examine how these consumer-centric policies, laws and market conditions are causing disruption and uncertainty in the collections industry. There are three take-aways from our interview with Stephanie Eidelman, CEO of The iA Institute.
Regulators are placing the compliance responsibility at the feet of Creditors.
Stephanie Eidelman: As we remember from former CFPB Director Cordray, they were going to write rules for first parties. They set that aside. The Trump administration didn’t pick it up. I would expect these will be picked up again with the Biden administration. So, your platform nicely anticipates that.
Walker White: Absolutely. It ultimately comes down to the fact that we have better technology today to solve collaborative problems. It’s important that the collaborative platform is for all parties to work together in a compliant, efficient manner to achieve an outcome we all desire. This is good for all parties involved, but also for the consumer as well, to make debt collections as palatable as possible.
Our solution, called Oliver CLX, which stands for collections litigation exchange, automates, and orchestrates all repetitive, legal, and regulatory processes, bringing all the required parties together onto a single platform to drive more revenue, help them maintain rigorous compliance, and ultimately simplify the litigation process. This gives creditors more control over the process and ensures compliancy across the channel.
Hunstein is just the latest example of the need for change in the Collections Industry.
Stephanie Eidelman: In the last week or two, we have all been consumed by this case that came out of nowhere, Hunstein. I’d be interested in your perspective on how the market can deal with compliance fire drills in a better way.
Walker White: I think Hunstein is an example of why change is required in this industry. If we look back over the last 15-18 months, think about all the disruptions in the industry. COVID—obviously, unexpected macro activity. And then Regulation F, which was expected and will require a lot of change. Some of these changes can be awfully expensive and disruptive. And ultimately, these changes expose all companies in the supply chain to compliance risk, from the creditor to the master servicer, to the law firm, etc.
We think the trend is towards what we call “creditor-managed collections,” rather than the more decentralized approach that we have today. This is not going to be creditors dictating the steps that the law firm or others must take, but rather think of it as the creditor setting the table. That’s where the Oliver platform is valuable to manage all the consumer data in a centralized repository, and then farm it out to anyone who is authorized to use it. This allows those creditors to implement, in a configurable group of servicers or vendors that they want to implement their collections strategy, facilitate the data transmissions, because it’s the creditor’s platform.
This allows us to step right around the Hunstein problem, because it’s not going to a third-party and then from that third-party to someone else. The creditor is authorizing the release of the information directly. It doesn’t matter whether it’s for agency, legal, or debt sales. Ultimately, we are centralizing and enforcing the consumer preference data side of that as required by Reg F.
We are no longer playing telephone, where we toss files from person to person. With a creditor-driven model, the creditor puts the data into a platform where everyone can operate on it seamlessly. And I think that’s the difference that we’re going to see going forward.
Built-in Compliance stabilizes the process.
Stephanie Eidelman: It’s interesting that you talk about centralization as a way to standardize or maybe stabilize the process. How does that look different tomorrow from today?
Walker White: I think a good way to consider this is through the lens of the compliance being built into the solution. Historically the creditor would send a file out, they would rely upon their servicers, the firms, and so on to manage it. But think about how TurboTax, which took all the laws, rules, and procedures of the tax code, and basically brought it into a platform where even someone like myself can file my taxes online because they built all that compliance into it. The Oliver platform has built-in compliance rules, such that anyone who’s operating in the environment gets the benefit.
For example, the creditor wants the demand letter sent in 35 days, not 34 and not 36. The platform ensures that will happen and documents that it was sent. Next the suit is going to be filed…automatically released…never a day early, never a day late, always on time. When it comes to proving attorney meaningful involvement, if you’ve got a platform which can oversee all processes, it’s easy for them to see that the attorney looked at this matter for seven minutes while they evaluated the balance and who it was being mailed to, and so on. Ultimately, I think the big difference we’re seeing; rather than leaving it to chance and to the individual parties, the creditor can oversee the process. Not enforce it but oversee it and make sure everything is followed in the way they expect it to.
Listen to the full interview here.