Oct 05, 2013 Philip Burgess
With the government shutdown in full effect, professionals in a number of industries are unsure how the development will impact their sectors. For many business and groups, very little has changed. For debt collectors, this fortunately appears to be the case as well.
There are very few instances in which collectors will need to change their operations in order to navigate the shutdown. However, it is important to note that many regulatory organizations will stay active, even with federal funding halts.
According to insideARM, the Consumer Financial Protection Bureau (CFPB) is one such organization that will stay active despite the shutdown. For debt collectors, this means their activities will still be monitored and scrutinized throughout the length of the federal pause.
The reason the CFPB is still open is because it is funded by the Federal Reserve, which the source indicated remains in operation even while shutdowns occur. Therefore, any debt collection practice that violates the Fair Debt Collection Practices (FDCPA) in the coming days and weeks will be subject to the full force of the CFPB's regulatory power. So, it's business as usual for debt private debt service professionals.
Despite steps taken by a number of congressional members in recent months to cut funding to, or even eradicate, the CFPB, the fact the organization remains in operation during a shutdown shows it isn't going away anytime soon. For this reason, it's important for debt collection leaders to make sure their agents are well trained in best practices that comply with the FDCPA. The source suggested that industry enterprises should create online reference guides for staff members based on CFPB policies and statements.
As is the case with private collection firms, most federal agencies that offer some form of debt relief services will stay in operation during the shutdown.
Bloomberg reported that despite some Department of Treasury arms being scaled back - such as the IRS - many normal fiscal services will continue, including relevant collection efforts.
Although there appear to be very few short-term effects for the industry, it's unclear what the future holds for collectors. Even after a budget is finally approved, there could be long-term impacts for a number of different sectors down the road. Potentially, debt relief efforts may be affected, for better or for worse. For industry leaders, it's important to monitor how the shutdown will change the economy and the political landscape.