The Future of Compliance for the Debt Collection Industry

Legislative and regulatory compliance represents the fundamental link between every market segment (first-party credit grantors, third-party agencies, debt buyers, and collection law firms) and across all asset classes (credit cards, healthcare, utilities, telecommunications, student loans, etc.) in the accounts receivable management (ARM) industry. Compliance is at once a legal requirement, a reputational risk management strategy, an ethical imperative, and an unavoidable operational expense for debt collection service providers. But successful compliance is also an ongoing and mutable challenge for these companies.

Set against the backdrop of a battered U.S. economy that has negatively impacted many consumers’ ability (and in some cases, willingness) to meet their financial obligations, 2011 has seen:

• federal oversight and expanded rule-making power transferred to the Consumer Financial Protection Bureau (CFPB);
• attorney generals ratcheting up state-level actions against ARM firms;
• a year-end projection of more than 12,000 court filings from the burgeoning cottage industry of consumer litigation for alleged violations of the Fair Debt Collection Practices Act (FDCPA) and other statutes;
• and both major and minor media outlets across the country, having found renewed interest in exposing “an epidemic of abusive debt collection practices.”

In an effort to help receivables management companies achieve compliance with federal and state laws and regulations, Interactive Intelligence, Latitude Software and insideARM.com queried a group of ten ARM industry professionals about the future trajectory of major compliance issues in 2012.

The full paper gives you a 2012 forecast for debt collection compliance.

Collecting From The “New” Unemployed.

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Walter Steele, F.H. Cann & Associates

The global financial crisis that officially began in the fall of 2008 ushered in what some have called an entirely new world for the debt collection industry. Initial reactions to the economic downturn in certain corners of the ARM industry simply viewed it as part of the cyclical nature of debt collection and assumed a “been there, done that” point of view. As the recession dragged on for months, then years—with historic levels of sustained unemployment and underemployment—industry attitudes began to shift. What if the recent recessionary period was something other than the customary swinging pendulum? And if so, how do ARM companies effectively collect from the “new,” in some cases “never before,” unemployed? Walter Steele shares his perspective.

There is a cliché in the world of collections: “Find the people who can and will pay; work with the people who cannot until they can; and (insert – sue, close and return, or your favorite expletive) the people who refuse to pay.”

Traditionally, how your organization handles the latter consumer pool is usually a good indicator of how busy your compliance team (or defense lawyers) are going to be in the coming year. Looking forward to 2012 my concern for the industry is how we, as a collective, approach the middle tier of the above mentioned cliché, and the negative ramifications that could result in taking an overly aggressive approach to this ever growing consumer group.

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Download the Calling Compliance paper and get the full analysis from our panel of experts:

Kimm S. Bonn, Industry Consultant

The ARM industry should be prepared for two primary compliance emphases in 2012 – what I refer to as “client compliance” and the Consumer Financial Protection Bureau (CFPB). Client compliance denotes the amount of scrutiny and sensitivity that our clients will continue to exert. This includes reviews or extensive audits of customer complaints and disputes, and how they are resolved, as well as your overall test and control practices for your organization – the use of customer information via electronic means and via vendor associations, vehicles of
communication utilized with both the customer and internally, letter content and strategy, etc.

Gerri Detweiler, credit.com

Trying to pick the hot debt collection topic for 2012 is tough. There are so many choices. Will it be “robosigning” in debt buyer lawsuits? Collection calls to cell phones? The use of email or online/social media tools to collect debts? The continued growth of lawsuits filed by disgruntled debtors?

I’ll deflect the question just a bit by focusing my prediction on “who” rather than “what,” and will say that in 2012, the focus will be on the regulators; specifically the Consumer Financial Protection Bureau and state regulators.

With 2012 right around the corner, you need to prepare your team for a new batch of challenges – download the paper and get started today.

Michael Klozotsky
Managing Editor, insideARM.com