1. How Technology is Changing the Collections Terrain
Licensing and Regulatory Considerations
Kathryn L. Ryan
Partner, Buckley Sandler LLP
Tim Lange
Chief Operating Officer, APPROVED by Buckley Sandler
October 16, 2018

2. Overview Emerging Technologies and Products
Regulatory and Compliance Implications
Partnering with Fintech Firms
State Regulatory Initiatives and Considerations

3. Emerging Technologies and Products
Consumers have greater access to credit and ways to make payments to creditors and other industry participants
Finance
Peer-to-peer lending platforms
Apply for loans through an app
Making Payments
Take payments through an App
Consumer loans
Mortgages
Other Services
Pay for parking and other day-to-day services
But what happens when consumers fail to pay?

4. Emerging Technologies and Products – Partnering with Fintech
Fintech can expand product offerings to more consumers
Technology permits more precise underwriting and innovative solutions to accessing liquidity and credit
Also raises regulatory and compliance questions:
Are more options better?
What happens when consumers fail to pay?

5. Regulatory and Compliance Implications – When Default Occurs
With greater access to products and technology comes heightened risk for industry and consumers.
For consumers: More ways to pay means more ways to miss payments or default.
For industry: More ways to collect payments, mean more ways to trigger licensing and regulatory requirements.

6. Regulatory and Compliance Implications – Who, What, When, Where?
Activities don’t fit neatly within Collection Agency Laws
WHO
Who is collecting the claim or debt when doing so through an App?
Who must hold a license where one company holds the right to enforce, but another is contacting the consumer?
WHAT
What is a claim? What is a debt?
What constitutes consumer contact in the App age?
WHEN
When is a payment considered in default for a service?
WHERE
Where is collection activity taking place – i.e. in the borrower’s state? The state where the technology resides?

7. Regulatory and Compliance Implications – Who, What, When, Where?
Case Study: Arizona Collection Agency Law
WHO
Collection Agency means, among others, all persons engaged directly or indirectly in soliciting claims for collection or in collection of claims owed, due or asserted to be owed or due.
WHAT
Claim means an obligation for the payment of money or its equivalent and a sum or sums owed, due or asserted to be owed or due to another.
WHEN
The licensing trigger does not always to depend on whether the claim is in default.
WHERE
The licensing trigger does not appear to address geographic location of the person collecting the claim, although it is likely triggered by where the consumer is located.

8. Regulatory and Compliance Implications – Who, What, When, Where?
Case Study: Arkansas Collection Agency Law
WHO
Collection Agency means, among others, a person which engaged in the collection of delinquent accounts, bills, or other forms of indebtedness owed or due or asserted to be owed or due to another.
WHAT
Claim is not defined but the licensing triggers appears limited to delinquent claims.
WHEN
The license is only triggered if the claims were in default at the time of acquisition.
WHERE
The licensing trigger does not appear to address geographic location of the person collecting the claim, although it is likely triggered by where the consumer is located.

9. Partnering with Fintech Firms
Licensing
Does the Fintech Firm hold the requisite state authorities?
Does the creditor/holder of servicing rights hold the requisite state authorities?
Vendor Management
Consumer Disclosures
Compliance with Fair Debt Collections Act and state law
Compliance Management System
Privacy and Information Security
E-Sign

10. Some Trends Simultaneous Licenses and Partnering Model
Growth in Consumer Lending Market – but will this continue?
Identifying Borrowers and Collecting on Debt
Artificial Intelligence
Communication Methods
Credit Reporting Agency Settlement

11. State Regulatory Initiatives & Considerations
Can State Regulators Create Consistent Guidance?
Challenges with Registering in NMLS
Company Record: Personnel and Owners
Company Record: Locations
NMLS 2.0

12. Ideas for State & Industry Collaboration
Definitions or Glossary
Review use of Consent Orders
Facilitating Discussion of New Business Ideas
Non-US Based Entities
Application Nuances
Brick & Mortar Requirements
Financial Implications
Uniformity

13. Questions
Kathryn L. Ryan Tim Lange