March 20, 2020 Ranking Member Sherrod C. Brown U.S. Senate Committee on Banking Housing and Urban Affairs 534 Dirksen House Office Building Washington, DC 20515 Dear Ranking Member Brown: On behalf of ACA International, the Association of Credit and Collection Professionals (ACA), I am writing in response to your letter asking for action from the Accounts Receivable Management Industry (ARM Industry) and the thousands of businesses and employees throughout the country that make it up. ACA represents approximately 2,500 members, including credit grantors, third-party collection agencies, asset buyers, attorneys, and vendor affiliates in an industry that employs more than 230,000 employees worldwide. The majority of ACA-member debt collection companies, however, are small businesses. According to a survey, 44 percent of ACA member organizations (831 companies) have fewer than nine employees. About 85 percent of members (1,624 companies) have 49 or fewer employees and 93 percent of members (1,784) have 99 or fewer employees. Consumer welfare depends on open communication, and it is important to have policies that provide consumers with more options that will allow them to continue to access credit and services. This is critical due to the uncertainty about the length and severity of the economic impact related to the coronavirus. The work of the ARM industry remains important and limiting its ability to operate is a problematic response to the coronavirus. We are deeply alarmed that such an action would disrupt the credit ecosystem and cause further harm to consumers, lenders, medical providers, and other businesses throughout the country who rely on the ARM industry. As an example, our industry serves many hospitals throughout the country and is on the front lines of helping explain to consumers how they can access charity care and other financial assistance if they cannot afford care. It is also notable that such an action would impact the diverse workforce in the collection industry including 70 percent women in the total debt collection workforce and 40 percent being ethnically diverse. Additionally, 32 percent of businesses are women owned. Under legislative “solutions” that include an ARM Industry shutdown, many of these employees and businesses would face extreme hardship such as closing their businesses and losing employees. During this critical time, ACA members remain committed to consumers. This commitment has been further demonstrated since the outbreak through industry-wide calls to action for compassion and empathy. Additionally, most ACA members already have training and “hardship” programs in place to help consumers make arrangements that best suit their unique financial situation, including implementing temporary suspension of collections from consumers directly impacted by the coronavirus. These trainings include approaches for problem solving to help create accommodations to assuage consumers during difficult times. ACA International promotes a “Collectors Pledge.” Something that all members sign: I believe every person has worth as an individual. I believe every person should be treated with dignity and respect. I will make it my responsibility to help consumers find ways to pay their just debts. Throughout their history, and particularly in times of financial distress, ACA members play a critical role in ensuring that consumers can continue to access credit and services. As an academic study about the impact of debt collection noted, “In a competitive market, losses from uncollected debts are passed on to other consumers in the form of higher prices and restricted access to credit; thus, excessive forbearance from collecting debts is economically inefficient. Again, as noted, collection activity influences both the supply and the demand of consumer credit. Although lax collection efforts will increase the demand for credit by consumers, the higher losses associated with lax collection efforts will increase the costs of lending and thus raise the price and reduce the supply of lending to all consumers, especially higher-risk borrowers.”1 In short, consumer harm can result in several ways when unpaid debt is not addressed, and ACA members work to help consumers understand, address, and improve their financial situations. As this and other research finds, creditors may stop lending to the riskiest borrowers that may include out-of-work, or low-income consumers if there is uncertainty about the ability to collect since they must maintain safety and soundness and other liquidity requirements. As such, ACA members have been in close communication with their creditor clients, who we are aware are looking at consumer needs on a case by case basis. We support these efforts to tailor programs to individual consumer needs. In response to the specific suggestions: Waive late fees Most ACA members have “hardship programs” that provide a variety of options for deferring payments, agreeing to longer-term payment plans, or in some instances halting collection activities. These can include waiving or limiting any late fees. ACA members have diverse programs that vary based on each creditor client or service provider that they work with. The ARM Industry is well versed in helping consumers address unpaid debt and helping provide solutions that lead to the best possible outcome for consumers. Zywicki, Todd, “The Law and Economics of Consumer Debt Collection and Its Regulation,” available at https://www.mercatus.org/system/files/Zywicki-Debt-Collection.pdf. (Sep. 2015). 1 Stop accruing interest on any balance The Fair Debt Collection Practices Act (FDCPA) already requires that fees and interest can only be charged if expressly authorized by the agreement creating the debt or permitted by specific law. Those providing products and services set the parameters for repayment. ACA members are working with their creditor clients to address individual consumer needs and situations. Stop collection activities and suspend court proceedings ACA members are taking appropriate steps to address individual consumer needs. As outlined, ACA members are already taking various direct steps to provide accommodations for those impacted by the coronavirus including activating hardship program. However, eliminating the debt collection aspect of the consumer credit cycle entirely will lead to a decrease in access to credit and services, and could lead to irreparable harm to small and large businesses throughout the country. Contact consumers on automatic payment plans and offer to temporarily suspend payments Disrupting payment obligations unnecessarily could be harmful to consumers. While many consumers are facing distress, many are not and are still being paid regularly. Diverting resources that are being spent to communicate with consumers that need pertinent information, instead to outreach to consumers who have already figured out payment plans that are workable for their unchanged financial situation seems like a step in the wrong direction. Encouraging all consumers to suspend payment plans would have serious economic consequences not discussed or addressed in your letter. As noted, ACA members are already working with individuals and placing increased attention on compassion and empathy to address their specific situations. ACA members have also reported an increase of inbound calls from consumers who are interested in how they can address outstanding obligations. Again, consumers need the information that ACA members provide to maintain their financial health, and open communication can often lead to the most favorable outcome. Attached is ACA’s Code of Conduct and Collector’s Pledge, which ACA members have been following for many years and are proud of. We look forward to continuing our engagement with you on behalf of the ARM Industry. Sincerely, Mark Neeb Chief Executive Officer 3