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Dissecting the New World of Text and Email

  • Written by Michael L. Starzec

starzec michaelWhen my wife and I were in California, she insisted on taking a picture next to the sign outside Facebook’s HQ, a sign bearing the ubiquitous “Like” icon. There, I noticed that the reverse side of the sign bore the logo of Sun Microsystems. This confounded me. Is Zuckerberg that cheap? However, Zuckerberg purposefully did this when they took over Sun’s campus to remind employees what happens if you fail to innovate. In 1998, Sun was on top of the world. Two years later, Microsoft, Intel and Linux caught up with Sun and offered their comparative products at a cheaper price. Ten years later, the company that had called itself “the dot in .com” ceased even to be a dot on the map.

The same holds true in our industry: The FDCPA remained stuck in the 1970s, lacking only bellbottoms, pet rocks and a Bee Gees album to complete the look. Then, on May 22, 2019, the CFPB proposed rulemaking to finally address the 21st century.

Recognizing communication technology evolution has led to a consumer preference for email, texts or web portal communication, the CFPB proposed rules for the new communication modes. First is a “limited content message” that will not qualify as a communication under the FDCPA, so long as it does not communicate certain specific pieces of information that can be texted or emailed. Second, Cease and Desist requests will be specific to the form of communication. For example, a consumer can designate emails as their preferred communication means and limit all others. Third, the rules will allow use of emails and texts in debt collection, with certain limits, such as inclusion of instructions to opt-out of receiving emails or texts. Finally, the rules would set out procedures to protect debt collectors from liability for unintentional third-party communication when using emails or texts.

The proposed rules will allow the transmittal of required correspondences via email or text. In addition to a safe harbor initial demand letter form, a debt collector will be able to send that initial demand electronically. If sent in that manner, the Bureau will set forth requirements and allowances for debt collectors to provide prompts within the communication for disputes, validation and other features. Hence, the consumer could click on a link in your demand letter to dispute the debt, cease and desist or make a payment. To further protect debt collectors, the Bureau would create a model validation notice, clarify how to validate debts electronically and a safe harbor if the debt collector complies with certain steps when delivering validation notices within the body of an email, if that is the initial communication.

When Netscape Navigator was deemed David to Microsoft’s Goliath, Bill Gates is claimed to have said they had to “innovate or die.” That is no different here. The CFPB is proposing these rules and on their face, the changes are refreshing, they seek to balance the overreaching of the former CFPB chair and allow for our input. Now, given the relative fairness of the proposal, we could sit back and let the process play out. However, it is important that we stop being reactive and be part of the change. I can guarantee that our friends on the consumer side will loudly proclaim these proposed rules are bad for consumers. As we know, they really mean that the rules will be bad for business. This is a chance not simply to modernize communication but create black and white standards to protect us against the endless lawsuits that feast on the gray areas of the FDCPA. Let your voice be heard, whether on your own or through a national organization. Shape the future, don’t be shaped by it.


Michael L. Starzec is a partner with Blitt and Gaines, P.C and is vicepresident of the Illinois Creditors Bar. He is a frequent speaker, writer and litigator on creditor’s rights.

Scouring Documents Quicker with Optical Character Recognition

  • Written by Michael L. Starzec

starzec michaelIf you were to ask me, a court-going litigator, to discuss tech breakthroughs, this would be a dull article. I would extol e-filing, as it allows me those final, final, final edits well after 5:00 p.m. Next, I would mention remote access allowing me to work, as I am now, while waiting for court. Finally, I treasure the ease of converting Word documents to PDF (and vice-versa). As it turns out, that last function is the heart of a revolution in efficiency.

Make Many Documents Few

No, we’re not talking about the first impression you make when you walk in the room. Optical Character Recognition, or OCR, is simply the electronic conversion of typed or printed text into machine coded text. This, in its most basic sense, is what Adobe or other PDF conversion programs do. However, this is OCR’s most basic function. OCR use has not only made e-filing simple and easy, but in its broader applications, it makes possible text-to-speech and text mining. That sounds like technobabble and it is but OCR has changed the most important aspects of a collection firm: court filings, compliance and payment processing.

Our firm undertook a major effort to “tag” documents, having our OCR technology recognize key words in forms and court orders to trigger later events. For example, once an order is scanned, we can run a search by county and specific order type (judgment/alias) and tell the system to undertake a certain task – have an alias summons printed for attorney approval, prepare a report for the client of all the judgments from Washington County, etc. Staff time is saved from manually reviewing and coding on each individual file. This also allows us to check results. If we go to court with 25 files and postcourt we run a report and find we only have 23 orders, we can easily determine which are missing and what happened.

At the same time, once the OCR has determined an alias needs to issue, it creates the PDF form, telling the system to pull the previously filed complaint to accompany the alias. Then, it combines it with other cases set in the same county on the same date, depositing them in a file folder for review and approval by attorneys. Gone is manual data entry and physical printing of pleadings. Yes, manual reviews by staff and final approval by attorneys takes place, but the heavy lifting of printing, collating and matching documents is largely gone.

Payment Processing Enhanced

The same system affected our payment processing. OCR changed how we look up, present, and process payments. By reducing manual data entry, we sped up payment processing and increased accuracy. We also utilize the inverse of OCR for monitoring compliance in our phone conversations with consumers. Speech-to-text call auditing allows for control reporting to ensure compliance with legal and client standards for better call experiences and reduced audit findings. In addition, it catches items not coded properly – the consumer claimed fraud but we coded as a dispute – One requires an affidavit and investigation, the other requires validation.

However, for any system of data automation to work, you have oversight and controls. The key to this process is control reporting. Our internal audit process verifies everything that should have printed and every payment received is properly credited. Hence a robust internal compliance procedure and team is key to ensuring an OCR based system works.

In effect, for lawyers, words now serve two different purposes. On the one hand to persuade and on the other to provide a mechanical framework to ease the workload on your office.


Michael L. Starzec is a partner with Blitt and Gaines, P.C and is vicepresident of the Illinois Creditors Bar. He is a frequent speaker, writer and litigator on creditor’s rights.

Collectors Help Consumers Obtain Credit

  • Written by Michael L. Starzec

starzec michaelWhile in court, a consumer requested to discuss settlement. After the mini-Miranda, he asked if I was aware of the Holy Bible. When I advised him that the nuns at my grade school expected us to have read it he immediately broke into broad smile stating that he knew the matter would proceed “virtuously.”

Then, he produced a well-thumbed Bible, turned to Leviticus 25:8-13 and read to me its duty of debt forgiveness in Jubilee years. Since it was Jubilee year and because “America is Judeo-Christian nation” he was sure I would dismiss the case. When I suggested the Jubilee didn’t apply to modern entities, he considered me as a teacher addressing a particularly dim student, asking if I questioned the relevance of God.

Not surprisingly, I suggested we involve the judge but the young man switched from the Old Testament to the New, insisting that Jesus would forgive his debt. Unmoved, I offhandedly noted that even Jesus agreed that one should render unto Caesar his due. At this, the young man disgustedly announced that Jesus had broken bread with tax collectors but mentioned nothing about forgiving debt collectors.

That little vignette is amusing but his reasoning is not much different than the views of utterly agnostic regulators and legislators. As philosopher and economist Adam Smith noted, “[v]irtue is more to be feared than vice, because its excesses are not subject to the regulation of conscience.” Eschewing the Bible for civic morality, legislators nonetheless endow legislative and regulatory efforts with the virtue of protecting consumers from the black hats – us. And, because these efforts are driven by the “virtue” of preventing the poor from repaying legal debts, well, case closed.

Fighting For Time

We faced such virtue signaling just last year: We were part of a coalition that tried to bring veracity to virtue when faced with a legislative package that imposed automatic exemptions on banks, increased the income threshold for garnishments while virtually eliminating interest and slashing the lifetime of judgment. Put differently, it took longer to collect them but with less time to do it - the perfect arrangement for virtue signaling polls. Notwithstanding that Federal Reserve studies found that increasing collection regulations increased interest rates for the same vulnerable people the politicians hoped to protect. Never mind that, in some cases, increased regulation led to lost access to credit, because this was all in an effort to assist the relatively small group of consumers who default.

In the end, the collective lobbying efforts succeeded in thwarting the proposals… temporarily. However, with the advent of a new governor, these same bills are set to be reintroduced this month. So why now? In my mind, these bills are a reaction to what consumer advocates see as the neutering of the CFPB. When it was in place and creating regulations by litigation rather than by promulgation, closing down law firms on the basis of standards that didn’t exist at the time, the local actors were content to sit back and let the power of the federal government do its work.

Time for Vigilance

For our part, at the time, it was easy to identify federal intervention as the main concern and focus of our efforts. However, it also clouded us to the simple truth that regulation comes at all levels and legislation is simply regulation without an agency. Bills such as these should remind us that as a profession, we have to be vigilant on behalf of ourselves and our clients at all times and at all levels. We need to ensure we are organized locally, statewide and nationally. We have to involve all the actors in the effort – our clients, our vendors – to understand that regulations on us impact everyone connected to our firms, from process servers, to asset location services, to efiling and many, many more. Likewise, when we have a politically favorable climate, we can’t simply wipe our brows and be glad to be left alone. We must ensure we move to enact fair legislation.

And we have a good story to tell – readily available credit helps many, many more people than it hurts. The first loan you repay sets you on a path to financial independence. Denial of credit helps few and may permanently impact a consumer’s future. Where necessary, we are the conduit to communicate consumer hardship and, in getting old loans paid, we allow the consumer to reset their financial clock and look to the future. Not a bad day’s work but, unless we vocalize it, the virtue of what we do is lost.


Michael L. Starzec is a partner with Blitt and Gaines, P.C and is vicepresident of the Illinois Creditors Bar. He is a frequent speaker, writer and litigator on creditor’s rights.

More Powerful Than Money: How to Really Motivate Employees

  • Written by Michael L. Starzec

starzec michaelOne of the most enduring scenes in Francis Ford Coppola’s “Patton,” is Patton’s speech whose purpose is clear: to motivate men to fight. The speech is really a collection of Patton’s most colorful quotes, woven together as an exhortation to perform well. For myself, I’ve never liked the rah-rah speech as I am pretty self-motivated. However, that is not a humble brag. You see, my dad lived through the Great Depression, spent his 18th birthday (June 6, 1944), at place called Normandy, then fought in Korea and Vietnam. Hence, if I ever told my dad about being unmotivated, suffice to say, there was not a ton of sympathy for esoteric angst over my desk-job travails.

With that upbringing, I found it hard to relate to an unmotivated employee who knew hard work likely meant better pay. Understanding their pay was not the sole motivation was a revelation: Patton’s one-size-fits-all motivation was appropriate because that’s how militaries work. As was noted in Peter Jackson’s recent World War I documentary, “They Shall Not Grow Old,” a soldier who complained about small boots was told: “It isn’t the boot that doesn’t fit you. It’s you who doesn’t fit the boot.” In today’s economy, that is not the answer.

Recognition

In collections, the bottom line is dollars making it easy to assume every aspect, including employees, is motivated by money. However, Harvard Business School found that perks, promotion and pay “don’t necessarily excite people to work smarter or harder. Instead, they prompt employees to do only the minimum required to get that next raise or job title.” Instead, studies by MIT, the London School of Economics, and Carnegie Mellon found that recognition from managers and peers results in employee motivation and retention.

Motivation and retention are intrinsically linked. When an employee leaves, there is recruiting, interviewing, training, resulting in reduced productivity for the manager who is interviewing then training as well as the new employee who will take time to get up to speed. All of this increases your operational costs. These findings are not the esoteric musings that did not impress my father: A Gallup study of 10,000 business units in 30 industries found that recognition leads to retention, increased employee effort and profitability.

Engagement

For us to organize with this mindset, the first step for me was personal engagement with new attorneys from the start. There you can determine aptitude, interest and ability in litigation, drafting, court appearances, organizational skills and willingness /confidence in public speaking. This allows us to focus on specific training and channeling the attorneys to their strengths. Additionally, we do not learn the attorney’s skill set but we get to know the person.

We also make an effort for spontaneous, departmental recognition. When a new associate wins their first trial or hearing, all the attorneys receive an email about the attorney’s accomplishment. Likewise, client or judicial compliments, effective handling of a difficult matter, or identification of a compliance issue are announced to their peers. Importantly, we ensure the other partners are aware: It is one thing to have your manager recognize you and another to have a partner do so.

Stay Connected

Finally, I try to stay connected with what my attorneys are doing: I attend volume court calls, review pleadings and placements – this lets me know what my team is juggling on daily basis. Consequently, I can make more informed decisions on time management and staffing while showing engagement. And it’s never a bad thing to occasionally bring coffee and some good donuts. Thus, it’s not the necessarily the Carrot and Stick approach because, as author Dan Pink noted: “Humans aren’t horses.”


Michael L. Starzec is a partner with Blitt and Gaines, P.C and is vicepresident of the Illinois Creditors Bar. He is a frequent speaker, writer and litigator on creditor’s rights.

3 Major Steps to Maintain Confidence in Your Compliance

  • Written by Michael L. Starzec

starzec michaelIn the modern compliance era, collection law veterans have become inured to seemingly relentless rounds of annual, bi-annual, and quarterly testing, certification and recertification exams that we take on a yearly basis. For us, compliance is used to improve your practice, modernize workflow and protect against audit failures. Indeed, it becomes cost-effective as you avoid risk and attract business with robust compliance controls. However, your associate attorneys often do not perceive these impacts as they wrestle with compliance on a day-to-day basis.

In the not-so-distant past, I managed our associate attorneys, that tenure ending just as the reality of CFPB oversight lead to compliance-heavy training and testing. Then, as now, the allure of collections was the promise of a steady diet of court, arguing many substantive motions and obtaining significant trial practice. At that time, after a few hours of FDCPA training and testing and a quick review of the employee manual, a new associate was with attorneys on day one, reviewing case law and learning how to prepare a court call. By day two, they were shadowing an attorney in court.

Now, an associate won’t see an attorney or think about the law (other than the FDCPA) until their fourth day at the firm. In addition, depending on the client, a new attorney may take up to 14 different tests. And these tests cover areas as diverse as Fair Lending to the American with Disabilities Act to Anti-Money Laundering. In fact, at one point, for a mortgage lender we actually had a test on the federal Flood Insurance compliance. (Not surprisingly, flood insurance was never raised by a defendant in a single case we handled for that client.)

But when we reflect on the training, it is not surprising a new associate leaves bewildered. First, they take a test on the FCRA but later are informed attorneys cannot discuss the implications of the FCRA in settlement discussions. While they never process an electronic payment, they learn about the Electronic Fund Transfer Act (EFTA). They wonder if they would confront claims of inappropriate access to bank facilities. And, from all of this testing most of the attorneys immediately realize that simple, honest mistakes can result in FDCPA lawsuits. One associate noted that as attorneys handle the case last, they are the line of last resort to prevent a lawsuit.

- Click here for the Electronic Fund Transfer Act and checklist (Collection Advisor Professional Network Members Only) -

This sobering realization is useful information for all of us with management roles. While we want to create a compliance culture, we do not want to have employees constantly on edge, fearing decision making. For that reason, our firm has made efforts to ensure our attorneys can practice law and compliance with confidence.

1. See the Whole Process

First, we try to ensure that we don’t let our various departments work in a vacuum. Therefore, we expose our attorneys to the entire process, from placement review to filing of post-judgment remedies. Not simply to know how a file gets to court, but to let them know that there are people and processes in place to detect mistakes or changes in the circumstances of the file.

2. Someone to Summarize

Second, because we as partners and managers are engaged more often in disseminating information rather than having to act on that information, it is critical to come up with ways to cope with the sheer volume of material that falls upon the staff. On a monthly basis, think how many times we receive client updates or are issued an entirely new client guide comprising hundreds of pages. And all of these changes are acknowledged with a simple click of the mouse. With the amount of work an attorney must perform, synthesizing that information into actionable intelligence is nearly impossible. To combat information overload, at our attorney meetings, we have an attorney who is responsible for summarizing all the changes that may impact our attorneys over the course of that month. We quickly discovered that these summaries yielded discussion, questions and feedback. Something we rarely obtained by simple email dissemination.

3. Re-Familiarize with the Workload

Finally, it is important to re-familiarize yourself with the day-to-day work your attorney performs. Walk into their offices, find out what issues they are facing, find out how much the practice of collection law has changed since we were the ones running around the court house. Having effective lines of face-to-face communication leads great benefits to staff morale and leads not simply to work satisfaction but breeds a culture of cooperative compliance and teamwork that can only enhance the effectiveness of your practice.


Michael L. Starzec is a partner with Blitt and Gaines, P.C and is vicepresident of the Illinois Creditors Bar. He is a frequent speaker, writer and litigator on creditor’s rights.