Be Prepared for New Federal Regulations Coming in November

New rules covering how debt collectors communicate with consumers are scheduled to go into effect on November 30th, and it’s up to you to be ready for them. The Debt Collection Rules issued by the Consumer Finance Protection Bureau (CFPB) late last year amend Regulation F, which implements the FDCPA (Fair Debt Collection Practices Act). The Rules cover communications between debt collectors and consumers and also clarify existing prohibitions on harassment, abuse, false or misleading representations, and unfair practices. The Rules also extend communications to include emails and text messages and ultimately give consumers more control over the medium and frequency of contact from debt collectors.

Among the topics covered by the Debt Collection Rules are:

  • Communications in connection with debt collection
  • Notice for validation of debts
  • Harassing, oppressive, or abusive conduct by debt collectors
  • Disputes and requests for original-creditor information
  • Sending required disclosures

Preparedness Assessment Takes Extensive Look

To help debt collectors prepare for the upcoming rules, and as part of our audit and compliance services, Provana has developed an extensive CFPB Reg F Preparedness Assessment. The assessment takes a comprehensive look at a debt collector’s operations to help ensure the company will be in full compliance with the new Debt Collection Rules. Upon completion of the assessment, Provana will provide recommendations and consultation to the company in order to implement the proper controls.

A large automobile manufacturer recently asked Provana to audit its collection service providers. As a part of the review process, Provana developed the CFPB Reg F Preparedness Assessment. The evaluation includes an extensive list of items to review, including but not limited to:

  • Policies and procedures, including how consumers are contacted, the frequency of contact, disclosures made, how collectors handle time-barred or disputed debt, and how they work with non-English speaking consumers
  • Credit bureau reporting
  • Call monitoring
  • Employee training and testing
  • Consumer complaints and disputes
  • Record retention
  • Communication with consumers
  • Credit reporting

To complete the assessment, Provana performs the following steps:

  • Interview company key personnel to identify internal controls implemented to mitigate risk associated with the Debt Collection Rules
  • Document internal controls to identify any possible risks associated with the new Debt Collection Rules
  • Perform a comprehensive gap analysis to help ensure internal policies, procedures and controls are in place to avoid violations of the Debt Collection Rules
  • Provide an assessment report which details the company’s internal controls, any issues and/or gaps identified and Provana’s recommendations

Allow Sufficient Time For An Audit

Conducting an audit is no simple task. That’s why it can take a month or more to complete. Provana typically divides a compliance audit into four stages, with each taking about a week to complete.

The first stage includes an introductory meeting and an Initial Document Request. Companies will complete the document request through IPACS® (Provana’s Integrated Performance Audit and Compliance System). IPACS is an automated compliance management system you can utilize to ensure your business adheres to industry and governmental regulations, as well client requirements.

In stage two, Provana reviews the policies, procedures, and other documentation provided by the company. Provana will contact the debt collection company in the third stage of the process if it needs additional information or clarification.

In the fourth and final stage, Provana will deliver an Assessment Report which outlines the internal controls already in place to help ensure compliance. The report also includes recommendations for modifications to existing internal controls or adding new policies to help mitigate the risk of any potential violations.

Compliance Is Up To You

It is up to debt collectors to make sure the company operates within the new CFPB Debt Collection Rules. It is possible to review your practices and controls yourself to ensure you comply; however, it is usually best to engage a third-party company to audit your business practices. An excellent third-party company, such as Provana, knows what to look for and will conduct an impartial and comprehensive review of your procedures.