Category: Blog

Texting in Debt Collection? LMKWYT!

Amy Hinzmann

September 12, 2023

Due to the lack of specific reference to Regulation F in Cupp, the California case on texting under Regulation F, debt collectors are left with little certainty that they will be protected by following legislative guidelines.

Prior to Regulation F’s effective date, text messaging was generally disfavored within the industry because many debt collectors were concerned about potential FDCPA claims arising out of text messaging. The FDCPA has not been amended in the time since text messaging became widespread and it does not address texting. As a result, most debt collectors avoided the risk presented by texting without more certainty on how it would be received in court. The few debt collections that did communicate via text message typically did so only with specific consent from the consumer, which can only be obtained after contact is first established through a different communication medium.

Enter the CFPB

The CFPB made it clear in the commentary provided with Regulation F that it endorses debt collectors’ use of modern communications methods like text messaging and email. Consumers want debt collectors to use these communication methods because they find these methods to be more convenient. Regulation F therefore included a tremendous amount of guidance about texting and emailing consumers, particularly consent and opt-out requirements, providing the industry with concrete rules to fill in the ambiguity of the FDCPA and enable collectors to develop policies, procedures, and strategies for engaging consumers through consumers’ preferred communication channels.

Judicial Reaction to Regulation F

Cases litigating the safe harbor created by Regulation F are starting to trickle out. A debt collector was sued in the Northern District of California after it sent 15 text messages to a consumer over the course of a month. On its facts, Cupp is definitely not the case on which consumer attorneys or debt collectors want to build case law on. First, the plaintiff is pro se. Additionally, the decision notes that the plaintiff alleges that he did not owe the debt, without reference to whether the defendant contested that fact. Based on the opinion, it seems that there was some mistake of identity or phone number.

Regulation F In Cupp

In short: There is no mention of Reg F in Cupp. The pleadings do not even tell us if the text messages sent to the plaintiff contained opt-out language, much less whether the plaintiff attempted to opt-out. Rather, the Court simply treated the text messages as if they were phone calls and determined, based on existing FDCPA case law (not the 7-in-7 rule), that 15 such ‘calls’ in a month could be considered harassment and therefore that the FDCPA claim could not be dismissed on the pleadings.

What does this mean for debt collectors? First, it suggests that the courts may not adopt the 7-in-7 presumption at all and that courts may be willing to find an FDCPA violation even where a debt collector does comply with 7-in-7. Second, it suggests that opt-out and consent may not be dispositive in these types of claims, as we may have expected in light of the regulation’s emphasis on consent and opt-outs.

But most importantly, it suggests that Regulation F did not change nearly as much as we thought it did. FDCPA plaintiffs and defendants can still litigate claims about issues that are thoroughly addressed in Regulation F without discussing the regulation at all, relying entirely on the older case law. There are no causes of action created in Regulation F; consumers must tie their claims back to the FDCPA, which has already been extensively interpreted by the courts. We may discover, as these cases progress through the courts, that the protections for debt collectors – the safe harbors and rebuttable presumptions – are similarly meaningless unless they tie back to the FDCPA or the case law interpreting it.

What is the diligent compliance professional to do?

For the time being, it appears that any FDCPA risk assessment must assess practices and policies both under Regulation F and then separately under only the FDCPA and its existing case law. Until we have more guidance from higher courts, we have to assume that any case and any court could go either way, while also bearing in mind that the CFPB has yet to bring any enforcement actions tied to Regulation F, which it may view very differently than the courts.

What’s your strategy WRT to text, then? LOL, IDK! LMKWYT!

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The CFPB’s unhelpful policy statement on abusive practices

Jessica Lamoreux

May 31, 2023

Which of the following constitutes an abusive practice by a company trying to collect a debt:

  • Answering the phone with, “How may I help you?”
  • Closing on nights and weekends.
  • Going to court to recover an account in default.

Under a new policy proposed by the Consumer Financial Protection Bureau (CPFB), the answer could be all of the above.

The policy seeks to interpret a ban on “abusive acts or practices” in connection with a consumer financial product or service in the Consumer Financial Protection Act of 2010 (CFPA), part of the post-financial crisis Dodd-Frank reforms.

Congress added the concept of abuse to the longstanding prohibitions on unfair and deceptive conduct to combat some of the most egregious practices in the mortgage industry leading up to the financial crisis. The issue often wasn’t that customers were deceived about the terms of their loans; it was that mortgage brokers arranged and sold loans they knew the borrower couldn’t repay. Millions of families faced foreclosure as a result of these products that were “designed to fail.”

The CFPB’s new policy interprets the concept of abuse to go far beyond these predatory lending practices. Indeed, the bureau says conduct can be abusive even if the consumer was not harmed. Nor, it declared, could a company defend itself by claiming it hadn’t intended to mislead customers.

During the Trump administration, the CFPB declared it would not pursue abuse cases unless “the harms to consumers from the conduct outweighed its benefits.” The bureau has now rescinded that policy, suggesting it’s open to mandates that impose substantial burdens on financial companies while providing little benefit to consumers.

Rohit Chopra, the bureau’s director, said the policy is meant to offer the industry a “bright line” to clarify how the law will be enforced. Its effect is likely to be the opposite, eliminating standards that have provided some guidance to financial services companies.

In nearly every section of the 9,000-word policy statement (interpreting 126 words in the act), there is room for an expansive interpretation of what constitutes abusive acts or practices. The bureau is essentially giving itself license to return to “Regulation by Enforcement,” the practice of its early years when it communicated new rules by bringing an enforcement action rather than publishing them in advance.

The impact on collections

Here I’m going to walk through three examples of how this open-ended framework could interfere with normal operations of debt collection and collection litigation. The policy also leaves many other aspects of consumer finance, especially the marketing of new products, vulnerable to a charge of abuse.

The collections process will be most affected by the bureau’s interpretation of the CFPA provision that bans financial companies from taking “unreasonable advantage” of certain situations that could give them the upper hand in dealing with consumers.

Although the policy statement offers some guidance on what is considered unreasonable, it does not make any attempt to identify instances of “reasonable advantage.” Rather, it offers a list of things that are not required for the advantage to be unreasonable, including whether the practice is typical in the industry or that a significant number of consumers misunderstood the situation.

Taken to its logical extreme, we could say that a practice is abusive if one person has an unreasonable understanding of the product and suffers no harm as a result, even though no benefit may have accrued to the entity.

The law identifies three specific ways that a financial company can have an unreasonable advantage, and the bureau’s policy statement interprets each of them in a way that could be problematic for the collections industry.

1. Taking unreasonable advantage of “a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service.”

The CFPB specifically calls out that lack of understanding can include failure to understand the likelihood and consequences of defaulting on a loan. And it defines abuse to include taking advantage of gaps in understanding by consumers of the non-monetary costs of a product, like the time and inconvenience required to obtain benefit from the product.

This definition could well include a consumer who did not realize that their debt would be accelerated upon default, that they might have to go to court, or that the lawsuit would add charges like court costs to the debt amount.

Will lenders have to include a prominent and explicit description of the U.S. legal system before originating a loan?

The policy statement is not explicit.

2. Taking unreasonable advantage of “the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service.”

Here the policy includes a focus on situations where consumers can’t select the company they are dealing with, including when a creditor sends an account to a collections agency.

“Even though there may be many participants in these markets, you have no choice but to deal with a specific, single servicer or debt collector that you did not choose,” said Chopra in remarks introducing the new policy.

What the director didn’t say is what would be considered taking unreasonable advantage of the fact that the consumer cannot switch debt collectors. There certainly are many differences between collection firms—their hours, the payment types they accept, and even the average time on hold before reaching a collector. Some are more willing than others to erase a negative credit bureau report in exchange for a payment.

Is the CFPB suggesting that it could be considered abuse to assign a debt to a collection firm that didn’t have the policies preferred by the consumer?

The bureau expresses no preference.

3. The reasonable reliance by the consumer on a covered person to act in the interests of the consumer.

This aspect of the policy focuses on situations “where an entity communicates to a person or the public that it will act in its customers’ best interest.” It’s meant to deal with cases like mortgage brokers who steer clients to products that produce the most profit rather than those that have the best terms for the borrower.

Here too, the agency has eliminated any guidelines that might focus enforcement on cases where there is significant harm to consumers. So it leaves open whether standard customer service language can be considered a representation of acting in the customer’s best interest.

Will collectors be banned from answering the phone saying, “How can I help you?” or from responding to a concern with, “We’d be happy to help you get this matter resolved?”

The CFPB offers no help.

There’s still time to comment

These examples are just a small fraction of the questions that the CFPB’s overbroad and ambitious policy statement leaves open. Thankfully, it’s not final yet, and the bureau is accepting comments on it until July 3.

If your company is involved in any aspect of consumer finance, now is your opportunity to ask the bureau to provide the bright line that Director Chopra promised.

Comments can highlight where the draft policy statement lacks the guidance that the industry needs to comply with this interpretation of the law. And they can predict how participants will react if the rules are left unclear.

I suspect the bureau’s current plan will wind up hurting consumers more than helping them. The credit application process will be bogged down by needless disclosures. There may be fewer innovations because new products could be more likely to be misunderstood. And fewer people could get loans because restrictions on the ability of creditors to collect a debt may encourage them to concentrate only on customers with high credit quality.

While the CFPB policy statement is meant to encourage the marketing of financial products while eliminating abusive practices, it may end up delivering none of the above.

Jessica D. Lamoreux is the Director of Risk and Compliance at Oliver Technology Corporation. She regularly presents to industry groups on a wide range of compliance-focused topics, including Regulation F. She has experience supporting compliance for both debt collection firms and original creditors.

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What I learned at NCBA

Amy Hinzmann

May 22, 2023

I had the privilege of attending NCBA’s Connect Conference last week in Denver, Colorado. As a relative newcomer to default management, the conference was a wonderful way to hear first-hand about the skills, habits and pain points of many of the stakeholders in the debt collections process who were in attendance.

Here are my key takeaways:

1. The default litigation bar is comprised of people who care deeply about the consumer – and efficient exit from the default management process is pro-consumer.

One of Oliver’s core values is “We champion consumer rights.”  I was lucky enough to attend a panel full of like-minded attorneys last week. During the panel entitled “How to Win or Lose in Collection Regulations” (featuring Jessica Lamoreux, Oliver’s Director of Risk & Compliance), the attorneys agreed that legislatures and regulators are focusing on medical debt, including the collection of medical debt. The panel noted that collections can be the first opportunity that the consumer has to truly understand what they owe – and why.

Medical billing is complicated. For a single procedure, a consumer can receive itemizations of benefits, preliminary billing statements, and other correspondence from multiple medical providers. Many of these documents are not bills due and owing yet, and consumers are not always able to tell what is actually owed until the account is placed for collection. Medical debt collectors are often providing the consumer with their first clear and simplified explanation of what is owed to whom.

Finding ways to streamline and simplify the process of medical debt collection serves consumers by offering what may be their first opportunity to obtain straightforward information about their medical debts.

2. NCBA members also care about employee and attorney burnout – another business problem alleviated by efficient, predictable outcomes.

The Attorney Well-Being & Mental Health panel candidly discussed the causes and effects of attorney burnout. Unsurprisingly, long hours at the office take their toll on employees’ mental health, which in turn reduces both productivity and employee retention.

Oliver is focused on providing a platform that simplifies the handoffs between attorneys, support staff and fourth party vendors.  Increases in automation will reduce the amount of time that attorneys spend on administrative tasks and on rework.  Allowing lawyers to focus on ‘lawyering’ and know they can rely on the Oliver process for efficient, accurate work will reduce the amount of time and stress related to moving a placement through the recovery lifecycle.  This will also provide a more consistent experience for the consumer.

As COO of Oliver, I’m responsible for the efficiency of our processes. I’m also responsible for a team of human beings – attorneys, paralegals and technical experts who work in a fast-paced environment. One of our core values is “We value people,” and I’m pleased to say that our vision and value proposition to the market will further our commitment to our employees, customers and users of the Oliver platform.

Jon Stelzner is the COO at Oliver, the first end-to-end solution for lenders in the default management process. As Oliver’s Chief Operating Officer, Jon’s primary responsibility is to oversee the company’s managed services and financial operations teams to ensure best-in-class delivery.  He is also responsible for Oliver’s reporting and analytics functions, giving clients actionable insight into what drives their metrics, and demonstrating the value-add that Oliver provides.

 

 

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The Safe Harbor Wears No Clothes

Jessica Lamoreux

April 6, 2023

If a recent ruling by a federal judge in Florida holds, complying with the CFPB’s tough 2021 collections rules (Regulation F) may not be as simple as copy and paste.

One of the bright sides to the Consumer Financial Protection Bureau’s Regulation F was the Model Validation Notice (MVN), a complete template for what the industry calls a G-Notice, the information that collectors must provide debtors when beginning to collect a debt under the Fair Debt Collection Practices Act (FDCPA). Regulation F explicitly provided a ‘safe harbor,’ stating that collectors using the CFPB’s model notice would be in compliance with the validation notice requirements.

But the Florida case, Roger v. GC Services, suggests that this “safe harbor” may not offer much shelter. The plaintiff was a debtor who claimed that the validation notice he received from a collection agency was confusing and misleading, even though it was undisputed that the notice precisely followed the language of the bureau’s model. Judge Cecilia M. Altonaga of the U.S. District Court for the Southern District of Florida rejected a motion to dismiss the case, saying the collector’s notice may have violated the FDCPA notwithstanding Regulation F’s safe harbor provision. The case, which will now go to trial, could disrupt the new normal that the collections industry has adjusted to in the wake of Regulation F.

What happened?

The Rogers case revolves around one simple fact: a validation notice sent in August 2022 by GC Services to collect a bank debt did not have a date on it. The notice had a section that listed the interest and fees incurred “Between December 31, 2021 and today.” Another line read, “Total amount of the debt now.” This language matched the Model Validation Notice set forth by the CFPB.

The plaintiff argued that because the notice was undated, the debtor would not be able to interpret “today” and “now” and thus couldn’t determine whether the amount listed was the full amount owed or if additional interest or fees had accrued.

The debt collector responded that the CFPB’s model validation notice has no date and uses the same references to “today” and “now.” Indeed, the bureau includes “date the form is generated” on its list of optional—but not required—elements of a validation notice.

The motion to dismiss the case argued that this notice could not be considered misleading or confusing because it uses the exact form and language required by Regulation F. It cited the regulation’s “Safe Harbor” section that says “a debt collector who uses [the model form] complies with the information and form requirements” for validation notices.

What did the court rule?

Judge Altonaga, however, rejected this interpretation of the safe harbor. She wrote that there is no reason to assume that complying “with the information and form requirements” of Regulation F ensured compliance with the FDCPA itself.

This interpretation may raise some eyebrows in the industry, as it is not clear why anyone would follow Regulation F other than to comply with the FDCPA. After all, government enforcement actions and private lawsuits must be brought for violations of the FDCPA. Regulation F creates no enforcement mechanisms or causes of action in itself.

Indeed, the reason that collectors have worked to comply with Regulation F as fully as possible is they believed it would shield them against liability under the FDCPA. If the regulations don’t offer that protection, it is unclear what purpose or utility they have.

A Safe Harbor from what?

One of the biggest frustrations for the collections industry is that it saw this coming. Over the many years that Regulation F was being developed, the bureau was warned of several ways that the model notice was confusing and not consistent with the underlying law.

For example, the MVN specifies the items to include in a table that itemizes the debts being collected, but there is no line for some items, like court costs, that creditors can legitimately collect. As a result, the sum of the items in the table can be lower than the total amount owed. When the industry protested that this format would be confusing to debtors, the bureau ignored them.

In other situations, the bureau’s MVN requires disclosures that directly conflict with disclosures mandated under state law. Collectors were so afraid that the MVN would invite litigation claiming it was confusing or misleading that they didn’t adopt the format until Regulation F became effective in November 2021. By contrast, collectors began conforming much earlier to other aspects of the regulation, such as the rule that limited them to contacting a consumer no more than seven times in a seven-day period.

Despite the problems with the bureau’s model notice, collectors used it once the regulation was in effect precisely because of the safe harbor that was offered. Judge Altonaga’s decision raises the question of what exactly this safe harbor keeps them safe from?

What happens next?

For now, the Florida court did not set any precedent for other cases, as it only ruled on a preliminary motion to dismiss. If the court determines the G-notice in the Roger case was actually misleading, the decision could then be appealed to the Eleventh Circuit, where the industry can try to get this situation clarified.

You might wonder whether the CFPB would speak up to defend its regulation against a judge who, in effect, said the bureau misinterpreted the law. That’s unlikely as the bureau’s mission isn’t to defend debt collectors, even against its own poorly worded rules.

What does it mean for the collections industry?

One thing is clear: consumers’ rights attorneys will pounce on undated G-notices, and the safest practice is to assume that a date is required and not optional.

The bigger question is whether future courts will hold that notices that use the CFPB’s model are not completely protected from challenges under the FDCPA.

Given the many problems with the MVN, we suspect that consumers’ attorneys have already started to develop arguments about additional ways that their clients are confused by G-Notices that follow the Regulation F model.

With the Regulation F safe harbor in question, debt collectors may want to consider the relative risk of strictly following the MVN template. Ask yourself whether the validation notice you are using could be considered confusing or misleading to the least-sophisticated consumer? The answer will depend on the nature of the debts you are collecting and the applicable state law.

If you conclude that using the MVN format is likely to be confusing or misleading, you will have to make a difficult choice. You are caught between the unpredictable court system and the powerful CFPB. It is anything but a safe harbor.

Jessica D. Lamoreux is the Director of Risk and Compliance at Oliver Technology Corporation. She regularly presents to industry groups on a wide range of compliance-focused topics, including Regulation F. She has experience supporting compliance for both debt collection firms and original creditors.

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Oliver completes acquisition of Lawgix Services

Walker White

April 4, 2023

Oliver completes acquisition of legal managed services provider to deliver full-service platform to U.S. creditors

The combination of Oliver’s software-as-a-service technology with the managed services capabilities of Lawgix Services creates an end-to-end solution to deliver efficient recoveries for the default management industry.

WASHINGTON, D. C. — 04 APRIL 2023 — Oliver Technology Corporation (“Oliver”), the leading debt collection software platform, has announced that it completed the acquisition of Lawgix Services, the leading provider of managed services for collections litigation. Oliver now is uniquely able to provide creditors a complete solution for the entire collections litigation process, with expertise in collections law, process engineering, and technology.

Walker White will continue as CEO of the combined organization, and John Ritter, who served as CEO at Lawgix Services, has assumed the role of President.

“This acquisition marks a critical step forward for us in bringing the Oliver vision to life: foster a consumer lending lifecycle that is precise, fair, and compliant,” said Walker White, CEO of the combined organization. “I look forward to all that is ahead for this company, and I am delighted to be working alongside John to get it done.”

Oliver is working to transform the default management market to the benefit of all parties.  To achieve that, Oliver enables lenders to efficiently collect debts they are rightly owed while maintaining rigorous compliance and preserving their reputation.
With the acquisition of Lawgix Services, Oliver now delivers both a secure and efficient SaaS platform and industry-leading managed services to facilitate legal, operational, and financial transactions across all stakeholders in the default management process.  Oliver’s vision is that combination will improve the process for all parties – including consumers.

As CEO, Walker White continues to have primary responsibility for managing investors and raising capital. John Ritter will take on the role of President, focusing on executing strategy by managing day-to-day operations and collaborating with Mr. White and the senior leadership team. Their combined backgrounds in leadership roles in software-as-a-service (SaaS) software companies and FinTech lay the foundation for Oliver’s transformational vision of the default management process.

“This is a new day for Oliver and the first step toward a new vision for the default management industry,” said Mr. Ritter. “I am delighted to be leading Oliver’s world-class business alongside Walker and look forward to delivering on our mission and vision.”

To learn more about Oliver, please visit: www.olivertechnology.com.

Media Contact:
Oliver Technology Corporation
Amy Hinzmann, Chief Revenue Officer
amy.hinzmann@olivertechnology.com
+1 888-699-2480

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Three metrics that drive collection litigation performance

Walker White

January 5, 2023

You can’t manage what you can’t measure. That’s as true for collections litigation as for any other aspect of business. Yet most creditors farm out their accounts and have little visibility into how their litigation strategy is working.

To ensure that their litigation is producing maximum recoveries with minimum cost, creditors need to track all of their accounts with consistent and timely measures. Thankfully, this is becoming easier now that cloud-based litigation management platforms can collect and standardize information from all of a creditor’s law firms, regardless of the matter management software they use.

Here are the three metrics that give creditors the best control of their collections litigation:

Net Recoveries

The overall figure is important, but the real power comes from the ability to drill down into the components: how recoveries and expenses vary by location, vendor, product type, and other variables. Lenders can use these insights to optimize the litigation process and also to adjust future lending to tighten standards in areas where net recoveries are low. 

Velocity

The effective return of a litigation program depends as much on the speed of recoveries as the amount. Monitor each step of the process by number of accounts and dollar value:

  • Placement Acknowledgment
  • Demand letter
  • Lawsuit
  • Judgment
  • Asset searching 

Here, too, drilling down can spot bottlenecks by state, specific product, or vendor. 

Vendor Performance

Collections law firms rely on outside companies to perform many of the functions needed to work accounts, including: 

  • Process service 
  • Account scrubbing (to prevent collections for deaths, bankruptcies, and active service members 
  • Mailing letters 
  • Appearance counsel 
  • Asset searching 

The creditor often pays the cost of these vendors and is responsible for their actions. So, it’s essential that lenders know which vendors are working on each account.

Collection litigation systems not only deliver the metrics creditors need, they also make the entire litigation process more efficient.  Learn more by downloading the Oliver Guide: “High Performance Collections Litigation: Five ways analytics and automation can increase recoveries, improve compliance, and reduce hassle.”

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How to cut collection legal fees without cutting corners

Walker White

December 5, 2022

There’s more to managing the collection of legal expenses than simply using contingency fees. After all, the largest expense line in most collection-litigation programs is legal fees.

Simply demanding lower fees can be counterproductive. In this new age of increased regulatory scrutiny, creditors can’t afford to have their law firms cutting corners.

Today, leading-edge creditors are using technology to reduce their legal costs while at the same time making their litigation programs more effective. New cloud-based systems can simplify information flow and collect benchmarking data needed to optimize the use of resources.

The result: Lawyers spend less time tracking down information and more time collecting debts and ensuring compliance.

Here are four of the best techniques for improving the efficiency of collections litigation:

Automation-driven efficiency. Cloud-based technology centralizes communication and document management. Streamlined workflows can substantially reduce the time and labor that law firms spend handling each account.

Centralized vendor management. Collections law firms rely on outside companies to perform many of the functions they need to service accounts. These functions include process service, account scrubbing (to prevent collections for deaths, bankruptcies, and active service members), letter mailing, and asset searching. Rather than relying on individual firms to select vendors, creditors can negotiate umbrella contracts, often at preferential rates, for use by all their law firms.

Data-informed firm selection and service-level-agreement management. With good collection litigation software, creditors can now calculate benchmarks for velocity and recoveries in each jurisdiction. If one law firm is underperforming, a creditor then has the information to negotiate tighter service-level agreements or even shift accounts to another firm in that state.

Restructured fee arrangements. By reducing the time and effort law firms need to spend on each case, creditors are in a strong position to negotiate lower fees. Some lenders may even choose to move away from the standard contingency-fee model entirely. Instead, they can negotiate flat fees for lawyers to perform specific services, such as sending demand letters and filing complaints. (If the case results in a judgment, it may be appropriate to set the fee for asset recovery as a percentage of the amount collected.)

Creditors that automate their collections litigation not only find ways to reduce legal costs, they also reduce errors, improve compliance, and increase the velocity of recoveries. Learn more by downloading the Oliver Guide: “High Performance Collections Litigation: Five ways analytics and automation can increase recoveries, improve compliance, and reduce hassle.”

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Oliver announces intent to acquire Lawgix Services

Walker White

October 26, 2022

Oliver announces intent to acquire legal servicing provider to create 360-degree collections litigation solution for creditors.

Addition of services offering to the Oliver software platform provides a fresh approach for creditors executing repetitive collections litigation processes.

 
WASHINGTON, D.C. – 26 OCTOBER 2022 – Oliver Technology Corporation (“Oliver”), the leading debt collection software platform, today announced the company’s intent to acquire Lawgix Services, the leading provider of managed services for collections litigation. The deal is expected to close January 1, 2023. With this acquisition, Oliver will add to its market-leading collections litigation platform a complete solutions offering and provide a revolutionary approach for creditors executing repetitive processes in collection litigation.

Specifically, in addition to utilizing Oliver’s world-class technology platform, including automated features, creditors will now also be able to tap a world-class team of experts in collections law, process engineering, and technology to handle critical tasks across document creation, case management, payment processing, and vendor coordination.

“This deal represents a critical step forward in Oliver’s evolution from technology platform to 360-degree solution for our creditor clients undergoing the complex and often-repetitive collections litigation process,” said Walker White, CEO, Oliver Technology Corporation. “Creditors are voicing a clear need for expert services in addition to top-quality technology to help them navigate an evermore complex collections litigation space. With this move, we are answering that call.”

The Oliver Advantage
Oliver:Services can replace the traditional model in which each law firm is responsible for the administrative and financial processes in collections litigation. These functions can be handled more efficiently by the central team at Oliver:Services, allowing lawyers to focus on litigation. Benefits include:
● Consistent, precise execution of litigation workflow by a dedicated team of trained paraprofessionals
● Document filing and case management optimized for every U.S. state and local jurisdiction
● Standardized document creation with automatic routing for attorney review
● Tighter controls that set the standard of care for regulatory compliance, security, and privacy
● More accurate accounting, with vendor payments reconciled and recoveries posted to creditors’ general ledgers
● Centralized monitoring and auditing
● Significantly lower total cost for creditors

“We are delighted to be joining the Oliver team. This is really a story of coming home for us, at a time when quality control, transparency, compliance and experience are the highest priorities for top-flight creditors pursuing collections litigation on an ongoing basis,” said John Ritter, CEO, Lawgix Services. “I can’t wait to see all we can accomplish, together.”

To learn more about Oliver, please visit: www.olivertechnology.com

To learn more about Oliver’s services offering, coming January 2023, please visit:
www.olivertechnology.com/products/#Oliver:Services

ABOUT OLIVER
Meet Oliver. We bring precision to complex litigation, focusing on debt collection today. Our software helps creditors and law firms work together across the entire debt collection lifecycle: creditors gain control of their litigation efforts, law firms have an efficient way to collaborate, and consumers are ultimately treated like people, not debtors. Our technology removes inconsistencies, prevents unnecessary errors, and keeps organizations in compliance. It creates operational firepower. And it enables people to work on the important things. We are working to change debt collection’s bad name by building Responsible Software at the intersection of RegTech and LegalTech. All that and more is why leading debt collection operations run on Oliver.

ABOUT LAWGIX
Lawgix provides best-in-class managed services across the entire collections litigation process. The Lawgix team is comprised of creditors’ rights attorneys and paralegals, process engineers, and technologists working in collaboration with creditors, law firms, and constituent stakeholders to create the most effective, efficient, and compliant solution on the market.

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The new compliance risks for creditors that outsource collections litigation

Walker White

January 10, 2022

For creditors trying to recover long charged-off debts, it’s been appealing to use vendors that manage the long and complex process of managing lawyers and filing suit against debtors. Not only did outsourcing save time and hassle, it insulated the creditors from violations of federal and state debt-collection rules made by the vendors.

The Consumer Financial Protection Bureau (CFPB) has long been trying to pierce the compliance shield provided by outsourcing. With its recent modifications to Regulation F governing collections, the CFPB has eliminated much of the protection creditors have against violations by their vendors.

Now creditors need other ways to protect themselves. Here are five of the most important steps any creditor can take to mitigate their risk that vendors could put them in violation of the new regulations:

  • Build a central process for monitoring compliance.  The CFPB has made it clear that lenders are responsible for the “unfair, deceptive or abusive acts or practices” (UDAAP) committed by any vendor they use. As with any other regulations, financial institutions need an independent internal process for ensuring compliance by their own employees and all the service providers they hire.
  • Closely monitor communication with debtors. Regulation F now imposes strict rules on the frequency and content of communications intended to collect debts. It also requires creditors and their vendors to keep track of and comply with requests consumers make about how they want to be communicated with.
  • Bolster the process for communicating details about debts to collection agencies and law firms. The new rules require specific information to be communicated with debtors who ask for evidence the debt being collected is valid. The data for these validation notices needs to be provided directly by the lender and can’t be passed from one vendor to another.
  • Make sure there is an audit trail of all collections activities at the creditor and its vendors.  Be prepared to respond to requests from bank examiners, the CFPB, and plaintiff’s lawyers asking for details about every phone call made, letter sent, and legal paper filed.
  • Consider bringing litigation management in-house. The new regulatory regime mandates a complex and detailed flow of information between creditors, collection agencies and law firms. Adding a master servicer to coordinate litigation increases the risk that something will get lost. Few master servicers have the technology needed to monitor communication by law firms in real time. This makes it very difficult for the master servicers and the creditors they work for to ensure compliance. 

The consequences for lenders of a violation of debt collection rules by a vendor can be significant. The CFPB has shown itself to be very serious about cracking down on regulatory violations, often imposing large fines. And even a small problem could disrupt the operations of a vendor, delaying the recovery of all the accounts it is handling. 

For a comparison of creditor-managed collection litigation to outsourced litigation management, you can download our QuickStudy, “The risk of outsourcing collections litigation: How centralized control can prevent compliance violations and increase recoveries at the same time.”

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How outsourcing collections litigation is hampering your recoveries

Walker White

January 3, 2022

Attention lenders: If you’re still hiring an outside firm to manage your collections litigation, you are spending money on a service that is making your operations less efficient. You’ll be able to increase recoveries while expending less effort if you coordinate your collections law firms in-house.

To be sure, anyone who’s been in this business for a while knows this wasn’t always true. Back when paper documents held sway, creditors hired outsourcers to escape the tedious and costly work of forwarding account files to local law firms and keeping track of their progress.

Today, paper has been replaced by cloud computing (or should have been). And the government now requires creditors to monitor the law firms collecting debt on their behalf, ensuring that they comply with strict regulation.

In this environment, outsourcing collections litigation is no longer the most efficient recovery method. Here are just six of the pain points caused by litigation outsourcing:

  • Disjointed workflows. Many outsourcers use multiple software systems (often emailing documents, too) throughout the collections litigation process, instead of a single streamlined system.
  • Manual document creation. Attorneys hired by outsourcers often create legal filings in Microsoft Word, after gathering supporting information from multiple systems. Data duplication leads to increased risk of errors.
  • Inefficient information exchange. Law firms need facts and documents to support the validity of the creditor’s claims. Eventually, they will need an official of the creditor to sign an affidavit attesting to the claim’s veracity. Typically, outsourcers handle this information exchange through email, delaying collections while creating manual work flows for the creditor.
  • Insufficient audit support. The systems used by most outsourcers are designed to keep track of groups of files that are forwarded as a package to law firms. They typically can’t provide the real-time details of individual accounts the creditor needs to supervise and audit compliance.
  • Costly fees. Aside from the legal fees involved, outsourcers pocket 4%-7% of all recoveries.
  • Heavier workloads for attorneys. Collections lawyers engaged by outsourcers must attend to time-consuming clerical tasks. This busy work leads law firms to ask for higher contingency fees than they would need with a more efficient (and less error-prone)  process.

Today a creditor can solve all these problems by using modern cloud-based technology that enables them to manage their collections litigation in house more efficiently than through master servicers. Specifically:

  • State of the art workflow management systems allow creditors to store collections data in a single repository for smoother workflows.
  • Documents are automatically assembled without draining clerical processes.
  • Compliance is simplified, since the system is centralized and disallows debtor-contact that would violate regulations.
  • The administratives costs involved are typically well below those charged by outsourcers.

Best of all, the enhanced efficiencies mean improved productivity, increased volume, lower legal fees, and ultimately, higher returns.

For a comparison of creditor-managed collection litigation to outsourced litigation management, you can download our QuickStudy, “The risk of outsourcing collections litigation: How centralized control can prevent compliance violations and increase recoveries at the same time.”

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