What Debt Collectors Are Getting Sued for in 2026

Adam Parks (00:00)

Hello everybody, Adam Parks here with another receivables webinar today. Very excited for the conversation that we're having because I think it's a little bit different. I had never really considered that we could keep such a close eye on what's happening to our industry by keeping an eye on the types of insurance claims that we are ultimately seeing coming across. And that led us to bringing together some folks from

Catherine Torrey (00:16)

you

Adam Parks (00:28)

QBE as well as some folks from ACA so that we could bring everything together and start a really good conversation. So John Bedard starting with you, could you tell everyone a little about yourself and how you got to the seat that you're in today?

John Bedard (00:43)

Sure. My name is John Bedard and I'm an attorney here in Atlanta, Georgia. I am a member of ACA and I am also a member of ACA's defense counsel panel that you're going to hear about today.

Raelene Grotts (00:44)

So,

Adam Parks (00:56)

Excellent. And Raelene could you tell everyone a little about yourself?

Raelene Grotts (01:00)

Hi, I'm Raelene Grotts I'm with QBE. We partner with ACA on their insurance program and I'm a claims professional and I've been handling debt collector claims since 2016.

Adam Parks (01:13)

Awesome. And Catherine, how about you?

Catherine Torrey (01:15)

Yes, hi, my name is Catherine Torrey. I'm vice president, Financial Alliance Programs at QBE. QBE North America is part of QBE Insurance Group Limited. It's one of the largest insurers and reinsurers worldwide.

Adam Parks (01:26)

Awesome. And Kristina last but not least, could you tell everyone a little about yourself?

Kristina Warmka (01:32)

Hi, Kristina Warmka. I am with Collectors Insurance Agency, a subsidiary of ACA International. I am the general manager and I oversee the insurance, licensing and bond services.

Adam Parks (01:43)

Excellent. And so as we kind of bring this conversation together today, I thought it would be interesting for us to start this with an understanding of kind of the insurance world as it relates to the debt collection. Because if we don't have insurance, it would be awfully difficult for us to function as collection organizations. So I wanted to start by talking a little bit about what is ACA? Why is it valuable? Talk a little about the insurance programs and kind of how these things come together and why people should care about this particular topic. can somebody want to start with talking a little about ACA itself and what the organization is and its focus?

Catherine Torrey (02:20)

Sure, I mean, I could just jump in a little bit before that just to mention that QBE and ACA have been working together for about 10 years as Raelene had mentioned on the professional liability program. We offer professional liability coverage and crime coverage tailored to the needs of the debt collector and especially ACA members, but we've also expanded it to RMAI members. The policy responds to claims related to FDCPA.

John Bedard (02:40)

you

Catherine Torrey (02:45)

FCRA, TCPA, and other fees, interests, or service charges, or collection costs to the original debt, as well as state-specific collection-related laws. And don't know if, Kristina, if you want to hop in and speak specifically to ACA.

Kristina Warmka (02:59)

Yeah.

Yeah. So ACA International is a trade organization for the arm industry. We are part of ACA. We're a collectors insurance agency. Like I said, we do the insurance, licensing and bonds. We've been with QBE since 2015 to offer an policy. And then just about three years ago, we expanded that coverage to offer an E&O debt buyers policy. So we work together with

QBE's defense panel, the claims team, underwriters, and ACA's education, and also their compliance department to help reduce and educate our members on claims.

Adam Parks (03:42)

Excellent. And John, I know you're active member of helping the underwriters better understand and providing defense for those that have claims filed against them. Could you talk a little about that program with ACA?

Raelene Grotts (03:51)

Thanks.

John Bedard (03:56)

Yeah, you know, what's unique about ACA and QBE is that they came together years ago to create a program designed to reduce risk to debt collectors and ACA members. And the way they do that is by they have assembled a team of experts. Many of those experts are defense panel counsel. Many of those experts are insurance experts that you've got here on the call today.

Raelene Grotts (03:58)

Thank

John Bedard (04:22)

And then we've got experts from ACA on the collection industry itself. And so they came together to create an insurance program that caters to the needs of the collection industry, particularly debt collectors and debt collection agencies and debt buyers. And they did that in collaboration with all of these experts. And it has been a resounding success over the years to reduce risk to agencies, to debt buyers, to debt collectors, because the collaboration between ACA and QBE has created an enormous amount of information that helps members and helps the industry understand what the rules are around the industry, from state law to federal law to regulations, you name it, and really provides sort of leading guidance on how debt collectors and debt buyers can operate in the industry in a way that complies with all the laws and reduces risk.

Raelene Grotts (05:12)

Thank

Adam Parks (05:20)

Well, reducing risk, I think, is the name of the game when it comes to the debt collection industry from a regulatory standpoint, from a litigation standpoint. Now, why I think this was such an interesting conversation for us to come together on today was to be able to look at some of the trends that are currently happening and where and why debt collectors are currently being sued on various pieces. So I know one of the things that we talked about as we were planning for this was TCPA and that

Catherine Torrey (05:29)

you

Adam Parks (05:47)

kind of exploding again in terms of one of those attack vectors. Could you talk to me a little about what is happening from a TCPA perspective these days and what our viewers need to be looking out for?

Catherine Torrey (05:57)

you

Raelene Grotts (06:00)

So.

John Bedard (06:07)

Is that me?

Catherine Torrey (06:08)

Yeah.

Adam Parks (06:08)

I could flip that. I mean, this one's kind of a float to everybody

Adam Parks (06:10)

because from an insurance perspective, you know what you're seeing that's coming across from a claims perspective. And John, you kind of know what you're watching for. So I figured I'd kind of float this out there to everybody.

Catherine Torrey (06:20)

Yeah. Well, I can just on a high level say, you we have seen a significant increase in claims tied to the TCPA and it's, you know, it's automated calls, texts and prerecorded messages. And that we've seen two main drivers, one being the artificial and prerecorded messaging, increased use of artificial prerecorded messaging, including ringless voicemail has led to larger class action settlements.

Raelene Grotts (06:40)

So, thank

Catherine Torrey (06:45)

I would say to John, feel free to jump in wherever you like, but also a failure to honor consumers requests to stop contact.

Catherine Torrey (06:54)

just, you know, whether or not that's don't call me at work, no calls on the weekends, right? However, that language is, ⁓ communicated and just the training required for the staff in that regard.

John Bedard (06:54)

Yeah.

John Bedard (07:07)

Yeah, one of the other areas that we're seeing, Catherine and Raelene, I know you're seeing them as well, is wrong number calls. And so when the caller believes they're calling consumer A and actually consumer B picks up the phone, that has given rise to a significant amount of liability and risk as well. And so those are the three areas that we're seeing a lot of right now.

Catherine Torrey (07:14)

Right.

Catherine Torrey (07:31)

Yeah, I think Kristina your team is working on recommending the use of the reassigned number database.

Raelene Grotts (07:34)

you

Kristina Warmka (07:38)

Yeah, we are underwriting, you know, risks that are coming in to make sure that, you know, if specific coverages that are requested, we are underwriting to make sure that, you know, that they are using some sort of system to make sure that those calls are being scrubbed and the reassigned database is one of the resources that we do recommend.

Raelene Grotts (07:51)

Thanks Yes.

Adam Parks (07:57)

So where do you think agencies can, other than using the reassigned number database, where can we start to look at our operations as collection agencies to restrict some of this risk? I know we're looking at the underwriting of it, but are there additional steps that we could be taking as organizations to further mitigate some of these risks?

Raelene Grotts (08:08)

You I think step one is using the R&D if you are leaving pre-recorded messages. mean, that's the most catastrophic claims I'm seeing when you're looking at $500 to $1,500 per call. And I think I read somewhere that 35 million calls, mean, 35 million cell phones numbers are reassigned every year. we're looking at high, high exposure here if you're not scrubbing those numbers. The pass through doesn't work right, John? mean, you can't use the, say the hospital gave you the number. You still need to be scrubbing that number, right?

John Bedard (08:53)

So yeah, and for those that are listening that aren't familiar with what we're referring to as the R&D, the reassigned number database, the government actually compiles a list of telephone numbers that have been reassigned to new consumers. They get that information from industry. Industry gives it to the government. The government then sort of consolidates all of it. And then the government makes it available to the industry and so that is important and the reason why we're all talking about using the reassigned number database is because before a caller makes a telephone call to a phone number it would be very very helpful for that caller to know whether or not that telephone number has been reassigned to somebody other than the person that they expect to be calling because under the TCPA if you are calling somebody that has not given you consent under certain circumstances, you could have significant liability. And of course, if the number has been reassigned, then it is very likely that the person it's been reassigned to didn't give you the consent to make the phone call that you were about to call. And so using the reassigned number database is just one arrow in a quiver of risk reducing tools that you can do to avoid the kind of liability that Raelene and Catherine are seeing every day now.

Raelene Grotts (09:50)

you

Catherine Torrey (10:04)

Raelene, what were the damages that you were sharing on that for each phone call? It was pretty significant.

Adam Parks (10:04)

Interesting.

Raelene Grotts (10:08)

It could be anywhere from $500 per call to $1,500 if it's deemed willful. And there's no cap. you're looking at multimillion dollar. mean, most agencies will make hundreds of thousands of calls every year or so.

Adam Parks (10:25)

And do you think that risk is amplified through the adoption of, let's call it AI conversational bots in that ability to amplify the outbound communications?

Catherine Torrey (10:36)

I would say 100%.

John Bedard (10:36)

You know, I would say yes, you know, we are now going through this proliferation of innovation in the calling space, including the use of AI. And, you know, sort of by definition, many of the AI tools out there now are artificial voices. And to the extent the TCPA regulates artificial voices under certain circumstances, which it does, the use of those artificial voices needs to be done in a way that is sensitive to the requirements of the TCPA. And the first line of defense when it comes to risk here is making sure that we have a compliance management system in our operation that first vets the implementation of new technology before we actually roll it out onto the production floor. And that's really sort of a necessary ingredient to the low-risk implementation of new technology.

I'm a firm believer that all of this technology can be used very effectively in the industry right now. We've just got to make sure that we cross our T's and dot our I's to make sure that we are doing it in a way that complies with all of the laws. And that's really what the beauty of this relationship between ACA and QBE is, because they have created all of those resources for ACA members and for QBE insurers

Raelene Grotts (11:33)

you

John Bedard (11:53)

to be consuming all of these valuable resources to help them put those processes in place and to reduce that risk associated with all of this new technology that's coming aboard these days.

Raelene Grotts (11:57)

So, thank

Adam Parks (12:05)

Interesting. And there is a lot of tech coming on and I've been having conversations from an AI perspective and saying, you know, the data that we're putting behind the artificial intelligence, if we're not using the reassigned number database, if we're not scrubbing those numbers, if we're not preparing ourselves, then we're just increasing the risk as we increase the volume of outbound calls, especially in a situation where there is no cap on the penalties. So the quality of our data that we're feeding to these machines is going to become infinitely more important over time. Now, John, one of the things that you mentioned was consent. And do we have consent to be calling these folks? And I know revocation of consent has been an issue in the past in the management of consent revocation. Is that still one of the main factors or has our industry really found systematic ways to resolve that issue?

John Bedard (12:56)

Well, it is a factor still. There are some things under, if we're still talking about the TCPA, there are some behaviors under the TCPA that are prohibited unless the caller has consent. Now they can obtain consent in any number of ways, but capturing that consent, documenting the existence of that consent, and equally as important, capturing and documenting the revocation of that consent after the fact are all very, important ingredients when it comes to building the compliance management process associated with making phone calls using technology. And so it's still very much a factor today. And mature compliance management systems take into consideration everything I just described. The capturing of the consent, the documenting of it,

Raelene Grotts (13:22)

you

John Bedard (13:44)

the capturing of the revocation and the documenting of the revocation. ⁓ That's an important ingredient.

Raelene Grotts (13:49)

Thanks.

Adam Parks (13:51)

It all sounds like it is a big part of what we're dealing with these days. In terms of what we've been seeing, I know the next thing that we started talking about as we were planning was FCRA and how FCRA and identity theft claims are accelerating right now and what kind of an impact that has. Now, I know the first question that comes to my mind when we start thinking about FCRA and identity theft is,

Adam Parks (14:15)

the responsibility of the creditor versus the responsibility of the collection agency itself. So I'm going to have a follow-up question down that line. But what are we currently seeing in terms of FCRA and identity theft related claims?

Catherine Torrey (14:16)

you

Raelene Grotts (14:28)

The majority of my claims are inaccurate credit reporting. I think probably John will agree with that. That's probably many of his cases are

Catherine Torrey (14:29)

I think, go ahead.

Raelene Grotts (14:36)

for that and yeah.

Adam Parks (14:36)

inaccurate credit reporting, okay?

Catherine Torrey (14:39)

I think we also have failure. ahead.

Adam Parks (14:39)

And from the perspective, God, no, please.

Catherine Torrey (14:42)

I was just going to say we also had failure to investigate disputes as a claim trend there.

Raelene Grotts (14:48)

Yeah, and those usually go hand in hand with the inaccurate credit reporting. They'll usually lump those two together.

Adam Parks (14:53)

Interesting. so I guess, John, from your perspective, as you're getting into the weeds on some of these things, how much of that is really within the control of the agency themselves if the information they're relying on came from the originating?

John Bedard (15:09)

Well, contrary to popular belief, they do have a lot of control over it. Because what we're really focused on here is the furnisher. Who is furnishing the data to the credit bureaus? Sometimes the creditors do and they take care of it. Often, however, debt collectors and debt buyers will furnish to the credit bureaus. And when they do, they have responsibilities under the FCRA. And one of those responsibilities is to ensure that they have policies and procedures that are designed to ensure maximum accuracy of the information that they furnish to the credit bureaus. Now, they are often relying on information that they receive from creditors. And anybody who's a furnisher knows that sometimes creditors make mistakes, right? Sometimes the information is not correct. And that's okay. It is not a violation of the law necessarily to have

Adam Parks (15:56)

No.

John Bedard (16:02)

an imperfect credit report. That happens. And the law tolerates imperfection. What the law does not tolerate is unreasonableness. Right? And so when a consumer notifies a furniture that there may be a problem or that there is a problem with information contained on their credit report, the law imposes on that furniture an obligation to act reasonably in response to what they're told about that dispute.

Raelene Grotts (16:24)

you

John Bedard (16:29)

And that's where all these claims sort of fall into this category of, okay, what did the furnisher do after learning that there was a problem with the content of information that they provided to a credit bureau? And that's where, you know, Raelene and Catherine will tell us a lot more about what they're seeing, but that's what we're seeing in terms of measuring the reasonableness of what a furnisher did after they learned

John Bedard (16:58)

that the consumer had a dispute with information on their credit bureau. That's what we're seeing.

Catherine Torrey (17:02)

Yeah, and Raelene, you can speak to this maybe more, but the strong, well-documented procedures are critical for defense in this scenario, in these cases.

Adam Parks (17:02)

So for

Raelene Grotts (17:10)

Correct, And I just always encourage my insurers to like go the extra mile. If somebody calls and says, oh, this, you know, I was the victim of ID theft. Well, they may not have been, but they may have been. And if they are, go ahead and, you know, immediately flag that account and do everything you can to help, to help that person saying that they're a victim of ID theft, you know, whether it's, you know, walking them through how to upload their police report or whatever. can't just assume,

Kristina Warmka (17:31)

and

Raelene Grotts (17:40)

that they know what they're doing, because a lot of times they don't. And then I'll get to a situation where I'm in court and a jury is going to side every time with that person who had the ID theft, even if they didn't do what they needed to do, like say they didn't upload their police report. The jury is still going to be mad at the collector, in my experience. Would you say that, John?

John Bedard (18:00)

Yeah, and you know, you mentioned ID theft, is very important because anybody who's listening, who is a furnisher under the FCRA, knows or really should know that ID theft is a really particular kind of dispute that a consumer makes that requires heightened attention and scrutiny from the furnisher. And the statute gives identity theft sort of special relevance right when we've got identity theft claims there are additional requirements that furnishers have to comply with that don't necessarily applied to other kind of disputes that a consumer might make and and unfortunately consumers who who are not well-meaning are aware that there is a heightened degree of scrutiny under the statute for identity theft and that and that it is possible to make an identity theft claim in a way that could benefit them, unfairly. And a lot of times, I'm being delicate with how I'm describing this here, but there are a great many identity theft disputes that our clients receive that after investigating, we learn that that was not a legitimate or a bona fide identity theft dispute.

John Bedard (19:13)

and in fact our clients are able to to demonstrate a document that many a significant amount of the identity theft disputes that they receive from some from consumers are not legitimate and that makes it very very difficult for for debt collectors who are furnishing to to make sure that when the legitimate ones come in they get handled the way the statute intends for them to be handled and so

Identity theft deserves special attention under the FCRA for furnishers. I guess that's my takeaway here.

Raelene Grotts (19:42)

you

Adam Parks (19:44)

Are you talking about... Go ahead, Raelene.

Raelene Grotts (19:45)

One thing, one thing too that I'm seeing a lot more of and John could probably elaborate, but is this garden variety emotional distress where the courts are letting people, you know, just get on the stand and prove up. yeah, I didn't sleep instead of having a doctor get up there and say that, or some sort of, you know, documentation from a mental health worker, you know, they're able to just get on the stand and say, God, this had me so upset. I, my stomach hurt and they're getting emotional distress awards for that is what I'm seeing John. Do you see that too? ⁓

John Bedard (20:15)

Absolutely, because consumers who have been damaged by credit reporting are able to testify about the damage that they experienced. And that damage includes emotional damage. sometimes the real victims of identity theft are very sympathetic. And it is very difficult for a real victim of identity theft.

John Bedard (20:39)

to fix all of the things that happened to them as a result of this identity that we don't want to come to closing bank accounts credit card and you name it i mean is everybody sort of familiar with how that how that happens and so it can be sort of a very unpleasant harrowing experience and and they're able to talk about that and when furnishers you know do not behave reasonably in response to learning about consumers legitimate identity that claim that gives rise to a circumstance in which they are able to tell, if it actually gets to a jury, to tell a jury about the damage that they have suffered.

Adam Parks (21:15)

It sounds like the bar has been lowered in terms of demonstrating that there has been some actual emotional distress. But one of the things that I've heard is talking about the reasonableness of the investigation itself. like, what does that actually mean? There's a dispute whether it be identity theft or something else, but like, I mean I'm not a lawyer, so when you say reasonable to me, it probably means something different than it does to you. But I'm curious from your perspective, like what that means.

Catherine Torrey (21:35)

you

John Bedard (21:43)

Yeah, know, furnishers across the country struggle with the answer to that question. you know, courts even sometimes struggle with the answer to that question because the standard under the statute is that a furnisher must perform a reasonable investigation. Now, when clients ask us that question, we have a laundry list of things that we recommend clients do when they're putting together their

Raelene Grotts (21:49)

That's it.

John Bedard (22:12)

procedures for investigating disputes. Because all disputes are not treated equally or treated the same. And so although I don't have a one sentence quip that answers the question, what is a reasonable investigation? What I do have and what we do share with clients is what we believe to be the ingredients of a reasonable investigation.

Raelene Grotts (22:33)

Thanks.

John Bedard (22:35)

What are the necessary ingredients of a reasonable investigation? I think there are some necessary ingredients. Not the least of which is you have to review all the information that is provided to you about the nature of the dispute. If you get a dispute from a credit reporting agency through e-oscar that's how we get them, reviewing all of that information is a necessary ingredient to a reasonable investigation. Reviewing all of the documents in the furnisher's possession

John Bedard (23:01)

about the account or about the information that has been furnished to the to credit reporting agency that i think is a necessary ingredient to a reasonable investigation and i'm not going to bore you with all the other ones but there's a laundry list of them

Raelene Grotts (23:03)

you

Adam Parks (23:14)

This is John. This

Raelene Grotts (23:15)

Yeah.

Adam Parks (23:16)

Is, I think, this is the baseline for an organization to defend themselves and what needs to be baked into their policies and procedures in order for them to successfully. And it wasn't until, I want to say I was in my mid-20s, the first time I met a jury of my peers by serving on jury duty and realized who I was actually speaking to. And it kind of changed my whole mental perspective of what is...

John Bedard (23:21)

Yeah, absolutely.

Adam Parks (23:40)

What is the court system? Like what is the judicial branch? So I think talking through these ingredients is kind of an important function there because that's one of those actionable takeaways that our audience can take back with them to their office and start thinking their way through or just checking, checking their policies and procedures that the ingredients are there and then baking it into their

Raelene Grotts (23:54)

You Thank you.

Adam Parks (24:04)

procedure going forward to make sure that they're actively defending themselves the right way.

John Bedard (24:09)

Yeah, yeah. you know, different kinds of disputes warrant different ingredients. Like we talked for a moment ago about identity theft reports. Look, if you get an identity theft dispute and you're a furnisher, well then, you know, the ingredients of that investigation includes investigating evidence of identity, not just looking at in comparing data on a screen but actually investigating identity itself in the form of government issued ID, the source of payments and previous payments, bank information, evidence of actual identity needs to be included in an investigation of identity theft. And so those are the kind of things that we share with clients about what we think the ingredients of investigations need to include.

Adam Parks (24:54)

So when we think about that, are there data sources that we should be using? Is there data out there that we can be acquiring to assist us through those investigation processes and to shore up our defensive position when confronted with one of these types of cases?

Raelene Grotts (25:00)

So.

John Bedard (25:12)

I think so. And in fact, one of the best sources of data and information about a dispute or how about your investigating it is the originator themselves. If you are a furnisher and you are not the originator of that account, well then, you know, in the collection industry we call them the creditor, the original creditor. You know, that is a rich source of information that furnishers can turn to to include in their reasonable investigation of the disputes they get from consumers. Nothing prohibits, and in fact under certain circumstances, the statute probably expects a furnisher to actually communicate with a creditor or with an original creditor when the information that they themselves have are not sufficient to perform a reasonable investigation of whatever dispute the consumer has about about the account or the information on their credit bureau.

Adam Parks (26:04)

That's interesting. Now, as we think about operating across the United States, which most collection agencies are, or larger collection agencies are definitely functioning across state lines, how different is the interpretation of these rule sets as you're dealing with jurisdictions across the country? Is it, know, have we found like here is the definition and we all agree, or is it still scattered like everything else?

John Bedard (26:30)

It's getting better, but it is not uniform around the country. We're involved in some cases that are at the circuit level, and we are encouraging circuits to adopt the reasoning of other circuits on how to measure the reasonableness of an investigation under the FCRA and how to measure the adequacy of a dispute itself. And so there are some circuits that haven't sort of adopted standards yet under the statute. Other circuits have and we are, you know, our firm and on behalf of insureds and on behalf of ACA members, we are advocating that circuits around the country adopt a uniform standard and method of measuring these things under the statute.

Adam Parks (27:13)

And so that connection back to ACA, think, is something that's interesting. Is that part of what ACA is doing as a trade association is to help these organizations unify that response and ensure that we're providing a, let's say, a more consistent argument across the various jurisdictions?

John Bedard (27:30)

Sure, I mean, I'll let Kristina sort of speak to that. I'm involved in that. I see that every day. ACA makes an enormous effort through its legal advocacy program to ensure that the courts are reaching the right conclusions on how to apply not just the FCRA to the debt collection industry, but the FDCPA and the TCPA. We have the Industry Advancement Fund, which is a hugely successful fund. that is used to help ACA members and to promote good jurisprudence throughout the country for the collection industry.

Raelene Grotts (27:59)

Thanks. What I miss, I'm sorry, it's storming here and I got kicked out. I'm sorry, I some good stuff.

Kristina Warmka (28:04)

Yeah, we.

Adam Parks (28:08)

No problem.

Kristina Warmka (28:09)

Okay, we were just kind of circling back on how ACA's kind of compliance department kind of, you know, funnels information over to the collector's insurance agency and we get that information out to our insureds to kind of keep them, you know, apprised to any, you know, claim trends that we're seeing throughout the different states so that everybody's kind of on the same page and how ACA and CIA kind of work interchangeably with those types of things.

Raelene Grotts (28:31)

Yeah, ACA is great. I mean, I can pick up the phone and call them anytime I have a question. For those of you that are members, I get on that website too. There's tons of resources there.

Adam Parks (28:40)

If you're not a member, that's an organization I highly suggest membership in, right? ACA and the way that these things come together. Because the more that I've learned about this process and ACA actually, or...

Adam Parks (28:51)

through the collaboration with QBE, being able to actually bring guys like John Bedard to the table from a defense standpoint, I think helps us avoid some of the terrible situations that we've faced in the past, right? Like a Hunstein situation, because now we're more consistent in the way in which we're responding. And even when an organization may not have the resources to handle something that is this important on a national basis,

Catherine Torrey (29:05)

No.

Raelene Grotts (29:06)

Right.

Adam Parks (29:17)

coming together as a collaborative group, think changes the perspective, changes the resources available, and ultimately changes the outcome from these types of situations.

Catherine Torrey (29:24)

you

John Bedard (29:28)

Yeah, and Adam, it's not just me. ACA and QBE have created a deep bench of experts in this area of the law, in the insurance area, in the defense area, in the compliance area, and that is really the value of this program and why it's been so successful over the years.

Catherine Torrey (29:49)

Yep. And just to touch again on what Kristina was mentioning about communicating out to members, just trends with the cases that we are seeing. And I'm sure we're going to touch on some of the letter claim, higher hazard claims that we've seen as of late, but just getting those communications out to existing members, sharing developments as they occur real time, really is invaluable. And that's really thanks to ACI.

Raelene Grotts (30:11)

with.

Catherine Torrey (30:16)

and the partnership with the panel council that we have.

Adam Parks (30:19)

Is it staring us in the right direction because now as a claim comes through and the defense is mobilized, but now we're also alerting everybody else to the situation at hand so that we don't all step into the same pit?

Catherine Torrey (30:31)

I would say a hundred percent. Raelene, we have about monthly claims calls and we catch up weekly with ACA, with the ACA team directly. you know, with that level of communication, we're able to stay on top of claims trends as they arise and then really get information out to members as soon as practicable.

Raelene Grotts (30:45)

you

Kristina Warmka (30:48)

And we, I'm sorry, at ACA, we, know, we, you know, work with our compliance and education team to get that message out, whether it's a huddle, whether it's a webinar, specifically for our insureds, we really just try to get ahead of what we're seeing and get that that message out to our insureds, kind of like what Catherine was speaking to.

Adam Parks (30:49)

And what kind of a... Go ahead. It seems like when we are coming together as a group and we're communicating, we're able to better organize ourselves, better mobilize ourselves. And that's something I find to be very interesting from this discussion. Now, I know we've talked about FCRA, we've talked about the TCPA issues, but I know that is definitely not the limit of what we are seeing across the country in terms of claims.

What other trends are you seeing right now or what other types of claims are you seeing or currently on the rise?

Raelene Grotts (31:38)

Well, one thing I'm, I'm seeing specifically, one thing I've seen specifically right now, and hopefully you guys didn't talk about this when I got kicked off is texts. Yeah. I, you, yeah. Yeah. Texts, texts are the new big thing. And you're looking at several kinds of situations. One is, you know, not having opt out on your texts. One is you can't text after hours. You've got to

Catherine Torrey (31:40)

Marlene, do you want to talk a little bit about the letter? text.

Adam Parks (31:50)

No, this is all you, please tell us what is going on from a text messaging perspective. in

Raelene Grotts (32:04)

go by the same rules you have on calls. think it's, what is it? Eight to nine, John, is that what it is?  You have to, texting without consent. You've got to have consent just like you do for phone calls. What else am I missing, John?

Catherine Torrey (32:17)

Missing required opt-out language.

Raelene Grotts (32:19)

Yeah, we got uptown language.

John Bedard (32:19)

Yeah, and the other thing we're seeing too is disclosure omissions, right? There are many places around the country in which debt collectors who communicate with consumers are required to include certain disclosures in those communications. And the failure to include those disclosures in text messages is something that we are seeing sort of a rise in claims for.

Raelene Grotts (32:24)

yeah, that's a great point.

Adam Parks (32:25)

Okay.

John Bedard (32:44)

which is why it's really prudent for debt collectors who are communicating with consumers, not just by text message, but by letter and by email and by all those other ways, is to run that through their compliance department, run that through their chief compliance officer, run it through their outside counsel to get those communications reviewed and approved prior to putting them into production. That's one of the best ways to...

Catherine Torrey (33:03)

you

John Bedard (33:12)

reduce risk when it comes to communications because I mean frankly you know an overwhelming percentage of claims by consumers against the collection industry is related to a communication of some kind between the collector and the consumer. We're now seeing the proliferation of new communication channels, text message being one of them, that is really becoming ubiquitous and that gives rise to the creation of risk if we don't make sure we cross our t's and dot our text message i's.

Adam Parks (33:44)

Well, text messaging is an interesting one because in order to add those disclosures, you have to think about the channels in which we can send through SMS versus MMS and hopefully eventually will be approved to be using RCS technology or we can better brand our communications, try to build some of that digital trust. But there's definitely some challenges in terms of SMS versus MMS. Have you seen anything? And this might be a little too technical, but I'm a nerd. So I'm going to ask it anyway. Have you seen anything in the differentiation of those claims between messages that have been sent as SMS versus MMS? Because MMS provides us with a higher character limit, potentially rich media, but it gives us more options to text or is it not really identified?

John Bedard (34:27)

We've not seen in our office claims that distinguish MMS and SMS yet. We've not seen that.

Adam Parks (34:35)

Okay, fair. That was just a curiosity question for me.

John Bedard (34:36)

Have you guys seen that really in Catherine?

Raelene Grotts (34:39)

I haven't seen him either, but...

Catherine Torrey (34:42)

I don't think we've seen it on our end.

Adam Parks (34:42)

You're on mute, Raelene.

Raelene Grotts (34:43)

Can you guys hear me? Yeah. Yeah, no, I haven't seen any claims for that, but I suspect that they'll be coming.

Adam Parks (34:44)

Okay. Yeah.

Catherine Torrey (34:45)

Yeah.

John Bedard (34:45)

Yep,

Adam Parks (34:50)

It was more of a curiosity and just whether or not we had visibility into which of the channels was creating more risk. And I don't know that there's really an answer for that.

Raelene Grotts (34:51)

Yeah, yeah.

John Bedard (34:58)

Yeah, and I'm not sure that the channel creates risk itself. In fact, I think there's a lot of opportunity for compliance when it comes to the difference between those two because the newer technologies, the RCS, it will allow collectors to actually provide additional information that will be very helpful to consumers. And so I'm kind of hopeful about how the industry is going to adopt and use those new technologies because they can really be used in a way that is effective and they can really be used in a way that can reduce risk, reduce harm and actually be a lot more consumer friendly than sort of the SMS which has a lot of restrictions on it right now anyway.

Adam Parks (35:39)

Fair. Now, do you think that as someone who spends a lot of time in the social media space and watching some of the content that I'm seeing coming out from, I'm going to throw up my air quotes and say these folks are trying to quote unquote help consumers with their debts.

Raelene Grotts (35:56)

Thanks.

Adam Parks (35:57)

Do you think that there's an influence right now on this increase in filings? And do you think it could be at least in some ways powered by some of this bad information consumers are getting from social media? And maybe is that driving this increase to the pro se and arbitration claims that we're seeing?

Raelene Grotts (36:15)

I think absolutely. I know there's tons of YouTube videos that'll tell pro-says how to file a suit or they can do a pleading on AI. It's usually a mess, but they do it. Right now, for instance, now, 18% of my claims are filed by pro-says. So that's pretty high. And I think they're getting all that off of the internet.

Adam Parks (36:33)

18%? Wow! Okay.

Catherine Torrey (36:34)

That is fine.

Adam Parks (36:42)

I mean, just for comparison, what was it years ago?

Raelene Grotts (36:42)

And and I prose know the percentage, but I would say just from my own experience in last 10 years, I mean, I maybe had four or five pro se's and, you know, not right now where I think I have 30. So yeah. And pro se claims in my experience get pretty expensive because the courts give them lots of leeway, which causes really unnecessary

Adam Parks (36:53)

Okay, well I think that gives us a pretty clear delineation.

Raelene Grotts (37:07)

unnecessary fees.

Adam Parks (37:09)

So, I mean

John Bedard (37:09)

One thing.

Catherine Torrey (37:10)

expenses,

John Bedard (37:13)

What one?

Adam Parks (37:13)

I've always heard the phrase that, you know, a person who has themselves for an attorney or a person who represents themselves as a fool for an attorney. believe that's the phrase. So John, like, how do you handle that type of situation? Like, how do you handle that type of pro se claim?

Catherine Torrey (37:21)

You

John Bedard (37:24)

Well, Let me just say a few things here. First is, it's wonderful that our legal system is accessible to people who are not represented. I mean, I think that's a good thing. And Raelene is correct when she says that litigants who are not represented by counsel, they do get a fair amount of grace.

Adam Parks (37:35)

Fair. Sure.

John Bedard (37:46)

from courts. And I'm not making a judgment about whether that's good or bad. But what I have seen is an absolute intolerance by courts, especially from people who are not represented, for making incomplete and incorrect representations to the court about the law. Because what I have seen many times is a brief gets filed by somebody who is not represented. And that brief was actually drafted by name your AI of choice, AI du jour. ⁓ And you know the AI right now, it can lead to inaccurate results if you don't use it correctly. And when you file documents in a court that purport to rely on cases that don't exist,

Catherine Torrey (38:27)

Verify.

John Bedard (38:35)

or reports to rely on the holdings of those cases for which those cases do not stand for, what we have seen is absolute intolerance from the court about that. And courts are routinely sanctioning people for that. They're even sanctioning lawyers. Lawyers who are using AI improperly are being sanctioned severely by courts for that very thing. And so it's wonderful that our system is available to litigants who are not represented by counsel. It's also wonderful that the courts do not tolerate imperfection when it comes to citing cases and relying on law.

Adam Parks (39:08)

Very interesting. Now, as we think our way through some of these challenges, people are using AI for those purposes, which is a little bit scary, but do you think that timely response to these situations or to these matters is an impact on your ability to defend? is time of the essence when a claim has been filed in order to

yourself appropriately.

Catherine Torrey (39:32)

Thank

John Bedard (39:32)

I can speak to the legal side of it and it's like, if you get sued and you get served, well, then the time starts ticking. You got to respond to that. And so from the legal standpoint, protecting your legal interests is required once you get served and once the time starts ticking for you to respond to a complaint. You don't want to be in default of a complaint. But I'll let Catherine and Raelene talk about the timeliness in terms of the insurance implications.

Catherine Torrey (39:38)

Right. Right, I mean, you want to report matters as soon as practicable. I think Raelene can speak a little bit more to it. I don't know if we lost her or not. in that regard, there have been cases that folks wanted to handle without notifying the carrier and that were not brought to our attention as soon as practicable.

Adam Parks (40:05)

We did. I think she's had a storm happening.

Kristina Warmka (40:16)

Thank

Catherine Torrey (40:21)

I think at the end of the day, and John, can speak to this too, it does not really ever serve in the best interest of the insured or the carrier.

John Bedard (40:29)

Yeah, I tell clients all the time, lawsuits and claims do not age like fine wine. They age more like milk. And so if we ignore it and we let it heat up, it's not going to taste good going down. And so that's how we share it with clients.

Catherine Torrey (40:35)

Right.

Kristina Warmka (40:36)

No.

Adam Parks (40:38)

Yeah

Kristina Warmka (40:47)

We always tell our insureds to file as soon as practical. You know, policy is a duty to defend. So, you know, we want to make sure that our insureds you know, putting Raelene and her team on notice for any.

Raelene Grotts (40:59)

I'm back. I'm so sorry. It's really storming here and my power keeps going out and my wifi keeps going out. Yeah. I'm sure it'll start hailing in a minute. ⁓ yeah. So I don't know if you guys touched on this, but I always try to encourage my insureds to get claims to me right away. Even if it's just for notification purposes. I know everyone kind of likes to try to get things settled for themselves and I get it, but.

Catherine Torrey (41:06)

That Texas weather, that Texas weather. We were just talking about claims reporting. We were just talking about claims reporting, Raelene.

Raelene Grotts (41:28)

there's a lot of stuff that goes into the policy language, for instance. Like I'm not going to cover pretender costs. Like say you get your own attorney and you do a lot of work, well, that's not going to count towards your retention. And I can't speak for every insurance company, but I think a lot of them are the same way. And then there's also like the matter of, know, was the insurance company prejudiced from what you did? Say you went ahead and had a hearing without me involved or whoever your insurers, is and something goes wrong, well, you know, that would be considered prejudice, you know, because we didn't have control of the defense right away. Also, I mean, it's just, if you can get something settled right away on your own, I get it, do it. But I would say if, say your answers do and you haven't got a settlement in place that you're comfortable with, you need to just go ahead and reach out to your insurer and With me, again, I can't speak for every insurance company, but I'll let you tender things for notification purposes only, at least initially. And if I see things are going really south, then I might insist that you go ahead and get one of my attorneys on board. But that's just something to think about. don't know, John, do you have any comments about that? know you've had to take over cases for me, for instance, where someone that's just really messed them up and then you've got to spend a lot of time getting things cleaned up.

Adam Parks (42:36)

I think that's a really important piece.

John Bedard (42:45)

Yeah. And you know, I keep going back to this program and to this relationship between ACA and QBE. Because when you tender the claim, you're actually onboarding an entire team of experts. And that's what makes being insured through QBE, I think unique, in the sense that you're just not getting a claim adjuster to tell you what to do or tell you what you can't do or take the case out from on you what you're really getting is is a deep bench of experts that have probably seen and done the claim that's been alleged against you a hundred times already they know the playbook in fact they've probably on a first name basis with the lawyer that is to do ⁓ and and and that really says a lot about the exp the depth of experience and the breadth of experience that this program has

Catherine Torrey (43:29)

Right?

Raelene Grotts (43:29)

No.

John Bedard (43:38)

brought to bear for ACA members and for QBE insurance.

Adam Parks (43:42)

Very interesting point, John, that it's probably not your first rodeo when you see a claim because there is clearly, look, we're here to talk about claim trends, which by definition means that we are seeing the same things over and over again and knowing how to defend those or having those relationships can be instrumental in resolving the matter. Now, we did talk about the pro se, but I missed part of that question that I want to go back to. Have we seen an increase in arbitration exercising as well? Like have we seen more claims that are pushing for that arbitration versus the courts?

Catherine Torrey (44:14)

you

Raelene Grotts (44:16)

Yeah, I've seen that and I'm not really sure what's driving that. Do you have any ideas, John? I mean, I know some of them are pro se doing it, filing for arbitration.

John Bedard (44:25)

Yes, we have seen that as well. And one of the, think the big drivers is, that arbitration cases are cost front end loaded. And so, you know, to initiate an arbitration, well, many arbitration clauses actually shift the cost of the arbitration onto the creditor or the defendant. And what happens is, you know, If you're going through AAA, you're going through Jams, you're going to these other arbitration forums, they front end load fees. It's expensive. It's a couple thousand bucks right out of the gate to arbitrate. And consumers and claimants and their lawyers know that. And so if a consumer or a claimant or a lawyer is expecting some kind of a settlement relatively quickly, we have seen in the past their penchant for filing an arbitration claim. because they know that the defendant is going to have to steal paid several thousand dollars to the arbitrator your arbitration form pretty quickly in the process ⁓ and and of course you know if they don't really want to do that up front without first figuring out what's really going on the other reason is is to really we have also seen consumers and consumer lawyers sort of bully defendants because many arbitration clauses

Raelene Grotts (45:26)

Thanks.

John Bedard (45:43)

have what I'll call an anti-class action provision, meaning you can't bring class claims in an arbitration. So what they'll do instead is they'll file 40 claims in arbitration against the defendant. And now we have 40 times front-end loaded costs and fees, which really changes the dynamic dramatically. And so I think The cost structure of arbitration encourages that a little bit. That's not to say that there aren't also benefits of arbitration. There are, but we have also been involved in several more arbitrations in the last few years than we have in the last 10 years.

Adam Parks (46:21)

Very interesting. wonder if that's also a factor on the tail end of the consumers seeing information on social media, because I do spend a lot of time looking at some of that consumer information, because I want to understand from a debt collector's perspective, like what is the consumer being told and what do they believe to be true? And some of the things I've seen has really like hurt my heart because they're so wildly inaccurate. And unfortunately, although we are held to a high standard in the courts.

Raelene Grotts (46:32)

Thank you. Yes.

Adam Parks (46:51)

These social media influencers are held to zero standard whatsoever. And they can just say whatever they want with no repercussions. And so saying things that are silly, like never pay a debt buyer, they bought the debt, now they owe it. I saw that video last night. I mean, it just sounds insane when you hear it out loud. But if you're a consumer and you have no understanding of what a debt buyer is or how the collections industry functions or

Catherine Torrey (46:58)

You

Adam Parks (47:18)

really how the credit system works, then you might believe that to be true and rely on that to make your next action in decision. And I wonder how much of this, I know clearly the pro se situation is most likely being driven by we see this volume of increase.

Catherine Torrey (47:26)

Okay.

John Bedard (47:33)

you

Adam Parks (47:36)

But I wonder if that arbitration is the same thing. And it might be, John, that they're seeing the same kind of content that's talking about, well, they're going to have to pay these fees up front, and now they're going to be less likely to sue you, and we'll get it off your credit report.

Because most of the content that I see related to that is all about how to get something off of your credit. It's also the number one search terms related to the name of collection agencies. So if you look at how Google and ChatGPT

Raelene Grotts (48:02)

Thanks.

Adam Parks (48:03)

are being asked about XYZ collection agency, it's usually related or most frequently related to how to get them off my credit report. Sometimes even more so than the name of the company itself

Catherine Torrey (48:04)

Okay. you

Adam Parks (48:17)

being searched. So you get a call or a text message or an email from a company, you go and search for that company, but they're not searching for the name of the company, they're searching for how to get them off of the credit report. And I think that is where some of this social media action is driving some of these behaviors.

Catherine Torrey (48:17)

you

Raelene Grotts (48:31)

And I know we're running out of time, but there's one thing I just want to touch on really quick is also for the collectors who work outside their state, I think it's really important, and ACA has a great program for this, is to make sure you have state-specific disclosures. mean, some of the states have their own disclosures that they insist you put on there, particularly like California, Washington, think Texas does, New Jersey.

Adam Parks (48:31)

So as we...

Catherine Torrey (48:32)

Okay. Okay.

Adam Parks (48:35)

Please.

Raelene Grotts (48:53)

If you're not familiar, if you're like going into a new state, you need to make sure that you've got those disclosures on there. I'm seeing a lot of lawsuits for that right now. Are you John? Yeah.

Catherine Torrey (48:54)

Okay.

John Bedard (49:05)

Yes, yes, especially in the electronic communication channels. We're forgetting. It's in our letters, but for some reason, the review process for emails and text messages aren't going through the same, you know, it isn't the same process. And so we're omitting them from the other channels that we're communicating with. That's what we're seeing.

Raelene Grotts (49:09)

yeah, that's a good point. See you.

Adam Parks (49:25)

Well, this has been an insightful conversation for me. I hope our audience gained as much from your expertise as I did. As we go into our final couple of minutes here, does anybody have any final statements you'd like to make on our topic today?

Catherine Torrey (49:25)

You I don't. I just would say if you have any questions about ACA or QBE, you can reach out to myself or to Kristina. It's been a pleasure speaking with you all today.

Kristina Warmka (49:46)

Thanks for joining.

Raelene Grotts (49:51)

And I'm very sorry that my Texas weather is not. cooperating today, it kept kicking me off.

Adam Parks (49:55)

thought I was going to be the one... Look, in South America I assumed I was going to be the one that had internet connection issues today, so I guess I'm just glad it wasn't me.

Catherine Torrey (50:03)

you

Raelene Grotts (50:03)

Yeah, thank you AT&T.

Catherine Torrey (50:07)

You

Adam Parks (50:08)

Well, I really appreciate all of you coming on today, joining me for this conversation as we end stick around for just one minute so I can get the uploads and we can process this so our audience can reshare the replay that'll go live next Friday with any of their colleagues that also want to learn about the claims trends that are happening across the industry.

For those of you that are watching, if you have additional questions you'd like to ask our guests today, you can leave those in the comments on LinkedIn and YouTube and we'll be responding to those. I'll make sure the questions make it directly to our speakers today. But thank you again, everybody, for your time and attention. We appreciate you and we'll see you all again soon.

Catherine Torrey (50:30)

you