Mike Ginsberg: 2013 Will Bring Much Needed Regulatory Clarification for ARM Professionals

Mike Ginsberg

If 2011 was a year of anticipation then 2012 was a year of trepidation, this according to expert Rozanne Anderson who, once again, provides a clear overview of the legislative and regulatory climate for ARM professionals in Kaulkin Ginsberg’s Outsourced Business Services Sector Year End Review. [Download the complete report]

With Director Richard Cordray at the helm of the Consumer Financial Protection Bureau (CFPB), and the CFPB’s release of its definition of Larger Participant within the collection and asset purchasing industry, members of the ARM industry spent most of 2012 scrambling to self-identify themselves as a Larger Participant, self-assess their compliance risk, hire non-industry, self-proclaimed, experts to prepare them for the yet to be defined CFPB examination process.

For an industry new to the world of direct federal oversight and examination, 2013 will bring some degree of clarity. Rozanne equates the legislative and regulatory forecast for 2013 to the weather in Seattle. Clouds, rain with a smattering of occasional days of sun and clear skies will be the norm; but a norm we can predict and plan for accordingly. She encourages ARM industry executives to take heed and prepare.

In this report, Rozanne provides a top 12 list of compliance issues for ARM companies, covering important topics such as:

1. Responding to and investigating disputes and requests for verification – Upon receipt of a dispute or request for verification of the debt, you prevent continued debt collection activity until the consumer has been provided with the information required to verify the debt or the account is removed from queue or returned to credit grantor/asset purchaser.

2. State Calling Restrictions – Apply state calling restrictions regarding call frequency and order of calls in accordance with state law [i.e. number of calls per day/week/month and calls to residence must precede calls to employer in certain states, etc.].

3. Account Documentation – House or have access to documents either received from the seller of the account at the time of purchase or from the party having all right, title and interest in the account and for whom you are providing debt collection services. Such documents are necessary to substantiate verification of the debt or to support the claim if suit is commenced in a court of law. (Ex. original credit agreement signed by the consumer, the consumer’s e-signature if credit obtained electronically, closing statement, history of charges and payments, itemization of principal, interest, charges and fees assessed by creditor, itemization of principal, interest, charges and fees assessed by prior collection agency.)

4. Consumer Complaint Resolution and Tracking System – Track consumer complaints registered by phone, website, letter, third parties such as the BBB, FTC, CFPB, State Attorneys General and link the complaint to the account and the collector. You also link the action you took to resolve the complaint to the account and the collector. You produce a report indicating the remediation taken internally regarding the collector which may include specific training, assessment of penalties against the collector’s compensation, termination, etc.

5. Ongoing Training – Employ an appropriately scaled compliance training program for all members of your staff including members of your Board of Directors.

6. Cell Phone Consent and Revocation – Record consumer’s consent and revocation of consent for debt collector to contact them using an autodialer or prerecorded message and block cell numbers from autodialer campaigns for which the debt collector does not have consent.