With the financial regulatory reform bill signed into law by President Obama, the collection industry is bracing for the expected impact of the broad and complex legislation.
“We are disheartened by provisions in the financial regulatory reform bill that are all-inclusive without a clear understanding by lawmakers of the impact of their actions,” says Rozanne M. Andersen, CEO at ACA International, a collection industry association.
“Collection agencies do not sell or offer financial products and services. In our opinion, all financial services industries are not created equal and to include the debt collection industry in this new law is overreaching," she says.
As a non-issuer of consumer credit and already heavily regulated by the Fair Debt Collection Practices Act (FDCPA), more than 34 state consumer protection laws, state regulators and the Federal Trade Commission (FTC), the collection industry sought a carve-out to exclude itself from financial regulatory reform legislation but was rebuked by Congress.
Despite that disappointment, Andersen says, “Many industries not directly engaged in the issuance of credit worked very hard to attain carve out provisions and none were successful.”
The new reform most relevant to the collection industry is the creation of the Bureau of Consumer Financial Protection (BCFP) within the Federal Reserve, which will have consumer financial protection responsibilities and rule-making authority. The industry aggressively pursued a claw-back amendment whereby the FTC would retain jurisdiction over consumer protection laws such as the FDCPA and the Fair Credit Reporting Act (FCRA).
“The task now for our members is to work closely with the BCFP as the industry's chief federal regulator. ACA needs to help the BCFP find an appropriate balance between protection of the 4% of Americans who are not able or not choosing to pay their bills and the 96% of Americans who are.” says Andersen. “Our members work on behalf of hundreds of thousands of U.S. businesses to collect just debts in a professional, respectful, consumer friendly manner. Lawmakers and regulators need to understand, we are not the enemy. We are keeping the economy running and preventing businesses from closing their doors. But most importantly, third-party debt collectors are the last ray of hope for consumers who might otherwise have to file bankruptcy.”