Industry Experts Offer Predictions on 2022

As we embark on another trip around the sun, whether it will be an enjoyable trip or one that is fraught with danger is anyone’s guess. Would you have predicted a case like Hunstein last year and the impact it would have? Nevertheless, asked experts from across the industry for their thoughts on whether they feel 2022 will be a better or worse year for the ARM industry than 2021? Here is what they had to say.

Jeff Freedman, MRS BPO

This is going to sound like a play-it-safe answer but I think the reality is 2022 is likely to be similar to 2021, or worse, in some ways and better in other ways. So let’s start with the not so good part.

Stimulus money and other government incentives given out during the pandemic, resulted in a huge increase in liquidation that made the early part of 2021 very successful. Unfortunately, while we benefitted “downstream” in the collections cycle, so to speak, our clients also directly benefited “upstream”. This resulted in a drastic reduction of fresh placements in the 2nd half of 2021. We expect this reduction in placements to continue throughout at least half (maybe more) of 2022.

In addition, some government programs, like the advance payment of the child tax credit, took some money that likely would have been paid via refund in tax season 2022, and dispersed it early to customers in the latter half of 2021. While some of this money was used to pay down debt, the sunsetting of some covid relief programs, as well as the rise in inflation, meant customers were often using this tax credit money for everyday living expenses opposed to seriously past-due credit cards or mobile phone bills, for example.

Then there is Reg F. While Reg F went live in late 2021, the true impact will not be known until 2022. Despite all of our best efforts to comply, I believe many of us are waiting for the other proverbial shoe to drop in anticipation of a wave of dubious lawsuits as plaintiff’s attorneys seek new ways to profit off of our industry.

While fewer placements, a potentially muted tax season, and Reg F uncertainty suggest 2022 will be worse, we believe all is not lost. First, we expect placements to rebound significantly in the latter part of the year, as the debt collection cycle reverts back to normal (without the benefit of artificial stimuli or government mandated relief programs).

We also believe the continued march toward industry-wide digitization and self-service will accelerate in 2022 and continue to help mitigate some of the aforementioned revenue loss with efficiency improvements stemming from labor reduction (or reallocation) and improved customer experiences.

2021 was also impacted by staffing challenges as, here again, government incentives gave employees an alternate choice of staying out of the workforce all together. With many of these incentives waning in most of the country, we expect 2022 to show marked improvement and greater stability around staffing as compared to 2021, which should help make 2022 better on the whole.

Finally, we doubt we will ever get back to “normal” again, but we do believe that 2022 will begin to feel a little more like pre-pandemic than at any other point in the last 2 years and that definitely should make 2022 better than 2021!

Michael Klutho, Bassford Remele

No doubt 2022 will be interesting.

Personally, I expect that with ACA Industry Advancement Funding support, our industry will put Hunstein in our rearview mirrors – once a number of those cases are actually litigated on the merits. There are no actual damages and more important the vendor processes utilized are automated and inherent in running any business, including the courts. No one see the data.

Reg F too will sort out during the year. Fortunately, there are several nuggets in the regulation that will benefit collections in 2022. Of particular note is the limited-content message. When used properly, the LCM will allow agencies to generate an increase of inbound calls to then resolve outstanding debts.

And while there has been much consternation about the model notice, Agencies using it will have safe harbor when it comes to disclosing a consumer’s FDCPA rights and other required information. It also provides a hard and fast deadline for disputes and validation requests. That too is a positive for the industry.

One of the goals set by the CFPB in enacting Reg F was to allow for communications in the form and manner preferred by the consumer. That includes texting, emails, web-based, phone calls, etc. The regulation includes safe harbors here as well.

In sum, 2022 will include more robust communications with consumers though much of that communication will be in forms other than telephone calls. Time will tell whether the initial notice (in the form of a model notice) generates more disputes and requests for information though it could also result in more payments. As they say, we shall see.

Rozanne Andersen, Finvi

When I think of better or worse for the ARM industry I think of it in the context of financial success, technology success and human success.

Financial Success: I predict the great divide we observe in society between those who have financial security, and those who do not, will replicate itself in the ARM industry. Since the opening of the CFPB’s doors more than 10 years ago, agencies lacking the resources to establish a compliance management system, hire compliance professionals and implement compliance requirements have either been acquired by very large agencies or closed their doors in record numbers. This trend is responsible for the tremendous financial success of the very large agencies as well as the demise of the small to mid-size agencies since 2012. I predict Regulation F and the costs associated with implementing Regulation F will only increase the chasm between the large and small agencies.

Technology Success: In the words of Rabelais in 1534, “Natura abhorret vacuum” and so does technology. The collection industry is composed of amazingly resilient individuals. It is also because of their resilience and their willingness to embrace technology that the vacuous challenges of compliance will most certainly be filled by new advances in technology in 2022. Artificial intelligence and artificial voice technology will most certainly take center stage as the number one tool the industry will use to advance compliance and revenue in the coming year.

Human Success: My reference to human success is really more of a recognition of the tremendous contributions the collection industry makes to improve the human experience. From Williams and Fudge to State Collections to the hundreds of large and small agencies across the United States, fund raisers are held, football fields for the physically impaired are built, donations are made, all because collection agency owners and their employees know first hand how people suffer from untold tragedies most of us will only read about. Most agree, 2022 is a year to rebuild our families, the workplace, our healthcare system and our infrastructure. I not only predict, but also know, the collection industry will be there to lead many of these causes to successful fruition.

Jeff DiMatteo, American Profit Recovery

In March of 2020 we thought the sky may be falling. There were many unknowns for the industry and it threw consumers into a new normal. Consumers were stuck home, they could not spend like normal and they found stimulus checks in their mailboxes instead of just bills. What did consumers do? They did the right thing and took care of old debt which contributed to an unexpected boost for many agencies that year. We weren’t sure how long it would last, but it went into 2021 and made the year another good one for most in the industry. Most have seen things normalize in collections, but placements for many are still trying to get back to normal. With lower placements, fewer old accounts to collect on, charting the course with Reg-f and the staffing struggles that continue I think we are in for a challenging year. The great thing about this industry and the leaders in it is that we are resilient, creative and hard working. We are up for the challenges and I look forward to a rewarding 2022.

Jack Brown, Gulf Coast Collection Bureau

I think 2022 will be a year of opportunities within the ARM industry. With 2021 in the rearview mirror, our preparations for Reg F implementation are completed and we will see the opportunities that it presents. Agencies that are able to adapt to the new framework and technologies will continue to thrive, whereas companies that are unwilling or unable to adapt will have a difficult time staying relevant.

Melinda Chumbley, Solverity

This eternal optimist is confident 2022 will bring more opportunity, reduced uncertainty and renewed energy to the ARM industry. We have shown over the last two years a willingness to innovate, to work alongside colleagues and to find new ways to assist consumers, to serve clients and to emerge with profitable secure companies. I’m excited to see what happens next.

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