National Electronic Payments Month

Engaged Collectors Instead of Dialer Zombies

eidson samManaging a collection floor certainly has its highs and lows. It’s always been a, “what have you done for me lately,” kind of business. Whether your agency had a strong or weak performance last month, one thing you can count on is it will all start over next month. Collection floors typically consist of a wide variety of age groups, backgrounds, personalities and education levels. Throughout the years I’ve had the opportunity to manage many hard working professional debt collectors mixed with my fair share of the attendance-challenged, prima donnas, conspiracy theorists and those who aren’t happy unless there’s drama.

Creating the right culture and having the ability to manage personalities can make the difference between a cohesive collection floor versus one that is dysfunctional. The collector role doesn’t require a degree and in most states collectors don’t have to be licensed making it difficult to find career-orientated business professionals. Most candidates didn’t learn specific skills such as time management, prioritization and multi-tasking like those who attended college.

When hiring, there are positives and negatives to candidates with or without experience. Sometimes those with experience can be set in their ways making it difficult to coach and teach them your way of doing business. While experienced collectors tend to come with bad habits they also understand how to collect a debt. The other negative could be their inability to collect compliantly given our industries regulatory landscape. I prefer hiring collectors with little to no experience because it’s easier to teach them our way of doing business. However, there can be negatives to this strategy. For example, our society has created a sense of entitlement for the younger generation and the need for instant gratification. Years ago we didn’t have to run contests in order to motivate collectors. Their bonus check was motivation enough. Now it seems like collectors are more motivated by lottery tickets, prizes or paid time off rather than monetary compensation.

Collectors in 2018 have it easy compared to when I became a collector over twenty years ago. Technology and automation has taken the craft out of the collector role. I can remember having a rolodex full of contacts from other companies with whom I’d share information, calling directory assistance or using telephone books to find location information for a consumer. Now there are multiple vendors at our disposal who you can send a batch of accounts to and in return get the consumers’ most recent contact information all within a matter of minutes. Collectors no longer have to dig in order to find consumers because we do it all for them. To make it worse, the use of dialer systems created what I like to call dialer zombies. Dialer zombies are those collectors who just sit at their desk waiting for contacts to be fed to them. It takes constant motivation and oversight to ensure collectors are valuing each contact because they know another contact is coming their way as soon as they end their current call. In recent years our dialing strategy has transitioned to more of a manual approach forcing collectors to generate contacts on their own. Even managers had to adjust their mindset because we no longer used the set it and forget it approach. Prior to going with a manual approach we had to create a structured strategy that segmented the business in a way that makes sense. Once the strategy had been created we then had to focus on collector development.

Collectors have always found shortcuts to make their job easier. Teaching file maintenance to collectors I identified as dialer zombies became quite the undertaking. Without the basic fundamentals it can be difficult for collectors to consistently perform, not to mention satisfying our clients’ needs. I encourage our management team to engage their collectors throughout the day and monitor key performance indicators such as attempts, contacts and payments to ensure each collector is doing what we expect. Walking the floor, performing side by side training and holding internal call calibrations are ways we engage our collectors. If we don’t put an emphasis on training and development the collectors won’t feel the need for improvement or see the opportunity for advancement. As the old saying goes we would rather spend our time developing employees with the risk that they leave than not develop them and have them stay.

Sam Eidson is the Director of Operations for Delta Outsource Group, Inc. He also serves on the Board of Directors for the Missouri Collectors Association.

How Speech Analytics Changed the Way We Do Business

eidson samShortly after the Dodd-Frank Act and CFPB were created our organization made the decision to stay ahead of regulation by tying a collector scorecard to our collector bonus program. The purpose of the scorecard was to incentivize professional and compliant collections while driving performance. Our proprietary scorecard used randomly selected call recordings in the evaluation process. The scorecard consisted of five calls per agent that were a minimum of four minutes long and the consumer had to be willing, unwilling, able or unable to pay. Bankruptcies and disputes were not scored. The four categories we evaluated were opening of the phone call, call progression, obtaining full and complete information and compliance with all debt collection laws as well as our employee code of conduct. The scorecard used a proprietary formula to assign an overall scored percentage encompassing all of the aforementioned subjects. The overall scored percentage on the scorecard would be the percentage of the bonus dollar amount the collector received for that month. For example: if the collectors’ performance earned a $1,000 bonus but they received an 80% on their scorecard they would only earn an $800 bonus check. As I’m sure you could imagine, some collectors did not adapt well to this change. The perception was that the company was trying to take money from them. We experienced some negativity and even lost a few collectors who couldn’t accept this change. Almost eight years later we’re confident we made the right decision to hold collectors accountable for how they collect the debt.

In early 2015 we decided to add speech analytics to our way of doing business. In the beginning we underutilized the product with the basic reports provided. During the fourth quarter of 2016 we were contemplating whether speech analytics was worth the cost. We knew that the product had all of the bells and whistles but if we weren’t taking advantage of them, why continue paying the cost? The only way we could justify keeping speech analytics is if it could replace a full-time employee in our compliance department.

We spoke with our speech analytics vendor, expressed our concerns and advised them that the only way we would continue to use their product was if we could create an automated scorecard that replaced our manual process. They agreed to come onsite and help us build the scorecard we have today. There are nine compliance elements of the scorecard including proper ID of self, consumer, company and client, mini-miranda, two-party consent, FDCPA violations, risk and abusive language and legal action mentions. Now, instead of only scoring five calls per agent we evaluate their full body of work throughout the month.

We spent the next two months testing the scorecard for accuracy. We wanted to ensure that we felt comfortable with the scorecard prior to rolling it out to our collectors and ultimately affecting their income opportunity. Senior management feared rolling this out to our collectors because of how it was received years ago. In order to avoid negativity and turnover we had to explain how the automated scorecard not only benefits our organization but also how it benefited the collectors. Believe it or not, we didn’t have to sell the idea to the collectors because the majority of their scores actually increased. It all makes sense because if the collector failed one call out of five that accounted for 20% of their overall score. With the new automated scorecard one failed call out of two hundred has a much smaller impact on their overall score. We have also created standalone categories for excessive silence, profanity, TCPA risk and after-call work which monitors how long it takes for the agent to go from one call to the next. These reports are sent out to the compliance department daily. If there are any issues the collector is addressed immediately. Within three months of implementing the automated scorecard we were able to reduce our compliance department by one full-time employee.

Now that we’ve successfully completed our compliance scorecard using speech analytics, our focus will shift to collector efficiency. A few of the categories we will add are demanding the balance, offering settlements, payment arrangements, call duration and a seasonal category for tax time talk-offs. Even though speech analytics can be costly and may not be a fit for all organizations, there are ways to offset the cost by incorporating efficiency into your business objectives.

Sam Eidson is the Director of Compliance for Delta Outsource Group, Inc. He also serves on the Board of Directors for the Missouri Collectors Association.

How I Handle Federal and Private Student Loan Collections

eidson samMany are concerned that our nation is heading in the direction of another financial crisis. Almost 10 years since the great recession involving sub-prime mortgage loans, we could be facing another collapse due to the excessive amount of student loan debt affecting over 44 million Americans owing more than $1.4 trillion. That’s about $620 billion more than the total U.S. credit card debt and it’s getting worse with over 3,000 student loans going into default every day. Former students with and without a degree have become distressed borrowers needing assistance. The accounts receivable management profession plays a vital role in helping these borrowers resolve their unpaid debt. While both federal and private student loans offer high volume, consistent placements and larger average size balances, there are many differences between the two. Today we discuss some of the differences and our collection approach for each product.

In most cases the student doesn’t have credit history in order to qualify for the loan on their own. Often their parent or grandparent will cosign for the loan. Initially I attempt to reach the former student in an effort to set up a repayment plan. Once I make contact I set the tone by demanding the balance. After I have the borrowers attention I then update their full and complete information. The demographics I update are: the mailing address, phone numbers and, most importantly, their place of employment. I always avoid yes and no questions and ask less important questions that lead into the main question I want to ask. For example, I ask if they are working full time or part time. I then ask what their occupation is and for whom they work? By starting with non-invasive questions the borrower becomes comfortable and you lead them to the answer you desire.

If I get the runaround from the borrower or if they do not have the ability to pay, I head straight to the co-borrower. Even though the co-borrower signed their guarantee they really don’t want to pay for the loan. They have their own expenses and did not expect for the loan they guaranteed to go into default. It’s our job to educate the co-borrower and advise them why it’s important for them to accept responsibility and repay the loan. Once the borrower or co-borrower has agreed to pay, setting them up on a secured arrangement is of the utmost importance. When demanding payment I give them the options that are best suited to resolve the account. I advise them that we can set the arrangement up via checking or savings and ask which option is best for them. If they claim to not have their checkbook I advise them that I can get the routing number so long as they know their account number. If they claim to not know their account number I immediately respond saying, “that’s okay, we can make an exception and set it up via debit card. Go ahead with your card number as soon as you’re ready.” I have found success with the aforementioned collection approach for all types of debt throughout my career.

Federal loans offer income-based payment plans so collectors are able to offer various options to the borrower. Unlike private loans the statute of limitations doesn’t apply and many of the loans are non-dischargeable in bankruptcy. Federal loans can also be recovered by seizing income such as disability or tax refunds without having to take the borrower to court.

Private loans do not have as much flexibility when it comes to repayment plans. To make things even more difficult, the borrower could be under the impression that they already have an arrangement to repay the debt. This happens when the federal collector offers an arrangement that is all-encompassing. Unfortunately for the borrower the “all-encompassing” arrangement does not include their private lenders. If collectors are unable to resolve the loan on a voluntary basis with the borrower, private lenders may have to take the borrower to court and get a money judgment in order to use garnishment as a way of collecting. Once a judgment is in place the lender can also force liens on the borrowers’ assets. This approach may be necessary as private student loans are subject to the statute of limitations.

Sam Eidson is the Director of Compliance for Delta Outsource Group, Inc. He also serves as Secretary for the Missouri Collectors Association.

Working with the Modern Mortgage Consumer

eidson samAlmost a decade ago the mortgage industry turned upside down. Many factors led to the crash including our economy, subprime lending and adjustable rate mortgages. As a young collector in my twenties I was able to purchase my first home using a stated income and was given a 30-year mortgage with a rate that adjusted after seven years. We submitted a stated income to the lender in order to get approved because 60% of my annual income earned was from bonus checks. For some, this process for approval backfired because the loan was based on income that was not guaranteed. Some of you may remember the refinance boom. Loan officers attempted to assist consumers by refinancing their home loan for bill consolidation, home improvements or to avoid their interest rate and monthly payment from increasing after adjustment. The opportunity to make large commission checks even prompted a few of my colleagues to leave the collection industry and become loan officers. A few of them partnered with me to where I would send the consumer their way and, if they could, refinance the consumer’s loan where I would receive a kickback. The agency I worked at saw this as an opportunity and even opened a mortgage company to which we could refer consumers. Could you imagine how that would be received given today’s regulatory environment? Things sure have changed over the years as we make our recovery from the economic crash. There are many home loans left unpaid needing assistance from collection agencies.

All collection products require a unique approach and the same holds true for unpaid mortgages. Collectors must have advanced skills in order to be successful collecting mortgages. As with any type of debt collection, knowledge is power. Having information such as property address, property value, a recent credit report and knowing state laws are essential prior to making contact. Once contact is made take time with the consumer and allow them to explain their situation. The information they provide will help you understand which options will best fit the consumer’s need. After you’ve listened to the consumer you can begin walking them through what is best for them and the servicer. If the consumer is still in the home, find out if they want to keep the home or if they just want out. By the time you reach them the servicer has more than likely already offered a deferment or loan modification. If the consumer wants to keep the home, they have equity and their credit allows they may be able to refinance their loan. If they don’t have equity and their credit doesn’t support a refinance, try to work out a payment plan that satisfies the servicer in an effort to avoid foreclosure. If they want out of the home and have equity they may be able to sell and could potentially make a profit. If they are too far upside down they may have no other option but to short sale the home. In order for this to happen all the lien holders would have to agree on a payoff. Having a copy of the HUD will help you determine how much money is available and ensure you negotiate the best possible settlement. If the consumer is not willing to cooperate, foreclosure may be inevitable.

If you are collecting on a second mortgage or line of credit state law may protect consumers who are current on their first mortgage. Consumer protection laws limit the ability to collect these types of debt forcing many lenders to wait until the home sells eventually satisfying the lien. Once the home has been foreclosed the second mortgage or line of credit becomes unsecured debt.

If the home has already been foreclosed, making contact with the consumer could be challenging. A certain amount of skip tracing may be needed in order to obtain the most recent address, employer or phone number. For many Americans their home is the last thing they stop paying so if they’ve recently fallen delinquent their financial situation may not allow them to repay at this time. Again that’s where collectors must have the ability to listen and solve problems while not being intimidated by large balances. Volume and resources have forced many agencies to rely on dialing systems however based on the need for skip tracing and personal touch I recommend a dedicated team of experienced professionals that are geared towards a manual dialing strategy.

Sam Eidson is the Director of Compliance for Delta Outsource Group, Inc. He also serves as Secretary for the Missouri Collectors Association.

The Step-By-Step of Commercial Collections

eidson samAlmost ten years into my collection career I was introduced to commercial collections. I was given the opportunity to collect for a postage meter provider and heavy equipment leasing company. The two clients were dedicated to me and I was provided an assistant to help with skip tracing and outbound calls. What I learned from this experience became invaluable. I quickly learned how you approach commercial debt is far different than consumer debt.

Although the FDCPA doesn’t apply to commercial collections, that doesn’t mean you can do whatever you want. In fact it’s the exact opposite. Whether you contact accounts payable, the office manager or owner, each require a unique approach. For example when you make contact with accounts payable you must remember they are not responsible for the debt, in some cases aren’t concerned about potential consequences and may have been directed not to pay the debt for various reasons such as financial hardship or a dispute of charges. When talking to an office manager they may not have the authority to cut a check and would have to communicate with the owner in order to get the invoice paid. Once you’ve determined they are not a decision maker, I recommend focusing your attempts toward the person who can make decisions. Often that person is the owner of the company. If you are able to make contact with the owner, you have to keep in mind they are used to giving orders, not taking them. They need to be treated with the same level of respect you would give to the owner of your company. There may be various reasons why an invoice went unpaid, sometimes the accounts payable department is unorganized and misses due dates or they have been advised to only pay the necessities until receivables come in.

I always went in to the call expecting to get paid. However, getting a first talk off payment can be challenging. Most of the time the company wants an updated invoice prior to releasing payment. Other times you may discuss the debt with someone who doesn’t have the autonomy to make the decision to release payment. I always took the chain of command approach. After sending our initial dunning letter I would call and ask to speak with accounts payable. So long as I’m making contact and talking money, I would allow them to do their job.

If I started to get the runaround I would then approach the personal guarantor or owner. Unfortunately calling the place of business in an attempt to reach the owner is nearly impossible. Employees in almost every company have been trained to screen calls so the owner isn’t caught off guard with unsolicited sales calls. That is where I became creative by using skip tracing tools to find the owners home or cell number. One tool I used was the Accurint People at Work feature which would provide the name and title of each employee within the company. You can search by company name, phone number or Federal Employer Identification Number. Once you find the company you are looking for you can drill down to the President, Owner or C-level associate by name or social (if provided).

As you can imagine, the last place an owner wants to take a business call is from the comfort of their own home. You quickly become top priority and find out why the invoice went unpaid. Some owners don’t even know the bills aren’t being paid. Others explain they are going through financial difficulty and need assistance. If they have personally guaranteed the loan they are legally obligated to pay and their credit can be affected. If the business is affiliated with Dun & Bradstreet, their business credit rating could also be affected.

In some cases the business has dissolved or been acquired. If the business has been dissolved but there isn’t a personal guarantor, the chances of getting payment are slim to none. If the business has been acquired you will need to discuss the details of the sale with ownership. Ask if new ownership purchased assets and liabilities or just assets. If there is collateral involved your client may have rights to the asset. If the collateral holds value find out if there is a Uniform Commercial Code (UCC) lien and try to arrange voluntary repossession.

Commercial collections can be very rewarding with the right approach.

Sam Eidson is the Director of Compliance for Delta Outsource Group, Inc. He also serves on the Board of Directors for the Missouri Collectors Association.