Connecticut and Minnesota Approve Work From Home; MN Requires Debt Buyers to be Licensed

They say every cloud has a silver lining, and it appears the chaos caused by the Covid-19 pandemic is no exception. While March and April of 2020 were difficult for accounts receivable entities as they figured out how to deploy employees remotely while maintaining compliance with security and operational standards, it appears these efforts and how collection entities conducted themselves during the pandemic were not in vain.

Judging by recent regulations and orders, it seems at least some states recognized that allowing collection agents of properly licensed agencies to work from home did not result in any doomsday predictions coming to fruition. In January, Maryland issued guidance that will ultimately allow collectors to work from home post-pandemic, and in recent weeks Connecticut and Minnesota have followed suit.

Connecticut:

On July 1, 2021, Connecticut Banking Commissioner Jorge L Perez (Commissioner) signed an Order allowing employees of certain licensed entities, including consumer collection agencies, to work remotely (i.e., from home) so long as security standards and other requirements are in place. Interestingly, the Order began by noting that Connecticut has allowed certain employees of licensees to work from home since March 2020 to mitigate the spread of Covid-19 and expressly states that the Commissioner wishes to extend the ability to work from home. The order went into effect immediately on July 1, 2021, and will remain in effect until modified, superseded, or vacated. 

Minnesota:

On June 26, 2021, Minnesota Governor Tim Walz signed the Commerce and Energy Omnibus Bill (Bill), which included various topics. Relative to the accounts receivable industry, Article 7, Section 4 of the Bill, allows an employee of a licensed collection agency to work from a location other than the licensee’s business location (i.e., from home) if both the licensee and the employee comply with other applicable laws. The provision expires on May 31, 2022, and will need to be enacted again to remain effective.

Additionally, relative to debt buying, Article 5, Section 7 imposes a licensing requirement on debt buyers. Debt buyers will need to submit a license application by January 1, 2022. A debt buyer who has filed an application with the appropriate commissioner before January 1, 2022, may continue to operate without a license until the commissioner approves or denies the application.

insideARM Perspective:

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 people, which will enable them to bring on board those best suited to compliant collections, instead of only those within a specific geographic area. From a workforce perspective, allowing employees to work from home increases employment opportunities for those unable to travel from their home due to physical limitations, childcare, elder care, or other circumstances. Allowing employees to work from home is good for consumers because it reduces turnover, which results in consumers communicating with better seasoned and better-trained collectors.

All of that said, it’s important to note that new regulations, even when they are regulations that are good for the industry and consumers alike, require planning, processes, training, and implementation. Not all states will allow collection agents to work from home, and so far, this seems like the exception, not the rule.  Therefore, if multi-state accounts receivable entities plan on allowing collection agents to work from home, significant compliance hurdles will need to be overcome.  Agencies will need to develop processes that segment out accounts that may be worked remotely, establish protocols to ensure no other accounts go to remote agents, develop auditing procedures, and implement robust training programs for remote collectors. Receiving allowances like this from state regulators is terrific, but like everything else, accounts receivable entities should take the time to do it right; one or two bad scenarios could cause this freedom to evaporate very quickly.