by. Henry Meier
In a previous blog, I predicted that one of the most important areas of potential regulation no one is paying attention to is debt collection. Remember the CFPB issued an Advanced Notice of Proposed Rulemaking last November in which it strongly hinted that it was interested in expanding the scope of the Fair Debt Collection Practices Act to include creditors. Right now, the federal law applies specifically to third party debt collectors.
Another aspect of potential regulation has to do with greater oversight of debt collectors by creditors. In an excellent article in the most recent Banking Law Journal, attorney Benjamin Diehl also puts creditors on notice that the CFPB is likely to impose greater oversight requirements over third-party collection practices. As he puts it:
“It is clear from the CFPB’s consent orders that the Bureau expects creditors to take an active role in evaluating the soundness and legality of the practices employed by third party service providers.” He goes on to stress that “creditors should also evaluate their best practices regarding the handling of debt sales while also examining the policies and procedures with respect to collection activities handled by 3rd party service providers.”
There are no pending regulations yet, but, in my opinion you would be well advised to take his advice not only as it relates to debt collection, but to all of your vendor management activities. Everywhere you look your ability to demonstrate oversight of your vendor service providers is becoming an increasingly important component of the compliance regimen.continue reading »