Debt collection oversight expands
Jun 10, 2013 Philip Burgess
Debt collection was viewed as one of the most complained-about sectors in 2013, according to data from the Federal Trade Commission, though analysts have cited that many of these consumer-sent statements have not been verified. However, regulators have decided to increase efforts to identify and eradicate firms that do not oblige the Fair Debt Collection Practices Act, as well as those that may be considered abusive.
To avoid issues with law enforcement, damaged reputations and incurred financial losses, debt collectors should always ensure that policies are aligned with the statutes under the FDCPA, and that all employees understand the best practices of customer service. This approach will not only help maintain the legality of processes, but will also strengthen the brand image and work against the stigma that is currently facing the industry at large.
New database to expand complaint oversight
InsideARM recently reported that the Consumer Financial Protection Bureau, an agency that was launched through the Dodd-Frank Wall Street Reform and Consumer Protection Act, has created a more extensive consumer complaint database. The CFPB did not always track debt collection complaints as this task was historically managed by the FTC, though the former is beginning to have a bigger presence in the debt collection oversight process.
The source stated that the CFPB has also created state-by-state information tracking components for credit reporting and money transfers in hopes of assisting consumers and businesses understand trends in the respective markets. Credit reporting has been a major issue in recent years, especially among the biggest names in the business. However, alternative credit scores have become more popular, as they provide a strong utility for creditors.
"This data puts valuable information in the hands of consumers to help them understand what is happening in their states," CFPB Director Richard Cordray explained, according to the news provider. "And by adding credit reporting and money transfer complaints to the Consumer Complaint Database, we are making these important markets more transparent and accountable to all consumers."
InsideARM added that improper use of a credit report, incorrect information on a credit report, problems with credit monitoring and not being able to get a report are all categories consumers can use when filing a complaint through the new database.
Though debt collection complaints have not yet been verified, the CFPB has set a date to begin tracking and providing the information to the general public, the source noted.
Striking a balance
The Boston Globe reported in May that the District Attorney's office is becoming increasingly involved in the identification and investigation of debt collectors who do not follow the law. According to the source, Massachusetts investigators discovered several firms that were either not keeping records properly or completely breaking the law, and brought them to justice.
However, the news provider noted that legislators want to improve the oversight of existing legal frameworks to ensure that good debt collection firms can seek and retrieve money owed while protecting consumers and businesses from the grasps of illegal operations.