In the 2016 ARM Industry Operations, Technology & Payments report, Billing Tree found that agencies cited regulatory compliance as their biggest concern. This is a valid concern. Whether you’re a new collection agency or an established one, it’s good to constantly remind yourself that your business is heavily regulated by the Consumer Finance Protection Bureau (CFPB, a government agency whose purpose is to protect the consumer and develop and enforce laws and regulations to monitor and control the financial industry.
It’s important to note two things about the CFPB:
- The CFPB has the power to make rules independently, along with examination authority and responsibility for oversight of consumer complaints about debt collection. In other words, they’re autonomous; they don’t have to wait for Congress to make their rules. They can make their own rules and then enforce them.
- The CFPB has rulemaking and enforcement authority over all the participants in the collections industry.
Who is affected by CFPB regulations? Financial service providers. Who, exactly, is a financial service provider? Well, the CFPB is very loose in their definition of “financial service provider”. According to them, a service provider is someone who:
- Provides a consumer with a financial product or service.
- Is an extension of a company that provides a financial product or service.
The CFPB’s definition of “financial product or service” is also very broad. It includes:
- Payment processing product or service by any technological means.
- Debt collection related to any consumer financial product or service.
- Credit extension or deferred payment of debt by an organization to a consumer
Here’s the part that makes agencies nervous: the CFPB’s definition of “service provider” is very extensive due to the broad definition of “financial product or service”. Because of this the agency’s oversight doesn’t end with just the service provider’s activities. The oversight extends to anyone whom the service provider hires to do work for them.
This means that the CFPB regulations apply to any and all vendors that a service provider hires. Because the vendor is an extension of the service provider, the service provider is responsible for that vendor’s compliance or lack thereof. To put it into an example, if you hire a marketing person to create ads for your business and those ads are deemed to be out of compliance, you are held responsible and you are subject to fees, penalties, and fines for that non-compliance.
At Billing Tree we know how concerned you are about compliance. That’s why we have the newest technologies and systems to ensure strictest compliance. In addition, we also help you maintain compliance. We have an entire area on our website devoted to compliance education in which you can get all the latest news and insights about compliance as well as free online training and assessment for payment compliance. Would you like to learn more? Click the following link to go to Compliance Central.