Debt collection industry to see regulatory changes
While the debt collection industry is using cutting-edge, 21st-century technology to communicate with consumers, it has been relying on the laws and regulations that were written more than 30 years ago.
The Federal Trade Commission (FTC) has been the primary regulator for the debt collection industry, but it has been unable to provide the industry with clarity on laws because it cannot write new rules without authorization from Congress. Without clarifying rules, the industry has relied primarily on the court system for guidance on how to comply. This will soon change, as the Dodd-Frank Act transferred the FTC’s rule-making and enforcement authority over the debt collection industry to the newly formed Consumer Financial Protection Bureau (CFPB), which will have rule-making authority once a director is confirmed by the Senate.
The CFPB has signaled that issuing guidance and new rules for the debt collection industry will be one of its top priorities. Although some lenders and others in the financial services industry have expressed concern about giving the CFPB the ability to write new rules and take enforcement action, there is some hope in the debt collection industry that the new regulator will create a more predictable and consistent legal framework that makes it easier for the industry to ensure compliance.
Despite the political and regulatory uncertainty in the near future, it is imperative for debt collectors to stay prepared by following industry best practices established by The Association of Credit and Collection Professionals.