Sep 27, 2013 Philip Burgess
The debt collection sector continues to undergo massive changes, especially when it comes to the legal confinements and allowances imposed upon agencies. While the Fair Debt Collection Practices Act is alive and well, acting as the most critical piece of legislation for collectors to recognize, other decisions have come following investigations by the Consumer Financial Protection Bureau (CFPB) and other regulators in the past several years.
All agencies will likely want to use all resources available to them - including those that are more advanced and uncharted - to efficiently and successfully complete collection efforts. However, collectors need to ensure that they are following long-standing and new rules to avoid issues with the law, which can subsequently lead to financial problems, fines, sanctions and hurt reputations.
Major suit coming to a close
InsideARM recently reported that the latest case between one national collector and the Office of the Comptroller of the Currency (OCC) finished in a settlement, though some pieces of the litigation are still in the works. This case is believed by many to be a critical tone-setter for the industry at large, especially going into the next several years.
According to the news provider, the CFPB and OCC took on a joint investigation related to several practices of the institution in question, which led to massive settlements paid out of court by the defendant. Now, the organization still faces monetary penalties, fines and even damages to be paid to those who either had their rights infringed or identities stolen due to the actions of the defendant.
This should, first and foremost, serve as a lesson to all agencies operating within the sector that poor, illegal and even slightly refrained actions that go against the law can lead to substantial financial issues. Many collectors will not be able to fight back following such a major investigation and lawsuit, though none have to be at risk, as proper practices can be created and sustained over time.
The source explained that 13 Attorneys General from across the nation are now filing more complaints against this organization, which is leading to a continued up-hill battle when it comes to financial performances and brand management.
In short, simple missteps, especially institutional failures such as poor or illegal policies, will never pay off, especially with the CFPB, Federal Trade Commission and myriad other regulators stepping in to protect consumers and businesses.
Another one bites the dust
Similar to the aforementioned story, another national collection agency has come under the scrutiny of the Massachusetts Attorney General's office for its practices, the Wall Street Journal recently reported. In both of these cases, the general practices of each organization were found to either bend or break the rules as they stand in current legislation.
All of the litigation is directly related to the disclosure of customer information, communications with those in debt and the protection of private information. According to the source, the latter organization is being specifically investigated for alleged lawsuits filed against debtors which are in direct opposition to the law.