One of the fundamental dynamics within the heavily-regulated third party debt collection space is that although the subject (consumer debt) is quite significant, the industry itself is quite small.
When compared with other heavily regulated groups like banks, telecommunications firms, or oil companies, the debt collection industry is miniscule. The result is that the debt collection (or ARM) industry has very little power, both in Washington and in the media. The vast majority of third party collection agencies, law firms, and debt buyers are small businesses. And even the largest companies in the industry are considered small in comparison to the behemoths in other sectors of the financial services industry.
I’ve heard many collectors complain about the industry’s lack of lobbying power, the lack of a meaningful public relations initiative, and the lack of ability to defend against frivolous lawsuits.
While I am not privy to the financial details of ACPAC (ACA International’s Political Action Committee), it’s clear to me that the resources simply don’t extend terribly far. And I know that each of the major industry associations has one or more government relations representatives. Yet these individuals must cover an impractical amount of ground, and each association has a different agenda.
Clearly, for the industry to affect this situation in a meaningful way requires more alignment, more money, and more heft. Perhaps it’s time to come together on common issues, and also to partner with others in the same boat.
In the past it seems that creditors have been content to sit back and let third party collectors bear the brunt of media scrutiny. Yet they are the ones who have been hiring, directing, measuring, and compensating the collectors – or selling to them, as the case may be.
This type of cooperation has a precedent. When legislation was introduced in 2011 to amend the Telephone Consumer Protection Act (TCPA) to allow informational calls using auto-dialers, a broad coalition of disparate industries banded together in support of the measure. While the bill ultimately did not pass, the effort included ARM trade groups working alongside the American Bankers Association, the U.S. Chamber of Commerce, Mortgage Bankers Association, and others on a common goal.
Largely because of the actions of the CFPB, the light is now shining brightly upstream on creditors in the form of supervision, fines, and media attention. So perhaps now the conditions are right to approach these groups, such as banks, credit reporting agencies, or student loan companies, with the goal of cooperation and forming a united front with respect to matters of common interest.