Virtual Collections Made Virtually Simple - 10 Tips to Ensure Consumer Website Compliance

Rozanne Andersen

Like most businesses you have created a website to educate the world about your business, your services, your people and your successes. Many of you have also created unique websites to communicate with consumers about their rights, their payment options, their right to submit a complaint and in many cases their ability to make payments on line. Give yourself an A+ rating if you have entered the world of virtual collections. You clearly are in sync with the estimated 150 million people in the U.S. who pay their bills on line.

According to the PEW Internet and American Life Project, 74% of all American adults (age 18 or older) use the Internet and as many as 43 percent use on line banking services. An estimated 150 million people currently use the Internet to pay their bills. In recent years, the percentage of people using on line payment options has clearly increased across all generations but most notable among younger consumers.

Over the past 3 years, mobile payments alone have more than doubled in popularity, reaching more than 33 percent of U.S. residents, according to the results of a report, œBusiness Strategy: Results from the 2012 Consumer Payments Survey by IT research firm IDC’s™ Financial Insights division. More than half of those who made a mobile payment used PayPal Mobile (56 percent), with Amazon Payments and Apple’s iTunes service statistically tied at about 40 percent, according to the report.

The trends for U.S. consumer-to-business bill payments are in lock-step with the overall payment trends. According to the financial industry research and consulting firm Aite Group, consumers have heartily embraced the switch from paper to electronic payments. By 2009, electronic payments took over all other forms of payments, and by the close of 2012, 64 percent of consumer bill payments are predicted to be electronic, up from 49 percent in 2008.

Not surprisingly, as consumer bill payment behaviors change, most in-house retail lockbox operations are experiencing declining check volumes and rising costs per item.

Understanding these changes in consumer bill payment behavior is the first step collection agencies must take as they consider whether to enter the world of virtual collections. The second is to truly understand the consumer population from whom they collect debt and the third and perhaps most important step is to understand the compliance issues unique to the third party debt collection industry regarding consumer websites, web portals and on line payment options.

10 Tips to Ensure Consumer Website Compliance

1.   Conduct A Thorough Legal Review. Your consumer website is an extension of your collection notices. It requires a careful legal review by your compliance attorney.  The leading case on this issue is Vanwestrienen v AmericaContinental Collection Corp., 94 F. Supp. 2d, 1087, 1108 (D. Or. 2000) which concluded if any communication from a debt collector refers a consumer to the debt collector’s website, the website is considered an extension of the collection notice. This means all content on the website must conform to the requirements of the FDCPA.

2.   Include Federal And State Licensing Disclosures. Since your consumer website is an extension of your collection notices, it too must include all the required FDCPA and state consumer protection notices. It must therefore include your state or local licensing information as required in select states and cities. You should review all of these requirements with your legal counsel.

3.   Satisfy State Text Requirements. Once again, since your consumer website is an extension of your collection notices, you may need to include state specific notices in your link and communication preference web- agreements depending upon the states within which you collect debt. You should review all of these requirements with your legal counsel. State text requirements may vary depending upon your line of business [medical debt v. credit card, telecom, utilities, etc.], credit reporting practices, age of debt and the like.

4.   Inform First Collect Second. Due to the likelihood a consumer visiting your website may terminate the session during the payment process, be sure to include all required disclosures and requests for consent as a precondition to making a payment. This will help to ensure the consumer understands his or her rights before making a payment, agreeing to communicate with you via email or granting you consent to contact them at their wireless number using an autodialer or prerecorded message. A word of caution – never condition the consumer’s right to make an on line  payment on their willingness to provide you with Telephone Consumer Protection Act consent to contact them at their wireless number, pay a debt in full, enter into a debt settlement agreement or grant you permission to communicate with them via e-mail.

5.   Avoid Audio Announcements. The beauty of adding a virtual collection option to your overall debt collection strategy is that consumers can communicate with you and make payments when and where they choose. In the off chance the consumer is perusing your website while at work, at a coffee shop or even in the midst of friends, you do not want the consumer to be surprised with an audio announcement suggesting they make a payment or an oral recording of the mini Miranda disclosure at an in opportune time. Such an occurrence may lead to the unauthorized disclosure of the debt to a third party and subject your agency to liability under the FDCPA.

6.  Don’t Overshadow. Make sure your collection agents do not innocently suggest the consumer visit your consumer website to make a payment during the validation period in a manner that would overshadow the consumer’s right to request verification or dispute the debt. Be equally careful that your consumer website does not scream “Make Your Payment Now” or “Make Your Payment Today.”

7.   Include A Link Agreement. Most consumer websites include a payment portal provided by a third party. Be sure to include a click agreement on the site advising the consumer they are moving to a third party’s site when making a payment. View a link agreement template for you and your legal counsel to review before using.

8.   Include A Complaint Resolution Feature. Whether you meet the definition of Larger Participant as defined by the Consumer Financial Protection Bureau or are a very small shop, you are not insulated from consumer dissatisfaction. Consumer complaints can be triggered by the very best collection agencies. The key is to identify the complaints and resolve them to the satisfaction of the consumer as quickly as possible. Best practices suggest you provide your consumers with a means to file a complaint with your consumer satisfaction desk so that your team can promptly respond to concerns, misunderstandings or noncompliant conversations with a particular collection agent. Your consumer website is a perfect place to house your consumer complaint resolution program.

9.   Include A Communication Preference Feature. All consumers are not alike; nor do all consumers have the same communication preferences. Many would prefer to communicate with you via landline, others would prefer you contact them using their wireless number, still others may prefer you engage in e-mail communications with regard to their debt. Use your consumer website to present consumer’s with options. View communication preference agreements for you and your legal counsel to review before using.

10.   Ensure Your Consumer Website Is Unique And Independent.  Just to be sure you don’t overlook one important point. Although not required, it is highly recommended you create a separate and unique consumer website from your business to business website. The statements and accolades you share about your business and the image you present about your business on your B2B website are not appropriate content for consumers and for the most part irrelevant to your consumer population. Your B2B website may also confuse consumers about their rights under the FDCPA and other consumer protection statutes and give rise to claims under the FDCPA. Instead, include a link from your B2B website to your consumer website which contains consumer appropriate information, disclosures and of course your web payment portal.

BONUS 11.   Consult With The Payment Portal Experts. Designing a web payment portal is not necessarily within the skill set of most collection agencies. Before attempting to create a home-grown payment portal, consult with experts who have experience in payment web payment portal design or partner with web payment portal service providers for this purpose.  Include the necessary link agreement when directing consumers to the site of your third party web payment portal service provider.

Rozanne M. Andersen, a seasoned attorney and 15-year veteran of the collection, debt purchasing and financial services industry, serves as Ontario Systems’ in-house legal and compliance expert. A licensed attorney, Rozanne previously served ACA International, the Association of Credit and Collection Professionals, most recently as CEO, and prior to that as Executive Director and General Counsel. She received her J.D. from William Mitchell College of Law.  She was named by Minnesota Lawyer magazine as Attorney of the Year in 2004, and was profiled by Collections and Credit Risk magazine as one of the “Five Women You Should Know.”  

Rozanne frequently writes on topics for the credit, collection and revenue cycle industries and encourages visitors to follow her on Twitter @RozanneAndersen and at the Ontario Systems blog, hub.ontariosystems.com.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author.