Collector- June 2018 - 42

INDUSTRYTRENDS

TECHNOLOGY IS INCREASING
EFFICIENCIES

The Great Rebound
Rising debt volumes and a more business-friendly regulatory environment
set the stage for positive changes in the industry.
By Linda Straub Jones

T

he dictionary definition of rebound
is quite simply: "To bound or
spring back from force of impact."
Reflecting on the past several years in the
collection industry, that seems to fit. At
first, not only were banks not sending out as
much debt for collection (choosing instead to
work the debt in-house), but the regulatory
climate was quite chilly. Additionally, since
the financial crisis of 2008, consumers have
been much more cautious about spending,
resulting in fewer defaults and therefore
fewer accounts available for collections.
But several things are happening in the
accounts receivable management industry
that indicate a springing back from the
impact of the past few years.

A COMFORTABLE REGULATORY
RELATIONSHIP
While there are many regulators that
businesses in the accounts receivable

42

management industry have to work
with, the Bureau of Consumer Financial
Protection has arguably been one
of the most challenging. Additional
oversight, rules, regulation by bulletin
and regulation by enforcement resulted
in increased costs for compliance, which
reduced overall profitability.
However, there may be light at the
end of the regulatory tunnel. With the
appointment of Acting Director Mick
Mulvaney at the bureau, we're seeing a
shift from the strong-arm approach to a
more reasonable methodology. Yes, while
there will likely still be debt collection
rulemaking from the bureau, many now
believe that it will be approached using
a more sensible process that will address
much-needed updates to the Fair Debt
Collection Practices Act. This approach
will reduce uncertainty caused by a law that
hasn't been updated in over 40 years.

When 2001: A Space Odyssey was released
in theaters, everyone thought that HAL
9000 was some far-fetched idea. But look
at what Siri can do now-all from the
palm of your hand. How many of you
now use the Clear program to get through
security faster at the airport? Retinal
scans were at one time thought to be
something out of a sci-fi movie, but they
are now reality.
The future of technology is here, and it's
pushing forward at great speeds. Artificial
intelligence, biometrics, one-time passwords
and more are helping to increase efficiencies,
speed up collections and increase profits.
With companies that can analyze
your phone calls and automate your call
reviews, and software that can help you
organize your compliance management
systems to make sure you don't miss
licensing renewal deadlines, technology
is helping agencies be more efficient,
compliant and profitable.

DEBT VOLUMES ARE
INCREASING
This is a topic that seems to be covered in
the news on a daily basis. Credit card debt
has topped $1 trillion for the first time
ever. With the increase in debt, there will
undoubtedly be an increase in accounts
being sent to collections.
A recent WalletHub study found that
Americans added more than $90 billion in
credit card debt in 2017, which is only the
fourth time in the past 30 years that this
much was spent in a calendar year. Notably,
each of the previous three times that the
amount of debt added in a year was over
$90 billion, the charge-off rate increased in
the following year. So we can expect 2018 to
follow that pattern, with higher than normal
charge-off rates.
This means that not only will more
accounts be available for collections,
but it is also likely that more debt will
be available for sale to debt buyers, and
many of those purchased accounts will be
funneled to agencies.

ACAINTERNATIONAL.ORG


http://www.ACAINTERNATIONAL.ORG

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