Collection industry under the CFPB microscope. Learn how to protect yourself.

A record 12,788 lawsuits were filed in 2011 against accounts receivable management companies for regulatory violations, with the majority related to the Fair Debt Collection Practices Act. This year began with increased concern from the collection industry as the Consumer Financial Protection Bureau (CFPB) shows heightened interest in debt collectors.

Companies are facing potential litigation and fines

With this increased scrutiny, collection companies are under the microscope even more than before. Companies face potential litigation, fines and negative publicity if they attempt to collect on past-due consumers without proper handling. It’s now critical to identify accounts with a protected status before making collection efforts, in order to minimize legal risk and optimize your resources.

Experian’s FirstSweep^SM can help you optimize your treatment strategy to deal with regulatory risk. Experian^® can identify which consumers may be bankrupt, deceased or active duty military. Additionally, phone type and fraud indicators can be provided.

Act now by contacting your Experian account executive or calling 1 888 471 0066 to learn how FirstSweep can help you reduce regulatory risk.

Since President Obama used a recess “appointment” to name former Ohio attorney general Richard Cordray as the first director of the Consumer Financial Protection Bureau (CFPB) in January, the new director and the bureau have hit the ground running.

New Rule for Third-Party Debt Collectors

In February, the CFPB released a proposed rule that defined third-party debt collectors with more than $10 million in annual receipts and consumer reporting agencies with more than $7 million in receipts as “larger market participants.” This is the first of many proposed rules that will define the larger market participants that will be susceptible to the bureau’s nonbank supervision program.

Know Before You Owe: The Mortgage Disclosure Form

Another of the CFPB’s top priorities for 2012 is promoting greater consumer financial understanding. The bureau has continued its Know Before You Owe program, which aims to make financial disclosure forms shorter, simpler and easier for consumers to understand. Later this year, the CFPB is set to finalize a new mortgage disclosure form that combines and simplifies the forms that borrowers currently receive at closing. In addition, the CFPB is developing a financial aid shopping sheet for students to better understand their loan options, as well as a shorter and simpler model credit card agreement.