Is sending consumers to particular collectors a discrimination or fair-lending risk?

The short answer

It is the right question to ask. In our conversations with agencies, compliance and HR teams raise it early, even where the aim is only to match collectors to the accounts they handle best. Your counsel decides how the law applies to your agency. BestPair does not provide legal or compliance advice, and nothing on this page is legal advice.

What a compliance team needs first is a clear account of what changes. BestPair changes only which collector works an account. It does not contact consumers, and it does not change whether an account is worked, what a consumer is offered, or any collection terms.

Why compliance teams ask

In our experience, the Equal Credit Opportunity Act and Regulation B are the rules many compliance teams start from. Regulation B section 1002.2 defines a credit transaction as every aspect of an applicant’s dealings with a creditor regarding an application for credit or an existing extension of credit, and its list includes collection procedures. The same section defines a prohibited basis as race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into a binding contract), the fact that all or part of the applicant’s income derives from any public assistance program, or the good-faith exercise of any right under the Consumer Credit Protection Act or certain state laws.

Whether and how those rules reach your agency, your clients and each portfolio is a question for your counsel. What the definitions show is why the question is fair: the credit transaction definition names collection procedures, and age is on the prohibited basis list.

What changes, and what does not

BestPair does not change the rules or offers for either group. Those stay with your agency. The difference BestPair introduces is which of your eligible collectors takes the account.

What data is used, and what is not

The data is pseudonymised only. BestPair never asks for consumer names, Social Security numbers, phone numbers, email or street addresses, or bank or card details. Account IDs are your own, so BestPair cannot tell who a consumer is. Does agent matching need consumers’ personal details?

The account details are balance, days delinquent, placement date, consumer age band, state and ZIP code, with call and payment history keyed to each collector. Two of those deserve a close look from your compliance team: the age band, because age is on Regulation B’s list, and the ZIP code, because a location field can stand in for other characteristics. The age band is optional: a floor can start without it. The data agent matching needs.

What your compliance team should check

1. The field list. Go through every field that leaves your systems and decide, with counsel, whether any field beyond the minimum of balance, days delinquent and state should be left out for your agency or a particular client.
2. That treatment stays the same. Confirm from the Order Form and your own procedures that offers, terms and whether an account is worked do not depend on which collector takes it.
3. The contact and eligibility rules. Confirm they are enforced in your systems for every account, in both groups. Agent matching and business rules.
4. Your existing monitoring. In our view the checks your agency already runs on complaints, quality reviews and outcomes should cover paired accounts the same way they cover the rest.
5. The documents. The Order Form, Standard Terms and Data Processing Addendum set out what BestPair does and commits to. Getting agent matching through a compliance review.

Where agent matching fits

BestPair sends each account to the eligible collector who has done best with accounts like it, from the floor’s own call and payment history, inside the rules and workload limits the agency sets, and measures the result against a control group. Under BestPair’s Standard Terms, your agency stays solely responsible for its collection activity, including the laws that apply to it and its agreements with its clients, and your counsel decides whether the setup fits.

Sources

• Regulation B, section 1002.2: the CFPB’s text of the Equal Credit Opportunity Act regulation’s definitions, including credit transaction and prohibited basis.