Collections, compliance, and COVID-19


By Gregory Sheperd

The COVID-19 pandemic has affected everyone’s personal life and every business segment, including the timeshare industry.  The temporary resort closings and low occupancy rates this year far exceed those of the Great Recession and are among the lowest in the history of our industry.

At Meridian Financial Services, COVID-19 has impacted our business in several ways. Many state executive orders have been issued that inhibit a collection agency’s ability to call or send letters to give customers notice.  These orders require the customers to act quickly the procedures and processes that allow compliance with the temporary regulations.  We find that constant dialogue with trade associations, attorneys, and other collection agencies is vital.

Practices affected by these regulations include placing moratoriums on notification calls and letters, offering payment deferrals, and making sure work-at-home collectors meet certain requirements.  Jurisdictions with the most stringent regulations include Nevada, North Carolina, and Washington D.C.

Massachusetts also initiated an emergency order on collection activity, but a federal judge overturned it because it violated the First Amendment rights of collection agencies.  Regardless of the resort location, agencies must adhere to the regulations in a consumer’s state of residence.

Maintaining compliance

To maintain full compliance with these executive orders, an agency must implement new tracking mechanisms to identify debtor location and ensure that the proper state’s regulations are being followed.  Establish account status codes to identify consumers whom you can call, when you can send letters, and when you must not add penalties if someone requests a deferral or forbearance.

For the benefit of clients, track pertinent information related to the effects of the pandemic.  Be prepared to train your collectors continually on the ever-changing regulations, and create scripts and tools to help them navigate through the proper disclosures.

Many timeshare resort owners’ associations are reluctant to place delinquent accounts with a collection agency during this pandemic, whether due to furloughs and short staffing, or to concern over jeopardizing the resort’s brand.

Regardless of the reason, many independent associations can’t afford to absorb the negative financial impact of substantially delaying the placement of accounts.  They must collect maintenance fees to cover the resort’s continuing operating expenses. Association boards must take all factors into consideration to determine what is best for the resort’s long-term financial wellbeing.

Gregory Sheperd is president at Meridian Financial Services, Inc., in Asheville, NC.