Financial Literacy

“An investment in knowledge pays the best interest.” —Benjamin Franklin

You probably sat through classes in high school wondering when you’d ever use this information again. Maybe you were applying formulas to equations or using rote memorization to recite a poem, but you definitely weren’t sitting in a financial literacy class learning how to manage your money. 

There is no life skill so underserved as financial literacy. Across the country, only 12% of high school students are required to take courses on personal finance and among adults that are financially literate, 73% say their education was experience. These statistics suggest that many young adults fall delinquent before ever fully grasping basic financial topics. Subsequently consumers struggle to find a way out of debt.

As a debt collection company, we need volume to survive, so it must be counterintuitive to advocate for better financial literacy, right? Wrong. Debt will never disappear completely. But the depths of debt wouldn’t be so foreign with a proper understanding of financial fundamentals. Consumers would be much more equipped to resolve their debt. Education is empowerment.

Co-CEO Jeff Freedman said, “We recognize that at some point in their lives, many customers will hit a financial bump in the road. The more financially literate someone is, the better, because they will understand that part of our efforts are to try and assist them and navigate during the difficult times.”

In collections, we work with a customer, not against them. Those that are less financially literate often believe we are their adversary. When company and customer can come together for the common goal, resolution becomes painless. 

The obstacles to financial literacy are not few. Schools do not prioritize personal finance in their curricula, a large population remains either unbanked or underbanked, and many do not recognize the necessity of financial literacy until they are already in debt. However, awareness is an important first step. As of 2021, 4 out of 7 adults are financially literate. Let’s raise that number together. 

Continue your financial literacy:

https://www.investopedia.com/guide-to-financial-literacy-4800530

https://www.usfinancialcapability.org/quiz.php

https://www.financialliteracy101.org/financial-literacy/index.cfm

Sources:

https://www.possiblefinance.com/blog/financial-literacy-statistics/

https://www.cnbc.com/2021/06/03/25-states-have-introduced-personal-finance-education-bills-this-year.html

https://www.federalreserve.gov/pubs/bulletin/2003/0703lead.pdf

Women in Technology

The importance of representation, promotion, and empowerment

Technology has never been a female dominated field. Although women are pursuing STEM (Science, Technology, Engineering, and Mathematics) at higher rates than ever before, a substantial gender gap persists: women only hold a quarter of all technology based jobs.

In high school, 83% of boys opt for STEM subjects, compared to only 64% of girls. Simply put, girls are less likely to study STEM. Representation is integral, and if girls do not see women in technology, they may discount the possibility of entering the field. 

MRS’s EVP of IT Evelina Shalevich has been in the STEM field for years and knows how important representation is. She said, “Any company that is truly committed to diversity and inclusivity needs to lead by example and in a lot of cases it starts from the top. The leadership team needs to set an example and show the rest of the organization that inclusivity applies at all levels.”

The STEM field still has some work to do when it comes to inclusivity and creating a more equal atmosphere. Women face promotion and pay gaps, as well as biased roles that skew towards the non-technical side of STEM. Despite such statistics, the numbers are increasing. Women are entering the field more than in years past. And while women are still a minority group in STEM, the numbers are encouraging. 

Bridging gender gaps doesn’t happen overnight; change is incremental. Being part of the change means supporting and representing women in STEM. Day in and day out, MRS promotes equality, inclusivity, and empowerment. 

Shalevich said, “At MRS, we take time to acknowledge all the wonderful women that play integral roles throughout the company and highlight their achievements. We do have a very diverse group of individuals that are part of the MRS family and I believe the compassion that we are able to show our customers helps unite the employees.”

Women belong in STEM, at every single level. They are integral to the field and their contributions cannot be taken for granted. 

Developing women in STEM will move the field forward. From empowering young girls to championing representation, we can all be advocates for equality. 

Tax Season

Whatever you thought you knew about the collections cycle—throw it out. Long observed trends have been disrupted, and the industry is still trying to adjust its expectations. After 2 years of the pandemic, the only thing that is certain is uncertainty. 

Typically, when consumers get their tax refunds, they have used a portion to pay down debts. For this reason, pre-pandemic February and March were very lucrative months. Enter the great disrupter, COVID-19. It’s no secret that individuals were struggling with personal finances during the height of the pandemic. Relief packages helped countless families, but the government aid has further implications.

Tax Season

Through the 2021 calendar year, under the American Rescue Plan, parameters were made looser so that the program could better provide for those struggling. The upper age bracket to have a child qualify for the Child Tax Credit, went from 16 to 17. Additionally, the credit increased for ages 17 and under from 2,000 to 3,000 dollars and for those under 6 it increased from 2,000 to 3,600 dollars. In short, this meant more funds for those who qualified. Another change was that from July through December of 2021, half of the credit that would normally have been paid during tax season was paid early to those that qualified in the form of monthly installments during those aforementioned months. The early payout likely means a lower payout during tax season.

Experts across the board have stated that people may need to adjust their expectations. The number anticipated may not be the number individuals receive. Those who expected higher returns may struggle. 

In addition to the Child Tax Credit, those who accepted the offer to pause student loans will see a dip in their returns, as they cannot write-off any student loan interest. 

Due to these factors, it is likely that the industry may face lower liquidation rates for months that were previously successful. But MRS has never shied away from a challenge. 

Co-CEO Jeff Freedman said, “Lower liquidation is a reality that we will have to deal with. Stimulus money in 2020 and part of 2021 that had an enormous positive impact is actually hurting the industry now as a result of much lower placement volumes.”

The past few years certainly haven’t been easy. The pandemic and Reg F have both had astronomical impacts on the industry. 

What is necessary in times like these is unwavering customer care and propulsive innovation. Though we cannot change the volume, we can stay true to our values despite the obstacles.

“Our use of our digital tools can help us manage expenses a little better but the tools obviously cannot help us with lower placement volume and placements are like the fuel that fires the proverbial engine in our industry,” said Freedman.

The question circling everyones’ minds is when will volume increase? Though it is yet to be determined, some predict as early as the fourth quarter of 2022. More likely, the industry will experience the volume increase in 2023.

A shift in the way we view the calendar in the industry may be in store, or maybe we’ll gradually return to normal. The fact is that no one knows at this point. Regardless of what lies ahead, MRS’s will forge ahead.

Sources:

https://www.cnbc.com/2022/01/03/dont-count-on-that-tax-refund-yet-why-it-may-be-smaller-this-year.html 


https://www.cbsnews.com/news/tax-refund-2022-heres-who-will-get-a-bigger-refund-or-a-smaller-one/

Privacy Law Redux

Over the past decade, there has been growing concern and heightened awareness over a consumer’s personal information. Consumers want their private data to stay private. Consequently, the legislature has followed. 

Delaware

Lawmakers are considering a bill regarding data broker regulation. The goal of the bill is to provide information to consumers about how their data is being used by data brokers. Furthermore, the bill proposes data broker registration and would force all data brokers to respond to a myriad of questions about how they use personal information that would then be published for the public. 

Illinois

The Do Not Track Act has been proposed by Senator Cullerton. This law refers to individual tracking online, and although it is not a broad privacy bill, we could see more legislation regarding privacy in the future from this state. 

Massachusetts 

Lawmakers are still considering the Massachusetts Information Privacy Act which focuses on consumer data privacy. Though a hearing was held late last year, no further hearings have been scheduled. 

Mississippi

The Mississippi Consumer Data Privacy Act will likely be reintroduced by Representative Angela Turner-Ford.

New York

Like Massachusetts, New York lawmakers are still considering bills regarding consumer privacy. Last year, the New York Privacy Act made it out of the Senate, but no further. This year, it has been amended and reintroduced.

Oregon

Like Delaware, Oregon is considering data broker legislation, requiring brokers to register and be regulated. 

Virginia

Last year, Virginia passed the Consumer Data Protection Act with the goal of giving consumers more control over their personal data. A joint commission wrote an open letter suggesting numerous changes to the law that are reflected in the following amendments: right to cure and potential penalties, exemption for nonprofits, and deletion requests. The right to cure and potential penalties revises enforcement so that actual damages can be recovered for aggrieved consumers. Exemption for nonprofits would in effect expand the number of organizations that are exempt under the law. Lastly, deletion requests assists a consumer having their data deleted specifically from companies that have received the data indirectly. 

Washington

The Washington Privacy Act has been carried over from last year. Similar to Delaware and Oregon, Washington is considering an act which will regulate data brokers as well as form a privacy commission. 

Consumer Privacy is a top concern for lawmakers across all states. Nearly every state has or is in the process of implementing some form of privacy statute. What we in the collections industry can learn from this is that consumers want to feel secure. 

It is a fine line to walk, avoiding third party disclosure while demonstrating the legitimacy of a contact, but with the right controls in place and a compliance first mindset, the complexities can be mitigated. 

MRS handles sensitive information on a daily basis. Embedded into our business are controls that insulate, encrypt, and protect each consumer’s data that we receive. Helping a customer resolve their debt while providing them with the security that their information is safe is paramount. MRS is up to the task. 

Sources:

https://legis.delaware.gov/BillDetail?LegislationId=79022

https://legiscan.com/IL/text/SB3081/2021

https://malegislature.gov/Bills/192/SD1726

http://billstatus.ls.state.ms.us/2021/pdf/history/SB/SB2612.xml 

https://www.nysenate.gov/legislation/bills/2021/A680

https://www.oregonlegislature.gov/lpro/Publications/Issue%20Brief%20-%20Protecting%20Personal%20Information.pdf

https://www.wilmerhale.com/en/insights/blogs/WilmerHale-Privacy-and-Cybersecurity-Law/20220124-virginia-legislature-proposes-amendments-to-its-consumer-data-protection-act#:~:text=Virginia%20lawmakers%20are%20considering%20multiple,the%20law’s%20non%2Dprofit%20exemption.

https://app.leg.wa.gov/billsummary?billnumber=1850&year=2022