State tightening grip on debt collectors
Oct 27, 2013 Phil Burgess
The rules and regulations surrounding the debt collection industry continue to be in flux, especially on the state and local levels. While the Fair Debt Collection Practices Act (FDCPA) is still the fundamental federal law of the land, even its various components are beginning to undergo changes in light of technological advancements, increased consumer complaints and a variety of other catalysts.
Debt collectors have long had a stigma to fight against, and the faults of a few have hindered the stature of many firms that committed to legal, ethical and exceptional practices. This issue has intensified in the years following the Great Recession, as both public and private debt reached record levels in a relatively short period of time.
As a result, states, local governments and federal officials continue to work out new rules, guidelines and enforcement protocols to protect businesses and consumers who are in debt. Organizations that do not understand the entirety of the collection process should always consider outsourcing the tasks to a firm that specializes in them, especially given the turbulent regulatory landscape.
New York gets real
InsideARM recently reported that Benjamin Lawsky, the head of the New York State Department of Financial Services, wrote a letter with his colleagues regarding new standards for debt collection lawsuits and sent it to the state's Chief Administrative Judge of the Courts. Essentially, Lawsky has asserted that the state court system needs to have a more proactive and comprehensive stance on debt collection-related lawsuits.
According to the news provider, one of the fundamental areas the Department of Financial Services wants to tackle is pre-litigation practices among debt collection agencies, while several other new standards were also pitched in Lawsky's letter. New York had already been busy with new debt collection legislation, but some officials did not believe the previously proposed set reconciled enough issues.
"While I am confident that this proposed regulation is an important step to rein in unscrupulous debt collectors and ensure safe and fair credit practices in New York, reforming how creditors collect debt in the New York courts is an important next step," Lawsky stated in his letter, the source stated.
InsideARM added that the latest round of standards includes more thorough notification of potential lawsuits from debt collectors to their clients, as well as enhanced documentation protocols.
Simplicity always wins
When it comes to debt collections, firms can enjoy much stronger performances by simply following the law and mixing in several customer service best practices. Through a commitment to exceptional brand management, agencies will quickly be able to overcome the stigma facing the industry.
Countless examples of how certain agencies have adapted to become a greater resource for debtors and seen their profit margins balloon have surfaced in recent years. One such story included a debt collector that demanded its employees act as supporters for debtors, guiding them through the process of payment scheduling and other areas.
Agencies that follow the FDCPA, keep up with new rules on local levels and maintain strong pursuits of customer service will likely thrive in the coming years.