The Consumer Financial Protection Bureau’s threshold for what constitutes larger participant status in the debt collection industry, based on gross annual receipts, is considered too low by ACA International and DBA International.

The CFPB set a figure of $10 million or more in annual receipts or money recovered for its definition of a large collection agency. Twice since April, the ACA filed comments with the CFPB arguing that the threshold needs to be raised to $250 million.

ACA, the largest association for collection agencies, argues that annual receipts are not an accurate reflection of the size of a collection agency, as it is inconsistent with the way agencies determine gross revenues.

“An agency that recovers $50 million is collecting money on behalf of its clients. What annual revenues the agency earns are fees based on what it collects,” says ACA spokesperson Mark Schiffman. “Gross revenues are a much better definition of a company’s size.” 

DBA, the debt buyers association, also filed comments asking the $10 million threshold be raised. The industry seeks clarity around issues pertaining to CFPB’s definition of a large agency, says Bob Belair, an attorney with Arnall Golden Gregory LLC and DBA's Washington legislative and regulatory council.

ACA, in its comments, stated: “Whether under an annual receipts or gross revenue formula, the CFPB should exclude from the determination any non-retained income that is paid to credit grantors by debt collection companies.”

The argument for upping the $10 million threshold is that it would include agencies so small they will be considered small business concerns under the Small Business Administration’s rules, while being subject to the CFPB’s supervisory authority as a large agency.

“Of course, this result would defy the CFPB’s twin aims of ensuring that small business concerns under the SBA’s rules do not meet the CFPB’s larger participant threshold and that the CFPB Proposed Rule does not have a significant economic impact on a substantial number of small entities,” ACA wrote in its comments.

ACA also urged the CFPB to evaluate companies for larger participant status every year, instead of every two years.

Finally, the ACA asked the CFPB not to require disclosure of information protected by the attorney-client privilege, attorney work product, and other common law privileges, absent a clear directive from Congress that production of such information to the CFPB is not deemed to be a waiver of privilege.

“The proposed rule also imposes an irrebuttable agency determination that a company is a larger participant if it refuses to produce privileged and confidential information. It goes so far as to jeopardize the inviolable rights of companies to communicate with legal counsel regarding compliance with Federal and State statutory and regulatory laws without the risk of waiving any privilege or confidentiality with respect to those communications,” ACA wrote in it comments.

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