September 27, 2015 Denver, Colorado An Industry Perspective 2015 NACARA Annual Conference

Speakers Debra Ciskey Compliance Officer, Wakefield and Associates ACA International Board of Directors David Cannella CEO, Credit Service Company, Inc. Associated Collection Agencies, Inc. (CO, WY, NM Unit) Andrew Madden Director State Government Affairs, ACA International

Education, Advocacy & Member Service Offices in Minneapolis and Washington, D.C. Third-party collection agencies, law firms, asset buying companies, creditors and vendor affiliates, representing more than 230,000 industry employees 40 State Units (50 states) One International Unit (60+ countries) ACA International

Failure to Recover Consumer Debt Higher Taxes Government Budget Shortfalls Business Closures More Layoffs Higher Prices for Consumers Less Available Consumer Credit

Vital to Economic Health Paid $2.6 Billion in Taxes Provided 136,110 Jobs Recovered $55.2 Billion in 2013 Gave $130 Million in Charity Third Party Debt Collection

Economic Impact Study Conducted by Ernst and Young Surveys the Impact of Third-Party Debt Collection Get Your State and National Data

Taking Complaints Seriously  Debt collection is a consumer relations based industry.  Third-party consumer debt collectors make approximately one billion contacts to consumers per year.  The CFPB Annual Report on the Fair Debt Collection Practices Act (“FDCPA”) stated that 77 million individuals had a debt that was subject to the collections process in 2014  During that time, 88,300 complaints were filed with the Bureau regarding debt collectors.  Based on this data, in 2014, over 76.9 million Americans with debts in collections did not file complaints.  This means that the percentage of consumers who filed complaints with the Bureau was approximately one tenth of 1% of all consumers with debts in collections.

FCC Declaratory Ruling on the TCPA In January 2014, ACA filed a Petition for Rulemaking with the FCC asking for clarification of the TCPA  Clarify that just because a predictive dialer CAN be an Automatic Telephone Dialing System, not every predictive dialer MUST be an ATDS covered by the TCPA  Confirm that “capacity” means the “present ability” of the dialing system  Prior express consent should attach to the person incurring a debt, not the wireless number  Establish a safe harbor for “wrong number” calls

FCC Ruling Highlights Autodialers: “Capacity”  The capacity of an autodialer is not limited to its current configuration but includes its potential functionalities, i.e. its future ability to be modified to have the requisite capacity  All predictive dialers are categorically an ATDS, regardless of whether they possess the statutory elements at the time a call is made  Manual dialing raises concerns if the equipment that is being used to manually dial could theoretically be modified to be an ATDS Consent: Reassigned Numbers  Interprets “called party” as the subscriber or customary user  Rejects the “intended recipient” approach  Callers now have a one attempt to gain actual or constructive knowledge of reassignment

ACA’s Response On July 10, ACA International filed a suit in the United States Court of Appeals for the D.C. Circuit seeking judicial review of the Federal Communications Commission’s Declaratory Ruling and Order Adopted on June 18 on the Telephone Communications Protection Act.

Consumer Education  Ask Doctor Debt website launched in 2009  Target audience = general consumers  Content constantly reviewed to reflect changes in regulations and consumer needs  Re-brand scheduled for 2015/ Create the Online Consumer Debt Knowledge Center

Number of Percentage of Employeesall U.S. ACA members 1 – 25……………..….……………….…..….77% 25 – 99 …………..…..………………………. 17% 100+ ……………………………...………….. 6% Collection Agencies by size (ACA members only) A Diverse Industry

Cost of Compliance Can be directly related to the volume of consumer contacts and whether the agency is a data furnisher.  Responding to direct disputes and eOscar disputes  FTE(s) to evaluate calls and provide feedback  Complaint investigation and responses  Policy maintenance  Development and distribution of training  Data analysis and reporting  Client interface and training

Complaint Handling Better Business Bureau data:  Debt collection ranks 5 th in financial services for generating complaints  Dramatic decrease—11% from 2013 to 2014  Debt Collectors resolve 82% of complaints, compared to 78% for all other industries

Causes of Complaints (Unscientific)  No contact prior to credit reporting  Payment of debt did not result in credit deletion  “They call me every day, multiple times per day.”  Prior dispute with creditor  Escalated conversation with collector

CFPB Complaints  163,000 complaints since database started accepting debt collection complaints in 2012  Debt collectors have responded to 90% of complaints  60+ percent of consumers did not dispute responses of debt collectors  Complaints are not verified for accuracy nor indicative of wrongdoing.

The Complaint Process 1. Complaint intake occurs: search for the account, secure it from further treatment 2. Analyze allegations in complaint 3. Compare allegations to treatment history 4. Review all account activity, including collector notes 5. Review correspondence from consumer, if any 6. Review recorded phone calls, if any 7. Seek validation or further information from creditor 8. Determine best avenue to resolve consumer’s complaint 9. Compose response, send to regulator 10. Close loop on issue—depends on outcome of investigation 11. Track complaint and issues, include in next regular analysis 12. Communicate to Executives

Complaint Prevention  Compliance training, monitoring, and feedback  Customer service training and deescalating angry consumers  Positive feedback for well-executed calls, even if they did not result in payment  Resolution does not always = payment

Consumer Education  Provide consumers factual information about the credit reporting process  Make licensure information easier for consumers to locate on your website  Help consumers understand the Do Not Call registry, including that in your state if applicable

Opportunities  If your office does not seek complaint responses from debt collectors, maybe you should  It is in everyone’s best interest to resolve consumer complaints  Complaints give us the opportunity to confirm that our systematic processes are working, and discover processes that may be broken  Dialog with industry members is positive and constructive

Associated Collection Agencies  Established in 1923  A State Unit of ACA International  Over 80 members representing Colorado, New Mexico and Wyoming.  We want to be resource for you (tours, meetings, open dialogue…)

Economic impact of Colorado based agencies Returning Assets Gross  Revenue: $1.6 B  Commission: $303 M  Net Revenue: $1.3 B Providing Jobs  Direct Jobs: 3,968  Total Jobs: 6,457 Making Payroll  Direct Payroll: $225 M  Total Payroll: $389 M Paying Taxes  Direct State / Local: $23.2 M  Total Federal: $40.6 M

The Role of the Colorado Collection Agency Board A 5-member advisory board appointed by the governor to provide advice to the Administrator of the Colorado Fair Debt Collection Practices Act. Members represent the third-party debt collection industry and the public. The Industry welcomes the opportunity to be a resource.

Need for TCPA Reform

Questions ? Thank You