With no clear picture of what will constitute a Consumer Financial Protection Bureau audit, ACA International and DBA International are teaching members about best practices under the Fair Debt Collections Practices Act, which both associations say provide the best existing guidelines for meeting CFPB compliance. The CFPB is expected to clarify its guidelines for audits July 21.
“It seems likely that the CFPB will base its examination on the FDCPA, so this is a good time for debt collectors to perform a FDCPA self-compliance check,” says Bob Belair, an attorney with Arnall Golden Gregory LLC and the Washington legislative and regulatory council for DBA. “The CFPB has put out an examination manual for big banks that touches on the FDCPA as it pertains to a bank’s relationship with third-party debt collectors.”
DBA is developing a certification program for members to help them learn industry best practices and benchmark their performance against regulatory guidelines and the expectations of auditors. The association has discussed the program with CFPB and the Federal Trade Commission, which is expected to continue enforcing the FDCPA.
“Dodd-Frank transferred the FDCPA to the CFPB and it’s expected they will have oversight authority, but that the FTC will have enforcement authority,” says Belair.
ACA already has held a seminar for members about how to prepare for a regulatory audit and has included similar information in member publications.
“We are urging members to look at their operating procedures and training policies to measure their compliance against existing industry regulations, such as the FDCPA,” says ACA spokesperson Mark Schiffman. “Members should be taking steps now to prepare for CFPB compliance, not wait until after July 21.”
In the meantime, questions about what the type of information the CFPB can review as part of its audit process without violating consumer privacy laws under the FDCPA have arisen.
“Will the CFPB be able to listen to call recordings, audit a live call or look at a consumer’s file? If that’s the case, regulations in the FDCPA will most likely have to change,” says Phillips Duff, president of Lighthouse Consulting Group Inc. “If those areas are deemed off limits to CFPB auditors that will leave consumer complaints as a primary source of information and they are not always true indicator of compliance.”
It is not uncommon for a debtor that files a complaint against a collector to negotiate a settlement or payoff schedule before the complaint can be thoroughly investigated.
“By itself, the complaint does not tell the whole story about the collector’s performance,” adds Duff.
Even with all the preparatory work for CFPB audits being done, Belair says it most likely will be July 2013 before the collections industry has a firm grasp on the type of information the CFPB will want, as well as the extent and duration of an audit. “It will take a year before the industry can say it has gotten its arms around the audits and the cost to their business,” he adds.