This year is shaping up to be even more impactful on the credit and collection industry than last year was. Rising delinquency rates that could spur an increase in the number of accounts out for collection, a final debt collection rule from the Consumer Financial Protection Bureau, oh, and a presidential election in November each have the potential to cause shockwaves through the industry on their own. Read on to see the trends and issues that a dozen experts and veterans of the credit and collection industry think will have the greatest impact on the business this year.
Rozanne Andersen, Chief Compliance Officer, Ontario Systems
The trend I am watching is the exponential growth of consumer debt. If you google the phrase, “consumer delinquency rates” you will see delinquency rates remain at or slightly above pre-2008 Great Recession rates. Yet consumer debt is growing to worrisome levels. If history proves correct the credit bubble is expected to burst yet again and you will want to be prepared. One analyst calculated that the total amount of consumer debt hit $14 trillion in the first quarter of 2019, surpassing the roughly $13 trillion of debt that was accumulated before the markets were sent “into a tailspin.” a decade ago. This trend should place third-party debt collectors on notice of a pending boon in the collection industry market and the need to build the technology and compliance infrastructure they will need to handle the increase in assignments. My best advice is to invest in your future.
Rick Perr, Co-Managing Partner – Philadelphia, Kaufman, Dolowich Voluck
Technology will have the greatest impact in 2020. The publication of a Final Rule from the CFPB along with regulations promulgated by states will cement the lawful inclusion of modern technology into the collection process. Regulators have finally realized that communicating with consumers using the methods preferred by consumers in the most efficient manner is best for both the industry and the public. This will spur companies to develop more and more products for the ARM Industry. Welcome 2020!
Jeff DiMatteo, Owner/Partner, American Profit Recovery
Robocall Legislation. Most legislators get the fact that collection calls are not illegal robocalls, so they need to make sure legitimate business calls and information calls are not treated like them. Communication is the key for consumers resolving bad debt, so we need to make sure any new legislation does not limit it.
Tim Collins, General Counsel and Chief Compliance Officer, TrueAccord
A.I. has been talked about for many years in media and within the last year or so in our industry. It was not until the end of 2018 and the beginning of 2019 when companies other than TrueAccord started using it. Machine learning use will grow exponentially in 2020 though its full impact will not truly be understood for three-to-five years from now.
Stefanie Jackman, Partner, Ballard Spahr
Preparing to comply with the final collection rule during the anticipated one-year implementation grace period strikes me as something that will occupy a great deal of time for clients. Companies will need to ensure they have sufficient system capabilities to track and monitor consumer contacts across channels and can slice and dice those contacts in variety of ways to ensure compliance. Further, I imagine we will see an increasing influence of TCPA case law relating to what constitutes sufficient consent and reasonable revocation across the collection lifecycle since those cases will no longer be relegated to having impacts only on communications that involve the use of a prerecorded message or ATDS. It also will be interesting to see whether the CFPB goes with its determination of whether to require uniform time-barred debt disclosures.
Gordon Beck, President & Chief Operating Officer, Valor Intelligent Processing
In 2020, I believe the biggest trend, outside of the adoption of the newest collection rules by the CFPB, will be limited context text-messaging/SMS. With the trends in call blocking from 2019 appearing to be a constant and ongoing issue, it only makes sense that our forward thinking and resilient industry will attempt to find ways to revolutionize the way we speak and make contact with the consumers. Being able to properly, efficiently and compliantly adopt an SMS program will prove fruitful for the industry, but as 2020 continues on I feel it will not just be another weapon in our arsenal, but a necessary form of communication to continue to reach consumers and recover bad debt. The importance of implementing this program in a manner that prevents the inevitable onslaught of lawsuits, from lawyers looking to maintain relevancy in the collection space, will be paramount.
Brian Watkins, Owner, Southern Oregon Credit Service
The 2020 elections will be the biggest “unknown” for most of the year. A shift to Obama-era policies at the CFPB, the FCC, in Congress, at the IRS, and a new round of Obama-care legislation will keep many people up at night all year considering the possibilities and contingencies needed to survive in the near future. An election favoring a complete re-tooling of Obama-care and the possibility of significant, consumer-centric and positive changes in the American health care industry could send shockwaves through a collection industry that has consolidated into larger players to better serve a health care industry that has merged and acquired itself into a handful of major national players, and may not readily handle a new, nimble marketplace.
Leslie Bender, Chief Strategy Officer & General Counsel, BCA Financial Services
With caution – it will be interesting to see if President Trump’s signing of the “Traced Act” will lead to any clarification from the Federal Communications Commission on how computer-assisted technology can be used without opening the floodgates to more robocalls and fraudulent autodialing.
Mike Frost, Partner, Malone Frost Martin
FDCPA and TCPA compliant text messaging. Text messaging is the most real-time and effective form of communication in society. Now with a solution that provides TCPA and FDCPA compliant platform to allow debt collectors to deliver initial notices, subsequent notices and to communicate with consumers in real-time via text message will absolutely change the communication platforms most widely used by be debt collectors. Furthermore, the impact text messaging has on workforce management by driving inbound calls is likely to create additional opportunities for agencies to build even greater efficiencies in their call center environments.
Matt Kiefer, Chief Officer of Information, Compliance & Development, The Preferred Group of Tampa
Clarification and a final definition (from both the FCC and CFPB) of what constitutes an ATDS and using both autodialer technology and SMS messaging to match consumer preferences will be game-changing for our industry in 2020. Too many court rulings that differ from jurisdiction to jurisdiction (and in some cases the same jurisdiction) have caused confusion, concern, and hampered agencies’ ability to do their job to effectively reach out to consumers regarding their debts. We need closure on this once and for all.
Michael Lamm, Partner, Corporate Advisory Solutions
Two key trends – one relates to a pending recession and how the industry overall will react – I don’t think it will be a 2008 type recession but I do think the auto/student loan “bubble” markets will be a key driver in how long the recession will last. The second item is around who wins the Presidential Election – The industry has benefited from a republican, pro-business view of the market. I am unsure how our markets will react to Elizabeth Warren, if she were to win, and her far left leaning views on consumer debt, specifically with student loans.
Aaron Reiter, Director of Marketing, National Accounts, InterProse
I’ve noticed a significant shift in business ownership in the past couple years and it seems to me there will only be more of it in 2020. We’re seeing a generation of owners looking to retire and a lower percentage of business handoffs to children of those owners, which means we’re also seeing a greater shift to female-owned businesses in this space as staff members are buying out the retiring owners. It’s an exciting time for the industry with a steady infusion of fresh energy, risk tolerance and new perspectives. A couple of years ago, everyone was warning of consolidation and buyouts, but in my observation the smaller and medium-sized businesses are still thriving and that’s where the new owners are showing up.