Debt Collection and the Compliance Minefield


December 14, 2016 by Lisa Brammer

United Credit Service is a legitimate, law abiding collection agency. This means we scrutinize everything we say and do to make sure we are compliant with all federal, state, and local laws. Believe it or not, it’s not an easy thing to do because laws aren’t as black and white as you might think. In reality there are a lot of gray areas that are actually somewhat fluid—with laws morphing with each new interpretation from our courts and governing bodies.  Consequently we spend a lot of time and money working to stay complaint; looking for updates and new interpretations, and then altering our procedures and processes to reflect the latest changes in the laws.

All of our collectors go through rigorous training before hitting the collection floor and are ACA certified Collection Specialists. They not only test and recertify regularly, but also receive ongoing compliance training which includes answering a daily compliance question.  We also record all calls and review them for training and quality assurance.

There are many resources we utilize to keep up with industry regulations. ACA International, the Association of Credit and Collections Professionals, is one of them. They have a great Consumer Financial Protection Bureau (CFPB) Resource Center which is a continually updated storehouse of CFPB-related materials. It’s important for us to keep our finger on the pulse of all-things CFPB since they have both rulemaking and law enforcement authority over debt collection agencies.

Every day our collectors get on the phone and talk to consumers. They educate them on their accounts, offer financial solutions, overcome objections and stalling tactics, and negotiate payments. They do all of this while mindfully stepping through the minefield of compliance.

What does this mean? It means that a while ago, after a problem with the collection industry was identified, corrections were put into place and the pendulum began to swing. Remember the FDCPA and the Dodd-Frank Act I talked about in a previous post, the laws that were put in place to protect consumers from deceptive collection practices?  Well, they aren’t the only laws we obey to stay compliant, there are many, many more: TCPA, HIPAA, HITECH, FCRA, SCRA, GLBA, Age of Majority, and Bankruptcy laws.  Off the top of my head I can also come up with: Open and Closed Border laws, Interstate Collection laws, and Statutes of Limitation.  I could keep going, but you get the gist, there are a lot of laws we need to understand and apply with each interaction to make sure we are counted as one-of-the-good-guys by our clients and the FTC, DFI, and the CFPB (the governing bodies that oversee our industry).  Why a minefield?  Because if our collectors are not mindful about everything they say, they could be in danger of breaking the law.

As an example, let’s start with something basic. As I mentioned earlier, The FDCPA bans collectors from engaging in deceptive collection practices. Easy, right?  You’d think so, wouldn’t you? Just. Be. Honest!  But here’s the thing, back when my kids were growing up I’d council them on all sorts of financial matters:  I taught them how to balance a checkbook and why it was important to do so. I showed them how to set up a budget so they’d know where their money was going. I taught them to save for a rainy day. And I counseled them on the importance of paying their debts especially if they wanted to improve their credit worthiness. Did I deceive my kids? I didn’t think so, surely that was not my intent, yet if I was a collector and my kids were consumers I was attempting to collect a debt from, I could be sited for deceptive practices.

Why? According to an ACA International article “From Collector: Know the Score,” The Consumer Financial Protection Bureau wrote in a 2013 bulletin that they (CFPB) had concerns that statements made by collection agencies (and debt buyers, etc.) regarding the effect payments may have on a debtor’s credit report or overall creditworthiness may be deceptive.  Quoting the ACA International article, “…The CFPB’s bulletin provides examples of potentially deceptive claims, such as when collectors tell consumers that paying debts will improve their creditworthiness.”

When I first read that sentence my reaction was incredulous laughter. Seriously? But, after reading the entire article, I could see the point the CFPB was trying to make. They have concerns that consumers might interpret statements like that to mean that if (or when) they pay off a specific delinquent debt their credit score will improve right away. In most cases, this really isn’t going to happen. Typically it takes time to rebuild a credit score. In the ACA article they caution collectors to be careful not to imply to consumers that repayment programs could improve their credit report unless they really understand the facts.

We sent that recommendation to the collection floor—we certainly do not want to deceive anyone—even inadvertently.

Your take-away? The next time you see the media or politicians referring to the “lawlessness” of the collection industry I hope you’ll remember how heavily regulated our industry actually is, and the minefield we dutifully traverse every day, working to stay compliant.

Founded in 1950, United Credit Service, Inc. is a full service, licensed revenue cycle management and debt collection agency in Wisconsin providing effective, customized one on one management and recovery solutions for our business partners. Visit our website at, call 877-723-2902 or check out our YouTube video.


One thought on “Debt Collection and the Compliance Minefield

  1. […] December my friend and colleague, Lisa Brammer, wrote a great blog titled “Debt Collection and the Compliance Minefield.”  If you have not read it, you […]

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