Another Regulator – Impact of the CFPB for Bill Collectors

The Bureau has been taking form for over a year now, and is about to launch itself completely into the debt collection industry as the newest, biggest, and most powerful sheriff in town.  What is “The Bureau” and why is it involved in the debt collection industry, you ask?  Here are my cliff-notes version for those not wanting to rehash 3 years of political wrangling:

Remember the banking melt-down a few years ago?  Of course you do.  The federal government’s legislative response was to create the Consumer Financial Protection Bureau.  There has been much said and written about how The Bureau will oversee and add another level of regulation to the banking industry, which was it’s primary purpose.  But The Bureau also has oversight of non-depository financial institutions as well (i.e. debt collection companies, among others).  So what does this mean to us in Little-town USA trying to collect legitimate debts owed to our creditor clients?

Third-party debt collectors were already regulated by the Federal Trade Commission (FTC) under the Fair Debt Collection Practices Act (FDCPA).  Data furnishers are also regulated by the FTC under the Fair Credit Reporting Act (FCRA).  Companies using Automated Dialer and Answering Devices (ADAD) are regulated under the Telephone Consumer Protection Act (TCPA) by the Federal Communications Commission (FCC).  Did I mention states Attorney’s General also have oversight for the individual state laws (about 38 different versions) and some states have additional regulatory bodies and boards (NV, WA, CO, etc.) The CFPB will create a list of Large-Market agencies that will need to submit to regular auditing, much like the banking industry currently does.  The definition of “large market” is still up for grabs, but our small company is on the cusp under one definition, miles away according to another.  We’ll see where the final definition lands, but auditing thousands of collection companies our size will not be an easy, or cheap, task for a federal entity.  And compliance? Can we all just say it out loud:  no government auditor comes away having found “no problems” if they want to keep their job.

What does this mean to you and me?  As usual, more regulations and more laws will affect the honest and professional companies and likely won’t affect the true targets of the legislation.  Unethical and illegal activity will likely continue by dishonorable collectors, while those who care about their reputation, their clients, and the consumers will be punished with more rules that won’t offer protection but instill fear of noncompliance.  And who will complain?  The consumer the law is meant to protect!

Bill collectors will be more and more frightful of violating another regulation, so communication and “common sense” approaches to working with consumers will become more restricted, thereby producing more complaints.  Cynical, you say?  Maybe.  Tell me if I’m not mostly on-track:  There are about 10 complaints filed with the Oregon AG against our company in the past 4 years.  Three of the last four complaints I have answered were people wanting to know why we don’t respond to them with calls or mailings AFTER they have either disputed the debt or requested us to Cease and Desist from communicating with them.  One lady complained TWICE even though she admits in her complaints she refuses to open our mail!

More compliance, more audits, more government oversight and intrusion, another place for people who don’t pay their bills to complain, another Bureau we have to answer to and respond to, or else!  It will be interesting to see how much good The Bureau does for consumers having problems with bill collectors…

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