Collections compliance could be in for some big changes in the near future. So that’s why we recently hosted a webinar to discuss how a proposed rule change to the Fair Debt Collection Practices Act and how it might affect collections technology and processes, if passed. In case you’re unfamiliar with the FDCPA, it is a federal law that governs debt collection practices.
The FDCPA prohibits debt collection companies from using abusive, unfair or deceptive practices to collect debts. The presentation was very informative, but we also fielded questions from attendees near the end of the webinar. Here are just a few of the questions that were addressed:
Q: We are a first-party collector and sometimes send items to third-party collectors. Does XpressCollect allow us to push information to them?
A: Yes, it does. XpressCollect is set up for the organizational level, and those organizations have the ability to add agencies underneath the organization. Agencies can be assigned through triggers and queues for reporting purposes. Third-party collectors can have the ability to log into XpressCollect on behalf of the lender, but all of the permissions and roles are configured so they are only able to see what’s been assigned. Within the agency, permissions can be further broken down into groups and teams. If the agency doesn’t use XpressCollect, files can still be exported and shared.
Q: What are some of the keys things that financial institutions need to look at for when gauging how a collections system will be able to support changes to regulatory compliance requirements?
A: If there’s a mix of in-house and third-party collections, you want feel good that your organization as well as third-party agencies are also aware of compliance requirements and possible changes on the horizon and not just relying on the software solution to do all of the work. Ultimately, the responsibility lies with the financial institution to meet compliance standards, but it’s best when it’s a true partnership and everyone involved is trying to think ahead.
Not all solutions providers are forward-thinking when it comes to compliance, so financial institutions sometimes find themselves in a situation where they are reacting to changes with Band-Aids. The only way we save money is by getting a hold of customers and members, collecting on debt, and also being able to easily train others. As soon as these regulations were proposed, our compliance team was reaching out to product management as part of a proactive approach in case we decided to make system design changes considering the compliance change for our customers.
Q: Assuming the proposed FDCPA regulations are put into place, what’s a reasonable timeline for a current client or even a prospect to find out what changes will be made to XpressCollect or any other MeridianLink solution?
A: It’s hard to determine anything at this point because it’s all speculative. It’s really going to take the CFPB making changes to the rule based on commentary and then issuing a final rule. That’s when we’ll know an effective date. A lot of people keeping an eye on the FDCPA are predicting one year from the effective date because I think that’s been the track record with other regulations. Historically speaking regarding the FDCPA, which was approved in 1977 and has been changed throughout the years, this would be a massive change.
So when we know the effective date, we can start analyzing what changes will be made to XpressCollect so we can help our clients maintain compliance and mitigate compliance risk. One of the things we pride ourselves on is having the flexibility to allow our clients to configure our systems in a way that best mirrors their interpretation of what’s happening with the FDCPA. The good news for us at MeridianLink is that we’ve already done the work we anticipate performing on XpressCollect (assuming the rule doesn’t change), so it wouldn’t be a purely reactive situation affecting our clients.
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