January 31, 2014

Complex Collection Regulations Likely to Get More Complicated

If you are a consumer debt collection firm or hire these firms and are uncertain about how regulations governing outbound collection calls have changed since the Consumer Financial Bureau (CFPB) began monitoring the industry, and the recent revisions to the Telephone Consumer Protection Act (TCPA), brace yourself. And, there are more changes likely at the federal level.

A week from now, formal comments will close on the Consumer Financial Protection Bureau (CFPB)’s latest Advance Notice of Proposed Rulemaking through its new comment portal. This notice pertains to the CFPB’s review of its debt collection practices to determine if additional rules are needed and what those rules would be. It announced the review a few months after the agency started accepting consumer complaints regarding debt collection practices.

There were nine areas the CFPB is focused on for this review, including several pertaining to debt collection practices:

  • Collector interaction with consumers , governed by the Fair Debt Collect Practices Act, especially unfair, deceptive or abusive practices
  • Collecting debts beyond the statute of limitations
  • Debt collection litigation at that state level
  • Exemptions under federal law for state debt collection systems under the FDCPA

Keeping on top of these complex rule changes is a serious business considering that fines can be $5,000 per violation on a federal level, to say nothing of variations in the law at the state level.

That’s what one West Virginia debt collection firm is discovering. Enhanced Recovery Company, LLC is facing a suit alleging it engaged in “violations of the state consumer credit and protection act, negligence, intentional infliction of emotional distress and invasion of privacy”. An interesting element of this case is that the ruling may find that state law can supersede federal law and the TCPA.

Time will tell. In the meantime, consumer debt collection firms can rely on failsafe, automated compliance tools like Gryphon’s Core Phone for Collections.