They say that every cloud has a silver lining and it seems that the chaos caused by the Covid-19 pandemic is no exception. While March and April 2020 have been difficult for accounts receivable clerks figuring out how to deploy staff remotely while maintaining safety and operational standards, these efforts and the behavior of the debt collection companies appear to have not been in vain during the pandemic.
Judging by recent rules and regulations, it appears that at least some states have realized that allowing debt collection agencies to work from home from properly licensed agencies did not make the doom and gloom predictions a reality. In January, Maryland issued guidelines that will ultimately allow collectors to work from home after the pandemic, and for the past few weeks Connecticut and Minnesota have followed suit.
On July 1, 2021, Connecticut Banking Commissioner Jorge L Perez (Commissioner) signed an ordinance allowing employees of certain licensed entities, including consumer collection companies, to work remotely (i.e., from home) as long as security standards and other requirements are in place . Interestingly, the ordinance first noted that Connecticut has allowed certain licensees employees to work from home since March 2020 to help contain the spread of Covid-19, and explicitly states that the commissioner is expanding the ability to work from home would like to. The order took effect immediately on July 1, 2021 and will remain in force until amended, replaced or repealed.
On June 26, 2021, Minnesota Governor Tim Walz signed the Commerce and Energy Omnibus Bill (Bill), which contained various subjects. With respect to accounts receivable, Article 7 Section 4 of the Bill allows an employee of an approved collection agency to work from a location other than the licensee’s place of business (i.e., from home) if both the licensee and the employee meet the requirements of other applicable requirements Laws. The provision expires on May 31, 2022 and must be re-enacted to remain in effect.
In addition, Article 5, Section 7, in relation to the purchase of debt instruments, imposes a license requirement on debtors. Debt buyers must submit a license application by January 1, 2022. A debtor buyer who submitted an application to the responsible commissioner before January 1, 2022 can continue to work without a license until the commissioner approves or rejects the application.
Allowing collection agencies to work from home is good for the industry, the workforce in general, and consumers. Agencies can hire from a larger pool of staff, which enables them to bring on board those who are best suited for legally compliant collections, rather than just those in a specific geographic area. From a workforce perspective, being able to work from home increases employment opportunities for those unable to travel from home due to physical limitations, childcare, elderly care, or other circumstances. Allowing employees to work from home is good for consumers as it reduces sales, which leads to consumers communicating with more experienced and better educated collectors.
Even so, it’s important to note that new regulations, even if they are regulations that are good for both industry and consumers, require planning, processes, training and implementation. Not all states will allow collection agencies to work from home, and so far this seems to be the exception rather than the rule. As a result, if several government debtors plan to allow debt collection agencies to work from home, there are significant compliance hurdles to overcome. Agencies need to develop processes that divide accounts that can be edited remotely, keep logs to ensure no other accounts go to remote agents, develop auditing procedures, and implement robust training programs for remote collectors. Getting such allowances from government regulators is great, but like anything else, debtors should take the time to get it right; one or two bad scenarios could cause this freedom to evaporate very quickly.