Pro-union groups are claiming Santander Consumer USA collections agents work under a high-stress environment, which is overly reliant on computer software that often inaccurately analyzes tone of voice, ranks employees based on “artificial” performance metrics, and makes it harder to assist financially distressed borrowers, according to a recently published paper.
Santander disputes the framing of the claims made in the report.
“These assertions and mischaracterizations are yet another attempt by union organizers to unfairly discredit Santander to further their own agenda,” the company said in a statement provided to Auto Finance News. “Santander prides itself on having an employee-friendly workplace where our employees are respected and motivated and where direct, open, and frequent communication between employees and management is encouraged.”
The 25-page report — which interviewed current and former Santander workers all employed through Fall 2016 — was conducted by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the National Employment Law Project, and the Committee for Better Banks. The authors are part of a campaign to unionize low-wage bank workers, including those at Santander.
One of the claims made in the report is that Santander’s recent compliance changes have made it more difficult for collections agents to assist delinquent borrowers, employees said. Specifically, the report cites the introduction of a “customer-service-like script” at the end of 2016, as well as the removal of a program called Optika, which allowed agents to see more borrower information –such as income.
“I can’t ask someone how long they’ve been out of work if they are out of work,” an anonymous employee said in the report. “[Santander] wants me to find out what caused them to fall behind, and you know they’re out of work, but if they’ve been out of work two years, that’s different. I can’t be an effective collector … if I can’t say certain things.”
“We were particularly dismayed that the authors chose to mischaracterize ordinary, customer-friendly business practices — such as monitoring customer calls and providing scripts to our workers — as evidence of improper conduct,” the company’s statement read. “These practices are not only expected by our regulators but are widely considered standard elements of best-in-class customer service and consumer practices.”
To ensure employees are following the script, Santander utilizes a software named Call-Miner, which inspects the agent’s speech for potential problems. For example, collectors must use at least 50 words when leaving a voicemail for a borrower who did not answer. Furthermore, there is an “apology quota,” in which the program checks that collectors gave at least three apologies and assesses “registered sincerity.”
“I don’t think it’s fair, a lot of hardworking people come to work, work hard, they have different hourly pay, and you have to work so hard for the bonus, which is not really consistent,” the current employee told AFN. “You are basically being graded by a robot, a computer system that is always based on the tone — being apologetic on each call no matter what it is. Your [graded on] wrap time — or the gap between each call — [and if there are] system issues there is nothing you can do about it and you have to suffer from that. It’s not convenient for the worker.”
Santander insists that customers and employees are its top priority as it continues to focus on improving its compliance program.
“We continuously review our consumer and business practices to ensure that we are providing responsible financing to consumers who want a vehicle to meet their personal needs,” the lender said in its statement. “Santander Consumer has zero tolerance for employee or dealer misconduct, and follows up on all documented employee complaints.”
Digging Into The Report
Although Auto Finance News was able to speak with a current employee who echoed the claims that the Call-Miner creates a stressful environment, there are also some exaggerated statements in the report that can be independently verified based on past reporting.
For example, the report details how onerous daily $10 late fees piled up on certain consumers. However, during a June meeting with AFN, Santander’s Chief Executive Jason Kulas said they had changed this policy at the start of 2017 to lower or — in some cases — outright remove the fees. This was confirmed by the current Santander employee, who wished to remain anonymous.
“We think that puts us in this virtuous cycle,” Kulas previously said. “Not only is it the right thing to do, but we think over time our customers have a better experience with us, they want to come back, they want to do more business with us. This ties into long-term success in shareholder value, even if in the short term there appears to be a cost to it if you are purely looking at the economics.”
Still, the report notes that “simple interest daily fees” — which is interest on top of a consumer’s existing interest payments — still exist. For one consumer that amounted to $310 a month once they fell behind.
The report also accuses Santander of shifting the burden of delinquent and defaulted loans onto investors through its securitizations — for which the lender is the largest subprime issuer. Except, the first loss position falls on Santander for the majority of those loans, Kulas told AFN.
“One of the biggest misnomers is that people who package up loans and securitize them make those loans someone else’s problem,” he said. “While clearly, we’ve gone through situations where different parts of the consumer industry have had situations like that happen — it’s not the case for us. The large majority of what we securitize stays on our balance sheet, it’s just financing, we retain the equity, we retain the first-loss position.”
However, the lender has faced criticism for its lack of income verification on those securitized loans. S&P Global found that this was done on a risk-adjusted basis but still cautioned that income verification is a “tenant” of successful underwriting.
Finally, the report cites a number of previous lawsuits and regulatory actions as evidence of current wrongdoings. But, as AFN previously reported, many of these actions date back before a wave of leadership change occurred in 2015 and early 2016.
For example, in March, the Federal Reserve Banks of Boston and Delaware entered into a $26 million written agreement with Santander Consumer USA over allegations that the lender knew of fraudulent dealers in its network, but did nothing about it. Those allegations are from 2015, and since then the lender has instituted a number of changes, including a new office of consumer practices, which analyzes company policy in order to optimize best compliance practices.
The report does, however, cite ongoing litigation as well. In January, the Mississippi attorneys general filed a lawsuit against the company alleging unfair and deceptive business practices dating back to 2013.
The report’s authors make a number of policy recommendations.
- A systematic investigation of Santander’s business practices
- Pay workers sufficiently
- Take whistleblowers seriously and treat them as allies to better the company
- Santander should enter into a dialogue with low-income communities where these lending policies have the greatest impact
- Institute a new employee-incentive system
“A new incentive system is far overdue at Santander — one that is divorced from parameters and priorities that implicitly or explicitly sanction aggressive collections practices, and that aligns with methods to reduce customer dissatisfaction and harm,” the report stated. “As one employee aptly described, ‘It should not hurt workers to have longer calls and help consumers to pay correctly, in order to pay less interest, or to use refinancing.’”Like This Post