Debt collection is a complex, evolving industry, and compliance with the myriad of federal, state, and local laws is an ongoing challenge for organizations in the field. These laws create a “patchwork” of rules and regulations that can vary widely depending on the jurisdiction, presenting challenges for those trying to maintain compliance and provide effective, consumer-friendly services.
Layers of Laws and a Patchwork of Regulations: Federal, State, Local
The complexity of debt collection laws begins with the different layers of laws and regulations that businesses must adhere to. At the federal level, there are laws such as the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA), and agencies like the Consumer Financial Protection Bureau (CFPB) and the Federal Communications Commission (FCC) issue important rules and guidelines that debt collectors must follow. These federal laws and rules provide a broad framework, but when you layer on state and local laws and regulations, designing compliance with multiple competing frameworks becomes more complicated.
For example, no consumer privacy law currently exists at the federal level, however, many states do have consumer privacy laws that provide consumers with the right to know what information is being collected about them, and the right to request that companies correct and/or delete their data. Some states provide an entity-level exemption to their privacy law (e.g., Colorado, Connecticut, Virginia) if a company is subject to the federal Gramm-Leach-Bliley Act (GLBA); however, other states may scope the exemption differently (e.g., California’s exemption is a data-level exemption, not an entity-level exemption). Depending on how a particular state shapes its laws, businesses and collectors must determine how to approach compliance in a way that harmonizes its policies and practices to comply with a patchwork of state laws governing privacy.
Sometimes, even federal laws create a patchwork of requirements, such as the FCC’s mandate regarding opt-out requests. The FCC has specified that opt-outs must be processed within a “reasonable” period of time not to exceed 10 days; while on the other hand, when it comes to debt collection and the CFPB’s Regulation F, a reasonable time frame for processing opt-outs is not defined, suggesting that opt-outs must be processed immediately. This leaves businesses and agencies with a conundrum—do you follow the more lenient 10-day window and potentially strain consumer relationships if further outreach occurs within that window, or spend the additional resources to ensure immediate opt-outs?
An additional layer of complexity comes from the different federal circuit courts in the United States. With 11 circuits, each containing multiple district courts, a ruling in one district may only be authoritative for that district. However, it may serve as persuasive authority for other jurisdictions. This decentralized legal landscape means that organizations must keep track of rulings that could affect how laws and regulations are interpreted in different regions. Even though not all court rulings carry the same weight across the country, they can still influence how the law evolves, and businesses like TrueAccord must stay informed of these rulings to adjust their practices accordingly.
Turning Compliance Challenges into Opportunities
The patchwork of laws and regulations presents an ongoing challenge, but at TrueAccord, we view this complexity as an opportunity. By staying actively involved in industry trade associations like the American Collectors Association (ACA) and Receivables Management Association International (RMAI), TrueAccord ensures it has a pulse on the latest developments. In addition to being part of these associations, TrueAccord leaders also participate in industry committees, allowing for deeper involvement on specific legal topics shaping the industry.
It’s not just about staying current within the debt collection industry; looking to related industries can also provide a competitive advantage. For example, when the CFPB first came around, it borrowed many of its compliance concepts and requirements from the banking industry, which had been dealing with regulatory compliance for years. By keeping an eye on what’s happening in sister industries, TrueAccord has been able to anticipate changes before they hit the debt collection world and be proactive in its approach.
An example of this proactive approach can be seen with the CAN-SPAM Act and opt-out requirements. While CAN-SPAM does not apply to the sending of debt collection emails, TrueAccord nonetheless looked at CAN-SPAM for best practices when it was designing its compliance policies around sending debt collection emails. Because of this, TrueAccord had adopted the policy of adding an opt-out to all outgoing debt collection emails before it was a requirement of Regulation F. When Regulation F mandated it, TrueAccord was already in compliance.
Be Prepared to Stay Ahead of the Compliance Curve with the Right Collections Partner
For businesses evaluating debt collection agencies, it is imperative to ask critical questions about how those agencies stay up to date on legal and regulatory changes. How do they manage change? How do they stay informed about new rules and updates? The answers to these questions will give businesses insight into how well a debt collection agency is equipped to navigate an ever-evolving compliance environment.
As we’ve seen, the patchwork of debt collection laws—spanning federal, state, and local jurisdictions—presents an ongoing challenge for businesses. However, TrueAccord’s commitment to staying ahead of the game through active participation in industry associations, tracking legal rulings and regulatory updates, and applying a holistic compliance management system ensures that we remain at the forefront of industry trends, laws, and regulations. By continuously adapting to changes and leveraging insights from across industries, TrueAccord not only stays compliant but also advocates for a more cohesive, forward-thinking regulatory environment. For businesses evaluating debt collection agencies, understanding how those agencies manage compliance and change is a key factor in choosing the right partner.