Tag: manage risk

The surge in digital demand over the past year reinforced the deep connection between recognition, fraud prevention and the online customer experience. As businesses transformed their operations to accommodate the rapidly growing volume of digital transactions, consumer expectations for easy, secure interactions increased at an even faster pace. That meant less tolerance for the interruptions caused by security and risk controls. We surveyed more than 9,000 consumers and 2,700 businesses worldwide about this connection for our 2021 Global Identity and Fraud Report. This year’s report dives into: Business priorities for the year ahead Why the digital customer experience remains siloed Consumer preferences that impact the digital customer journey Pandemic-era digital activities that have changed consumer expectations As we move forward into the rest of 2021 it’s crucial that businesses continue to focus on fraud prevention. In order to implement an effective fraud strategy that also makes it easier for customers to engage, businesses need to move away from a one-size-fits-all approach and focus on applying the right level of protection to each and every transaction. Download the report Review your fraud strategy

No two customers are the same. That’s why it’s important to go beyond the traditional credit score for a closer look at each consumer’s individual circumstance and create personalized response plans. Learn more about some of the many different customers you’ll encounter and download our guide to get recommendations for every stage of the lifecycle. Get the Guide

New challenges created by the COVID-19 pandemic have made it imperative for utility providers to adapt strategies and processes that preserve positive customer relationships while continuing to collect delinquent balances during an unpredictable and unprecedented time. As part of our ongoing Q&A perspective series, Beth Bayer, Experian’s Vice President of Energy Sales, and Danielle Grigaliunas, Product Manager of Collection Solutions, discuss the changing collections landscape and how the utility industry can best adapt. Check out what they had to say: Q: How are the COVID-19 crisis and today’s economic environment impacting consumer behavior? Particularly as it relates to delinquencies and payments? BB: Typically, when we experience recessions, delinquency goes up. In this recession, delinquency is declining. Stimulus money and increased unemployment benefits, coupled with stay at home orders, appear to be leading to more dollars available for consumers to repay obligations and debts. Another factor is related to special accommodations, forbearances, and payment holidays or extensions, that provide consumers with flexible options in making their regularly scheduled payments. Once an accommodation is granted, the lender or bank puts a code on the account when it’s reported to the bureaus and the account does not continue to age. Q: As a result of the pandemic, many regulatory bodies are recommending or imposing changes to involuntary disconnect policies. How can utility providers effectively collect, even if they can’t disconnect? BB: The public utility commissions in many areas have suspended disconnects due to non-payment, further increasing balances, delinquency and delaying final bill generation. Without the fear of being disconnected for non-payment in some regions of the country, customers are not paying delinquent utility bills. Utility providers should continue to provide payment reminders and delinquency notices and offer payment plans in exchange for partial payments to continue to engage customers. Identifying which customers can pay and are actively paying other creditors and institutions helps prioritize proactive outreach. Q: For utility providers who offer in-house collection services, what strategies and credit data do you find most valuable? DG: Current and accurate data is key when looking to provide stronger and more strategic collections. This data is built into efficient scoring models to articulate which debts are most collectible and how much money will be recovered from each consumer. Without the overlay of credit data, it’s harder for utility providers to predict how consumers prioritize utility debt during times of economic stress. By better understanding the current state of the consumer, utility providers can focus on consumers who are most likely to pay. Investing in monitoring solutions allows utility providers to receive notifications when their consumers are beginning to cure and pay off other obligations and take a more proactive approach. Q: What are the best methods for utility providers to reach collection consumers? What do they need to know as they begin to utilize omnichannel communications? DG: Regular data hygiene checks and skipping are the first line of defense in collections. Confirming contact information is correct and up to date throughout the entire consumer lifecycle helps to establish a strong relationship. Those who are successful in collections invest in omnichannel messaging and self-service payment options, so consumers have a choice on how they’d like to settle their obligations. Q: What current collection trends/challenges are we seeing within the utility space? BB: Utility providers do not traditionally report active customer payments and delinquencies to the credit bureaus. Anecdotally, our utility partners tell us that delinquencies are up and balances are growing. Many customers know that they cannot currently be disconnected if they fall behind on their utility payments and are using this opportunity to prioritize other debts. We also know that some utilities have reduced collection activities during the pandemic due to office closures and have cut back on communication efforts. Additionally, we’re hearing from some of our utility partners that collections and recoveries of final billed or charged-off accounts are increasing, despite many agencies closing and limited to no collection activities occurring. We assume this is because these balances are typically reported to the credit reporting agencies, triggering a payment and interest in clearing that balance first. Constant communication, flexibility, and empathizing with your customers by offering payment plans and accommodations will lead to an increase in dollars collected. DG: There’s been a large misunderstanding that because utility providers can’t disconnect, they can’t attempt to collect. The success of collections has been seen within first parties, as they are still maintaining strong relationships by reaching out at optical times and remaining top-of-mind with consumers. The utility industry needs to take a proactive approach to ensure they are focusing on the right consumers through the right channels at the right time. Credit data that matches the consumer’s credit health (i.e. credit usage and payments) is needed insight when trying to understand a consumer’s overall financial standing. For more insight on how to enhance your collection processes and capabilities, watch our Experian Symposium Series event on-demand. Watch now About our Experts: Beth Bayer, Vice President of Sales, Experian Energy, North America Beth leads the Energy Vertical at Experian, supporting regulated, deregulated and alternative energy companies throughout the United States. She strives to bring innovative solutions to her clients by leveraging technology, data and advanced analytics across the customer lifecycle, from credit risk and identity verification through collections. Danielle Grigaliunas, Product Manager of Collections Solutions, Experian Consumer Information Services, North America Danielle has dedicated her career to the collections space and has spent the last five years with Experian, enhancing and developing collections solutions for various industries and debt stages. Danielle’s focus is ensuring that clients have efficient, compliant and innovative collection and contact strategies.

Earlier this year, the Consumer Financial Protection Bureau (CFPB) issued a Notice of Proposed Rulemaking (NPRM) to implement the Fair Debt Collection Practices Act (FDCPA). The proposal, which will go into deliberation in September and won't be finalized until after that date at the earliest, would provide consumers with clear-cut protections against disturbance by debt collectors and straightforward options to address or dispute debts. Additionally, the NPRM would set strict limits on the number of calls debt collectors may place to reach consumers weekly, as well as clarify how collectors may communicate lawfully using technologies developed after the FDCPA’s passage in 1977. So, what does this mean for collectors? The compliance conundrum is ever present, especially in the debt collection industry. Debt collectors are expected to continuously adapt to changing regulations, forcing them to spend time, energy and resources on maintaining compliance. As the most recent onslaught of developments and proposed new rules have been pushed out to the financial community, compliance professionals are once again working to implement changes. According to the Federal Register, here are some key ways the new regulation would affect debt collection: Limited to seven calls: Debt collectors would be limited to attempting to reach out to consumers by phone about a specific debt no more than seven times per week. Ability to unsubscribe: Consumers who do not wish to be contacted via newer technologies, including voicemails, emails and text messages must be given the option to opt-out of future communications. Use of newer technologies: Newer communication technologies, such as emails and text messages, may be used in debt collection, with certain limitations to protect consumer privacy. Required disclosures: Debt collectors will be obligated to send consumers a disclosure with certain information about the debt and related consumer protections. Limited contact: Consumers will be able to limit ways debt collectors contact them, for example at a specific telephone number, while they are at work or during certain hours. Now that you know the details, how can you prepare? At Experian, we understand the importance of an effective collections strategy. Our debt collection solutions automate and moderate dialogues and negotiations between consumers and collectors, making it easier for collection agencies to reach consumers while staying compliant. Powerful locating solution: Locate past-due consumers more accurately, efficiently and effectively. TrueTraceSM adds value to each contact by increasing your right-party contact rate. Exclusive contact information: Mitigate your compliance risk with a seamless and unparalleled solution. With Phone Number IDTM, you can identify who a phone is registered to, the phone type, carrier and the activation date. If you aren’t ready for the new CFPB regulation, what are you waiting for? Learn more Note: Click here for an update on the CFPB's proposal.

Have you seen the latest Telephone Consumer Protection Act (TCPA) class action lawsuit? TCPA litigations in the communications, energy and media industries are dominating the headlines, with companies paying up to millions of dollars in damages. Consumer disputes have increased more than 500 percent in the past five years, and regulations continue to tighten. Now more than ever, it’s crucial to build effective and cost-efficient contact strategies. But how? First, know your facts. Second, let us help. What is the TCPA? As you’re aware, TCPA aims to safeguard consumer privacy by regulating telephone solicitations and the use of prerecorded messages, auto-dialed calls, text messages and unsolicited faxes. The rule has been amended and more tightly defined over time. Why is TCPA compliance important? Businesses found guilty of violating TCPA regulations face steep penalties – fines range from $500 to $1500 per individual infraction! Companies have been delivered hefty penalties upwards of hundreds of thousands, and in some cases, millions of dollars. Many have questions and are seeking to understand how they might adjust their policies and call practices. How can you protect yourself? To help avoid risk for compliance violations, it’s integral to assess call strategies and put best practices in place to increase right-party contact rates. Strategies to gain compliance and mitigate risk include: Focus on right and wrong-party contact to improve customer service: Monitoring and verifying consumer contact information can seem like a tedious task, but with the right combination of data, including skip tracing data from consumer credit data, alternative and other exclusive data sources, past-due consumers can be located faster. Scrub often for updated or verified information: Phone numbers can continuously change, and they’re only one piece of a consumer’s contact information. Verifying contact information for TCPA compliance with a partner you can trust can help make data quality routine. Determine when and how often you dial cell phones: Or, given new considerations proposed by the CFPB, consider looking at collections via your consumers’ preferred communication channel – online vs. over the phone. Provide consumers user-friendly mechanisms to opt-out of receiving communications At Experian, our TCPA solutions can help you monitor and verify consumer contact information, locate past-due consumers, improve your right-party contact rates and automate your collections process. Get started

Shawn Hanson, CEO of Marine Credit Union in Wisconsin, knows a thing or two about growth.  Over the past 18 years as CEO, Shawn and his team have the grown the credit union significantly, both organically and through acquisitions. In addition, he has developed a clear vision to reach the underserved. I spoke with Shawn to get his perspective and insights about growth, risk and the underserved. Here’s what he had to say: Marine Credit Union has grown from $120M to $789M over the past 18 years under your leadership.  What have been the top 2-3 actions you’ve taken to fuel this growth? The past two decades of growth have included a lot of successes, but also some key failures. Failures that taught us some hard lessons in who we are – and who we are not. If I can point to one action that has had the most impact on our growth, it is the refinement of our focus. We clarified our mission, vision and strategy and aligned our business decisions accordingly. Over the past 18 years as CEO, what has been your proudest moment? (Or proudest moments?) I reach out to employees on a regular basis and ask them to share with me a story of how they impacted a member’s life. I hear stories of people who never thought they would dig themselves out of a financial hole, and people we are helping to save thousands of dollars each month in bill payments. I feel so fortunate that I get to hear these stories every day. So, to answer your question, my proudest moment will happen today when I hear that next story. Then again tomorrow. And again, the next day. What drove Marine’s decision to focus on serving the underserved? I started my career in the consumer finance industry, so it is where my roots lie. Over time, we have come to discover that serving the underserved is not only a good business to be in, it is a business that is good. A business that is doing well while doing good – performing financially while giving back to its communities – is a business that people want to be around. How does your credit union define underserved?  What services does your staff offer members that are unique? We define the underserved as people who cannot typically get help down the block. While this most often means individuals, who are credit-challenged, it is more than that. Our underserved can be an overleveraged borrower who needs some help simplifying their life and streamlining bill payments. We have a debt consolidation product that’s a perfect fit for that situation. Our underserved can be a self-employed borrower whose income statements don’t fit inside a neat box, a homebuyer with an unconventional property. or an immigrant with alternative documentation. Our in-house underwriting and decentralized decision-making structure give us more flexibility to serve our underserved. Given your credit union’s history of growth through acquisitions, how have you preserved the culture of reaching the underserved? We are experienced, but we are not perfect. When it comes to the integration of employees, we learn through each acquisition. Our strategy is very different from other financial institutions, and we know this creates a learning curve for merging employees. Cultural integration is incredibly important to us. We have taken this too slow, too fast and everywhere in between. What we know for certain is that one size does not fit all. Whatever approach we decide on for a cultural integration, we do it with intention and two key principles in mind: do what’s best for the employees and the members. Why do you think credit unions are uniquely positioned to reach & serve the underserved? Talk about roots; this is where we were born. Serving the underserved is in our credit union DNA. Beyond our history, it is what we are known for: people helping people. Credit unions have built a legacy of trust with the communities we serve. Trust has become a coveted commodity. What is the biggest misperception among credit unions regarding the topic of serving the underserved? It’s too risky. One of the underpinnings of the credit union movement is providing a path to affordable credit.  What should risk-adverse credit unions think about when evaluating their mission? Think about the role you play in your community; how would the world be poorer, but for your presence? If you can answer with clarity, you're serving a need. Everybody seems to be chasing the most qualified borrowers today. We're focused on being there for the rest. Marine’s mission is to “create a better future for themselves and their families”.  What has been the biggest surprise for you serving the underserved? We call it “the snowball effect.” Repeatedly, we have seen one small “yes” turn into a remarkably different life for a member we have helped. A car loan led to transportation to work, which led to a steady job, which led to a promotion, which led to buying a home. I never underestimate the power of a chance. How has your board helped to accelerate the mission to reach the underserved?  What advice do you have for boards who are concerned of taking on more perceived risk? I feel very fortunate to work with a Board of Directors who has accelerated our mission in many ways, but most importantly, by having an open mind and allowing themselves to think differently. Our Board is always learning and always pushing me, one another and the credit union to be better. Strategic planning season is upon us.  What advice do you have for credit unions looking to lend deeper? Hone your focus. Know who you are and who you are not. Know who you serve and who you do not. Get aligned on where you want to be 5, 10 and 20 years from now, and work backward. What do you need to be focusing on in 2019 to achieve your long-term goals, and what do you need to stop wasting energy on? Ensure your people, products and processes are aligned and scaled to support a diversification or transition. This can take years to build or evolve. Walk, don’t run.   About Shawn Hanson Shawn Hanson is the CEO of Marine Credit Union. He has been with the credit union since April 2000 when the credit union had two offices and $37 million in assets. Hanson’s vision for the future is a differentiated financial institution that provides services to a broad geographic base with the best service. Hanson has also held positions at Citizens Community Federal Credit Union and AVCO Financial Services. Learn more about the array of alternative credit data sources available to financial institutions to reach your underserved populations.  

Traditional credit data has long been the end-all-be-all ruling the financial services space. Like the staple black suit or that little black dress in your closet, it’s been the quintessential go-to for decades. Sure, the financial industry has some seasonality, but traditional credit data has reigned supreme as the reliable pillar. It’s dependable. And for a long time, it’s all there was to the equation. But as with finance, fashion and all things – evolution has occurred. Specifically, how consumers are managing their money has evolved, which calls for deeper insights that are still defensible and disputable. Alternative credit data is the new black. It's increasingly integrated in credit talks for lenders across the country. Much like that LBD, it's become a lending staple – that closet (or portfolio) must-have – to leverage for better decisioning when determining creditworthiness. What is alternative data? In our data-driven industry, “alternative” data as a whole may best be summed up as FCRA-compliant credit data that isn't typically included in traditional credit reports. For traditional data, think loan and inquiry data on bankcards, auto, mortgage and personal loans; typically trades with a term of 12 months or greater. Some examples of alternative credit data include alternative financial services data, rental data, full-file public records and account aggregation. These insights can ultimately improve credit access and decisioning for millions of consumers who may otherwise be overlooked. Alternative or not, every bit of information counts FCRA-compliant, user permissioned data allows lenders to easily verify assets and income electronically, thereby giving lenders more confidence in their decision and allowing consumers to gain access to lower-cost financing. From a risk management perspective, alternative credit data can also help identify riskier consumers by identifying information like the number of payday loans acquired within a year or number of first-payment defaults. Alternative credit data can give supplemental insight into a consumer’s stability, ability and willingness to repay that is not available on a traditional credit report that can help lenders avoid risk or price accordingly. From closet finds that refresh your look to that LBD, alternative credit data gives lenders more transparency into their consumers, and gives consumers seeking credit a greater foundation to help their case for creditworthiness. It really is this season’s – and every season’s – must-have. Learn more

By: Staci Baker It seems like every time I turn on the TV there is another natural disaster. Tsunami in Japan, tornadoes and flooding in the Mid-West United States, earthquakes and forest fires – everywhere; and these disasters are happening worldwide. They are not confined to one location. If a disaster were to happen near any of your offices, would you be prepared? Living in Southern California, this is something I think of often. Especially, since we are supposed to have had “the big one” for the past several years now. When developing a preparedness plan for a company, there are several things to take into consideration. Some are obvious, such as how to keep employees safe, developing steps for IT  to take to ensure data is protected , including an identity theft prevention program, and establishing contingency business plans in case a disaster directly hits your business and doors need to remain closed for several days, weeks, or …. But, what about the non-obvious items that should be included in a disaster preparedness plan? When a natural disaster hits, there is an increase in fraud. So much so, that after Hurricane Katrina battered the Gulf, the Hurricane Katrina Fraud Task Force, now known as the National Center for Disaster Fraud, was created. In addition to the items listed above, I recommend including the following. Create a plan that will put fraud alerts in place to minimize fraud.  Fraud alerts are not just to notify your clients when there is fraudulent activity on their accounts. Alerts should also be put in place to let you know when there is fraudulent activity within your own business as well. Depending on the type of disaster, delinquency rates may increase, since borrower funds may be diverted to other needs. Implement a disaster collections strategy, which may include modifying credit terms, managing credit risk, and loan loss provisioning. Although these are only a few things to be considered when developing a disaster preparedness plan, I hope it gets you thinking about what your company needs to do to be prepared. What are some things you have already done, or that are on your to do list to prepare your company for the next big event that may affect you?