12.10.15 by Andrew Shafer

THE CFPB – BIG BROTHER IS WATCHING (AND IT'S JUST A MATTER OF TIME BEFORE IT STARTS ACTING).

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          While settlements with banks and other credit originators are hogging the press, the CFPB has not abandoned the credit and collection industry – it just has not really gotten to it yet.  Even though the Bureau has limited its jurisdiction to agencies with more than $10 million in revenue, that revenue figure is a pretty low hurdle, particularly for agencies that are engaged in “big ticket” debt such as medical and student debt.  For agencies that are within the Bureau’s cross hairs, pro-active compliance and documentation ought to be your mantra.

            The Bureau has published its Collection Agencies Examination Manual.  This is the audit cook book that Bureau auditors will use when examining your operations.  It provides a terrific guide for what types of systems you must have in place to survive an audit.  The manual is available on the CFPB website (www.consumerfinance.gov).

            The Bureau has also published a Collection Agency Management Control Systems outline.  This document is an excellent guide for what your written management control systems manual must contain.  That publication is also available on the CFPB website.

            On May 15, 2015, the CFPB released its latest industry publication, the Company Portal Manual, version 2.14.  That publication is also available on the CFPB website.  This publication instructs collection agencies about the procedure for responding on-line to consumer complaints within the 15 days required by Dodd Frank.

            At this point, most agencies we represent have had limited contact with the CFPB. For the most part, that contact has been limited to responding to consumer complaints filed with the Bureau.  Take those complaints seriously.  The Bureau is compiling a data base.  Our best guess is that with limited resources, the Bureau will first audit agencies with the largest number of unexplained complaints. Remember, this is your opportunity to inform the regulator about why the complaint lacks merit.  Equally important, if the complaint is valid, explain what your agency has done to fix the problem for that consumer and for consumers to come.  Demonstrate that you have implemented system wide changes to avoid recurring problems.

           Any good news?  While Dodd Frank gives the CFPB the authority to make rules implementing the FDCPA, so far, it has not adopted any new regulations regarding the debt collection industry.  The Bureau has focused its enforcement attention on credit originators, not collection agencies. The several administrative proceedings that have been brought have all been against lenders.  Through May 31, 2015, the Bureau has filed only two actions in federal court against collection agencies.  In each instance, the violations were egregious.  In each instance the defendants were accused of engaging in fraudulent activities (attempting to collect phantom debt and threatening criminal prosecution on bad checks by masquerading as local prosecuting attorneys).  So, that’s good news…isn’t it?