Yesterday’s top story should serve as a wake-up call to everyone in the ARM industry. It underlines the Consumer Financial Protection Bureau’s mandate concerning vicarious liability: you are responsible for the companies you keep company with.
Specifically, in the case against a slew of fraudulent companies masquerading as collection agencies, several technology providers that cater to the ARM industry were named as defendants for “providing substantial assistance to the Debt Collectors’ unfair or deceptive conduct.”
What should collection agencies and vendors to the industry do in the wake of this development? If an agency is thinking of partnering with a debt buyer, how much due diligence is necessary?
Specifically: are agencies doing enough — and documenting what they are doing — to show a full understanding of the business practices of their clients, their vendors, and their business partners?
Compliance professionals, no doubt, are doing a lot of “I Told You So!”s. Their’s is among the toughest jobs in the industry: they’re not a profit-maker and they almost always have a hundred reasons why a collection agency can’t do something that the owner is convinced will make more money.
However, it’s compliance professionals who will be at the forefront of this due diligence push. And this is new(ish) waters: how will you know that you know enough about another company to trust them not just with your reputation, but your existence?
We’d love to hear from compliance professionals in the comments below. What are you currently doing for due diligence?