We’ve all seen the headlines lately with the statistics of lawsuits rising against collection agencies, of penalties handed down by the CFPB and the courts, of settlements against collection agencies and even speculation that the business of debt collection is going the way of the dinosaur. But is the business of collections really going away, or is it just going through another change?
Back in 1977 when the FDCPA was enacted, many agencies thought “that’s it, we’re done”, but agencies didn’t go away; they just had to comply with some much needed regulation. Those who could and would comply did, and those who couldn’t or wouldn’t are gone, but that’s a good thing. It’s been better for consumers, and has helped to bring a little more respect to the collection industry.
So now fast forward to 2010 and the creation of the CFPB. The collections industry is going through yet another change, but again, that may not be such a bad thing. A routine weeding out of those who aren’t already abiding by the FDCPA is good for consumers and it’s also good for those upstanding agencies that are already abiding by the rules, but getting a bum rap because of the negative press relating to those who aren’t running their businesses within the law.
After reviewing many of the 1,500 or so comments received as a result of the CFPB’s recent Advanced Notice of Proposed Rulemaking (ANPR), it’s clear that there is still work to be done within the collection industry. There are still those out there who are pushing the limits and even going beyond the limits to collect debts. Once the CFPB piles through the comments from both consumers and businesses alike, new rules will likely be written, and our industry will be refined once again.
So does this mean that CFPB exams and additional regulation will be easy? Not in the least! It’s going to be a rough road for everyone involved. But getting your compliance management program in order, and adding a little more oversight to your vendors will go a long way to getting your collection agency in line for this new wave of regulation.
In fact, with the additional requirements surrounding vendor oversight, it’s forcing the hand of those who are not already in compliance to either get there, or be left behind. If your vendors aren’t already protecting your data, treating your consumers with respect, or running their business in a compliant manner that is in line with industry regulations, then it’s good that you’re finding this out! And perhaps it’s time for you to find a compliant vendor.
The regulatory message is clear, comply or get out. If you can ride this storm, and come out on top, you’ll be successful with your collection business.
This article originally appeared in the latest issue of Know Your Debtor, a free quarterly newsletter focused on the U.S. consumer environment. Make sure you’re registered to receive insideARM’s newsletters on your User Profile page.