Compliance is a vital part of our industry, and agencies often have difficulty keeping pace with the latest federal requirements that seem to change almost daily. Fortunately, our industry has people like compliance expert John Bedard on our side.
Bedard, managing partner of Bedard Law Group, P.C., is a nationally recognized authority on the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA). He represents the ARM industry and works tirelessly to help all collectors stay compliant.
We sat down with John and asked him to share his thoughts and expertise on the current state of compliance.
Q: For those readers who are new to the industry, can you tell us what is “compliance” or what becoming “compliant” means exactly?
- It means understanding that the state and federal government have created laws and rules which govern the operation of businesses in our industry. Specifically, when we talk about compliance or becoming compliant we mean making sure that our businesses are not violating the rules state and federal governments have created for our industry.
Q: What are the core challenges agencies face to become and remain compliant in today’s environment?
- The main challenge is gaining an understanding of the universe of laws with which debt collectors must comply, making sure to stay up-to-date on the changing legal environment related to those laws.
Q: What are some of the key factors agencies must be aware of to ensure they remain compliant?
- Above all else, debt collectors must understand that every aspect of business operations is regulated by the government—from sending letters, to making phone calls, to posting payments. The biggest mistake debt collectors can make is not taking the time to understand the vast amount of rules with which they must comply.
Q: What role do you see technology taking in helping agencies playing a part in remaining compliant? Is it a help or a hindrance?
- Technology, when used properly, can be a tremendous help to drive revenue, keep clients happy, and stay in compliance with the myriad of laws with which a debt collector must comply. Fortunately, the marketplace is replete with technological solutions to the industry’s most pressing challenges.
Q: What are your thoughts on the current state of compliance and where do you see it going in the future?
- The collections industry’s number one focus today is on compliance. State and Federal regulators are examining the credit and collection industries with unprecedented scrutiny and regulators see themselves as a law enforcement agency with a zero-tolerance approach towards compliance.
The collections industry is currently going through some growing pains in terms of the maturity of its compliance management systems. However, I am certain that the industry will be better off and even stronger when the entire industry approaches compliance with a new focus and even better technology in place.
Q: Tell me a bit about convenience fees, what are they exactly?
- Convenience fees are charges a consumer pays for the convenience of making an immediate payment.
Q: How and when can convenience fees be charged and what should agencies know about them?
- The most important thing debt collectors should know about convenience fees is that some states prohibit them entirely, so great care should be taken in deciding whether to accept or charge such fees. Certain states prohibit this type of fee unconditionally.
Q: What are the risks and benefits of convenience fees?
- One of the main benefits of charging convenience fees is that it allows the consumer to make easy, quick, and inexpensive payment on an account. A key risk for debt collectors is to be sure they aren’t charging too much or not clearly informing the consumer about the fees.
Q: What are the dangers of convenience fees in regards to compliance?
- The biggest danger for debt collectors is not complying with state and federal laws that govern these fees at all times.
Q: Any final thoughts on convenience fees?
- These fees have raised the eyebrows of state and federal regulators across the country. If debt collectors are going to charge these fees, they should seek the advice of competent legal counsel to ensure it’s done properly and that they are not exposing consumers to risk.
Q: Which government organization do you see as the most important for collectors to pay attention to and keep up with regarding compliance?
- The CFPB is the place where the collection industry should be focusing its attention on right now. The CFPB will be creating rules for our industry very soon and collectors all over the country should be pay special attention to their actions and words.
Q: What do you see as the most high risk aspect of compliance for agencies?
- The absence of a compliance management system is one of the single most risky things facing collectors today. Meeting compliance obligations through a formal system of compliance instead of the scattered “whack-a-mole” approach the industry has taken in the past is paramount in today’s environment.
Q: Should agencies expect larger clients to begin asking for standard requirements?
- Yes, bringing compliance management systems up to an agreed upon standard will be a key focus over the next 12-18 months for the collection industry. The government is telling us this and clients are demanding it.
Q: Can compliance be a marketing tool?
- Not only will it be a marketing tool, it will be a survival tool. Clients are not going to want to conduct business with debt collectors who do not have a robust compliance management system in place to prevent, detect and correct consumer harm.
In addition to John’s invaluable advice, Columbia Ultimate offers the Compliance Management System which provides a single point of global control for compliance managers, clients, and regulators when auditing and reviewing an agency’s regulatory compliance controls. The Compliance Management System is hosted and available to all collections industry professionals, including non-Columbia Ultimate users.