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Consumer Credit Mgmt
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Consumer Credit Issues
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What People Get Away With
"It's amazing what some stores will let people get away with nowadays," marvels one Mid-West credit manager. He cites the case of a store "so hungry for business" it apparently abandoned even minimal precautions. A clerk received a phone purchase for a $2,500 item. The caller gave a credit card number, but said he couldn't pick up the merchandise personally and instead would send a friend to pick up his purchase. Learn five other scams this department has encountered, and the specific steps they take to combat them. . . .
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Creditors' Liability for Agency Violations
This legal case study looks at a situation in which a college student's defaults on her debt. The college refers her account to a collection agency, and she sues based on violations of the Fair Debt Collection Practices Act. Does she have a case? Did the collge do anything wrong? Read on for the answers and analysis! . . .
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Did This Requirment to Purchase this Vendor's "Single Interest" Insurance Constitute a Truth-in-Lending (TILA) Violation?
Randolph, an Alabama resident, bought a mobile home that was financed by Green Tree Financial. The finance agreement contained a standard arbitration clause, requiring the consumer to arbitrate any and all disputes arising out of the arrangement. Nonetheless, Randolph brought a class action against Green Tree in federal court for requiring her and other consumer/debtors to obtain "vendor's single interest" insurance (which protects a vendor or lien holder against the costs of repossession in the event of default) without setting forth this requirement in its Truth in Lending Act disclosure. . . .
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Case Study: Is This Raising of Credit Card Rates a Truth in Lending ACT (TILA) Violation?
Solicitation materials for a bank's credit card promised a "fixed" 7.99% interest rate, and stated that the rate was "not an introductory rate." However, the disclosures that accompanied the solicitation, as well as the credit card agreement that the plaintiff executed after her application had been received and approved, both made it perfectly clear that the terms of the credit card, including the interest rate, could be changed "at any time." . . .
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SearchAmerica Announces New Permissible Purpose Searches
SearchAmerica, a proven online service that helps organizations quickly, easily, and inexpensively find people, today announced the release of two new searches. Both searches, Permissible Address to Social Security Number (SSN) and Permissible SSN to Address, access the credit header (or demographic portion) of credit reports. To take advantage of these "permissible purpose" searches, organizations must show a legitimate business need for the information in connection with a business transaction initiated by the consumer. . . .
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Ten Steps To More Effective Collections
Recently, Connecticut Natural Gas Corporation (ONG), Hartford, Connecticut, a division of Energy East, streamlined its collection effort and significantly decreased write-offs and improved receivables. "I felt we could do a better job collecting money, reducing bad debt and streamlining our internal processes," says Credit and Collection Manager Lucy Davis. "Now we're proactive instead of reactive." On the recommendation of an outside consultant who had reviewed the credit and collection process, the department: . . .
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Unsecured Loan
This case study looks at situation in which a lender made a secured loan to an individual that contained a clear and strongly worded privacy clause. When the loan went south, the undertook aggressive collection actions, and the borrower sued based on damages and an invasion of privacy. Did he have a case? . . .
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Improving Call Center Performance
At one time, the collection team at UGI Utilities, Inc. (Reading, Pa.) used to lose between 400 and 500 calls a day (customers hanging up after being on hold for too long). "Now, on a bad day, we rarely even lose 100," reports Alexis Bechtel, supervisor of Central Credit. "Our people are answering about 80% of all calls within 90 seconds." Moreover, collections employees, who used to answer between four and five calls an hour while spending the rest of their time off-line doing paperwork, are now averaging nine calls an hour. And on average they are collecting 11% of their accounts, almost triple what they did before. All of these improvements have grown out of a performance measurement program begun as part of the company's Performance Quality Management initiative. Most of the initiative involved a workforce management program that focused on creating RE's (reasonably-expected times to get jobs done). This article examines their call center's training, improvement teams, written goals and objectives, awards, what types of incentives they offer, and the how, when, and what of their monthly meetings. . . .
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Making Loan Decisions on Marginal Applicants
Decisions are easy on loan applications that are either (1) outstanding, or (2) beneath any reasonable consideration. Where decisions get difficult is when applications are marginal, and they are particularly difficult when the applicant stands in some special relationship with the lender--like a credit union member. . . .
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Teachable Moments
The "teachable moment" (TM) is that period of time when an individual is especially open to information. In consumer credit, these occur when - The application is made
- Credit is granted
- Credit opportunities are extended, and
- Credit is refused
- Credit counseling is conducted
Learn what this credit exec aims to convey in each of these "teachable moments! . . .
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Is This a Violation of Regulation Z of the Truth in Lending Act?
This legal case study looks at a situation where a fan purchased at a store did not work, so the purchaser did not pay for it. The store promised to fix it, but never did. A year later, the store demanded payment, including late fees, and notified credit bureaus of the account's status. The customer sued based on a violation of Regulation Z of the Truth in Lending Act (TILA). This looks at what happened and why. . . .
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Customizing Collection Strategies on Business Credit Cards
Business credit card issuers deal with a wide variety of businesses in diverse industries. Furthermore, some of these businesses may be relatively new while others may be seasonal, either of which present specific challenges. So the same collection strategy doesn't work for all. That's why Advanta Bancorp. (Spring House, Pa.), an affiliate of Advanta Corporation, diversifies its collection strategies to match cardholders' businesses. - what resources Advanta uses to determines what part of its lifecycle a business is in
- When the late fee is charged
- How delinquencies are measured according to risk and what collection strategies they use depending on the risk
- variables used by their call center predictive dialers
- strategies used to script calls
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Early Collection Intervention Keeps Customers Buying
If first-time customers fail to pay within terms, you can pretty much "pull out all the stops" (within legal limits) to collect what is due you. But what about the established account that runs overdue? Shouldn't you strive for some exquisite balance between active collections and customer service? Not in the opinion of Richard C. Ehrle, CCCE, vice president of credit for Carson Pirie Scott & Co. (Hillside, IL), a large midwest retailer. Learn what the primary goal is, and the specific strategies they use to attain that goal: What happens when a customer misses one payment? Two payments? What strategy is used on a collection call? What happens when a customer can't be reached by phone? . . .
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Tips for Selling and Buying Receivables
More and more consumer creditors are selling their older receivables rather than sending them to another collection agency or writing them off. There are benefits to both buyers and sellers in these deals--and there are also risks. If you're considering selling or buying charge-offs, you'll want to consider this professional's advice. This in-depth article covers... - who's selling?five key risks of selling your receivables
- the risks of buying receivables
- five types of accounts that can be successfully sold
- the importance of evaluating your portfolio before selling
- the three basic information requirements required to raise the value of your portfolio
- four ways to evaluate the buyers
- important contract considerations, including how to structure payment
- what a receivable buyer should look for in order to ensure success
- negotiating a price - some guidelines on pricing
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Small Claims Court--A Do-It-Yourself Guide
You've heard all the promises. You've offered workable solutions. You've given all the proper warnings and issued all the proper Fair Debt Collection Practices information. Still, you haven't been paid and your patience is at its end. What's your next step? If the amount owed falls within your state's guidelines, you could take the debtor to small claims court. Here's a complete run-down of what goes on in small claims court and how you can do it yourself without hiring a lawyer... . . .
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I figure if we can help them collect faster, they can pay us faster and order more product."
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