Collector - February 2016 - 19


Service member status, for example-
which Warshaw said his company scrubs
for at time of placement, time of suit, time
of judgment and time of execution-must
be obtained to ensure compliance with the
Servicemembers Civil Relief Act.
Litigious consumers present a huge
contact risk because they continue to cost
collection agencies thousands of dollars in
unnecessarily legal fees. Of the lawsuits filed
under consumer statutes in November 2015,
WebRecon reported that 36 percent of the
plaintiffs were repeat filers.
"These people are out to sue, period," Britt
said. "Stay away from them. Remove them
from your call campaign. You need to know
who these folks are. It's a huge risk to your
organization if you don't know who they are."
Bankruptcies also come with special
protections that collection agencies
must watch for. When a consumer files
a bankruptcy petition with the court, an
automatic stay is instituted that prohibits
any attempt to collect or recover a claim
against the consumer that arose prior
to the bankruptcy proceeding. Debt
collectors should have policies and
procedures in place to identify bankruptcy
filings in order to avoid a violation of the
automatic stay or discharge injunction.
While most agencies are aware of this,
Warshaw noted that many fail to conduct
effective scrubs.
"I will review an agency practice
and I will find that they are doing their
bankruptcy scrubs, but they are only
looking back a few years," he said.
"However, the account could be older than
a few years, and as such the search they are
performing is inadequate. They should be
looking back to the actual date the debt was
incurred, not just the last few years."
Law firms, for example, may be working
10-year-old judgments they secured from a
client who transferred the judgment from
a prior law firm. But if you are not looking
back far enough, you will not know if the
consumer filed for bankruptcy before the
claim was received. The prior law firm or
owner of the debt may have issued the
bankruptcy notice from years ago.

COLLECTOR 02.16

"If you are only looking back a little bit,
depending on what type of business you
are handling, you could be falling into that
trap," Warshaw said. "For someone who is
collecting fresh medical paper, a year may be
adequate. But for someone who is collecting
older accounts, you need to think about how
far back you are going to look."
Additionally, if your client is not the
original issuer, you should understand
how it got the claim information in the
first place as well as the quality of the
information it is relying upon. Agencies
must know their clients' policies and
procedures, how they process their data
and how they obtain and secure their data.
Read what the retainer agreement with your
client says, and make sure that your client
takes ownership of the accuracy of the
information it is giving you and it does not
contractually disclaim its accuracy.
"If you don't verify the information, you
could be getting a $1,000 balance, but really
it's $800 and the client who sent you the
claim added interest that wasn't permitted
by contract or law, or added collection fees
that you don't know about yet is blended
into the placed balance," Warshaw said. "If
you're not getting documentation with your
placement files, then how do you know
what you are getting?"

UNDERSTANDING THE FCRA
Are you credit reporting? If so, you are a
data furnisher pursuant to the Fair Credit
Reporting Act and should be following
furnisher rules. Agencies that credit report
must have policies and procedures in place
governing their actions.
The FCRA provides a number of
permissible purposes for reviewing
consumer reports, one of which is the
collection of a debt. For many years,
collectors assumed that the term "debt" as
used in the FCRA included items such as
parking tickets and fines; however, an 2007
appellate court decision concluded that
debt collection is not a permissible purpose
for accessing a consumer report unless the
debt in question arose from a voluntary
credit transaction. In some cases voluntary

PPMS CAN HELP SHORE
UP YOUR POLICIES AND
PROCEDURES
You have to put pen to paper
before you put your ear to the
phone. Written policies and
procedures are not only helpful-
they are essential, according
to the Consumer Financial
Protection Bureau.
ACA's Professional Practices
Management System can help
agencies align their internal
policies with the compliance
issues on the CFPB's radar.
PPMS is a management system
for collection agencies that
helps them develop, implement
and adhere to a set of industryspecific professional practices.
It teaches you how to create
comprehensive company
manuals, procedures and work
instructions.
PPMS can play a key role in
agencies' regulatory compliance
efforts, as its certification
requirements closely align with
the CFPB's expectations.
The first step toward PPMS
certification, the Foundational
Training on PPMS online training
session, will be held March
16-18. For more information
or to register for the event, visit
acainternational.org/events.

19


http://www.acainternational.org/events

Table of Contents for the Digital Edition of Collector - February 2016

Collector - February 2016 - Cover1
Collector - February 2016 - Cover2
Collector - February 2016 - 1
Collector - February 2016 - 2
Collector - February 2016 - 3
Collector - February 2016 - 4
Collector - February 2016 - 5
Collector - February 2016 - 6
Collector - February 2016 - 7
Collector - February 2016 - 8
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