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by Dick Bucci, Founder, Pelorus Associates - January 28, 2014

Compliance And The Contact Center

The legal landscape for call recording consists of numerous state and federal laws and industry mandates. These are written primarily to protect individual rights to privacy and to protect citizens from fraud and abuse. While laws rarely specify a requirement to record interactions, voice and data recordings are very valuable for monitoring compliance and identifying potential exposures.

A short list of rules and regulations with the most far-reaching impacts on contact center activity include:

Telemarketing Sales Rule

The Federal Trade Commission (FTC) issued the Amended Telemarketing Sales Rule (TSR) on January 29, 2003. The Amended Rule gives effect to the Telemarketing and Consumer Fraud and Abuse Act of 1994. The legislation gives the Federal Trade Commission and state attorneys general law enforcement tools to combat telemarketing fraud, gives consumers added privacy protection and defenses against unscrupulous telemarketers, and helps consumers tell the difference between fraudulent and legitimate telemarketing. The rule requires extensive and highly specific disclosures for businesses engaged in outbound telephone sales and up-selling to existing customers. Many financial businesses and common carriers are exempt, although they may be subject to other laws governing telesales.

Express verifiable authorization (EVA) is required when payment is made by methods other than a credit card or debit card. Under the Rule, authorization is considered verifiable if it is obtained in one of three ways:

• Advance written authorization from the consumer.
• An audio recording of the consumer giving express verifiable authorization.
• Written confirmation of the transaction is sent to the consumer before charges are submitted for payment.

Truth-in- Lending Act

The Truth in Lending Act (TILA) was enacted on May 29, 1968 as title 1 of the Consumer Credit Protection Act. Regulation Z, which gives effect to the provisions of TILA, became effective July 1, 1969. TILA was first amended in 1970 to prohibit unsolicited credit cards and has since been amended several times. TILA is a United States federal law designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs. The purpose of TILA is to promote the informed use of consumer credit by requiring disclosures about its terms and costs. TILA provides very specific disclosure requirements for lenders. Examples include the methods by which interest rates are calculated, requirements to disclose the annual percentage rate, cost of late fees, terms, advance notice of renewals and many other items consumers should know when evaluating the cost and terms of credit.

As with the TSR, agents should be provided with scripts to assure that required disclosures are always made and that they are explained consistently and accurately. Automating recording systems - ideally enhanced with speech analytics - are the fastest and most accurate way to check for compliance and isolate violations that could lead to costly litigation.

Fair Debt Collections Practices Act

The Fair Debt Collection Practices Act (FDCPA) which became effective March, 1978 is designed to eliminate abusive, deceptive, and unfair debt collection practices. It also protects reputable debt collectors from unfair competition and encourages consistent state action to protect consumers from abuses in debt collection. Penalties for violation can be severe, up to $500,000. Third party collectors need to record and monitor all interactions. It would also be wise to record screen interactions as well - to assure that scripts are up to date and are easily understood by agents.

Privacy Rule - Heath Insurance Portability and Accountability Act (HIPAA)

A major purpose of the Privacy Rule is to define and limit the circumstances in which an individual’s protected health information may be shared. The Privacy Rule requires health plans, pharmacies, doctors, and other covered entitles to establish policies and procedures to protect the confidentiality of protected health information about their patients.

The rule is particularly important for outsourcers that provide customer service or collections services for “covered entities.” Under the Rule, these organizations are defined as Business Associates (BA’s) and need to sign a contract committing that they will not use or disclose PHI created or received from or on behalf of their clients. There are other provisions as well.

Dodd Frank Wall Street Reform and Consumer Protection Act

Dodd Frank casts a very wide net. While much of the media attention has been on so-called SIFI’s (Systemically Important Financial Institutions), the scope of the legislation encompasses, with a few significant exceptions, virtually all financial products and services offered to businesses and consumers. This ranges from the Morgan Stanley's of the world to the corner payday lender. This 840+ page Act includes numerous disclosure requirements for which financial services firms. The Consumer Financial Protection Bureau (CFPB) is charged with administering and enforcing existing consumer laws and has been very aggressive in seeking out and prosecuting offenders. The CFPB has also assumed regulatory and enforcement authority for more for consumer financial laws already on the books including TILA, CARD, FDCPA and over a dozen others.

All contact centers, and most particularly those that deal with transactions, need to understand the legal environment in which they function and take action to help assure compliance. In larger organizations there will be a compliance department to help you. Mandatory disclosures should not be left to chance. In 2012 three major credit card issuers were assessed penalties and required restitution in excess of $500 million for violations that occurred within the contact center.

Check your scripts and includes script compliance is an important rating factor for quality management. Record all voice and screen interactions that involve actual telephone sales or sales attempts and install speech analytics software so you can quickly identify and rectify potential problem areas. Don't forget to monitor the activity of any outsourcers you may be using. Contact center managers are not attorneys but ignorance of the law is not a persuasive defense. There is a lot that contact center management can do keep up on legal regulatory activities. It is wise to follow the trade media and periodically monitor the FTC and CFPB websites for the latest rulemaking. If you have a compliance department that make sure that the contact center is included in periodic compliance audits.

Dick Bucci
Founder, Pelorus Associates
www.pelorusassoc.com
434-589-2131