In our recent Back to Basics Blog addressing debt collection Back to Basics, Continued–Debt Collection! the third “practice pointer” recommended that you stay tuned to future CFPB pronouncements about debt collection. Well, as it turns out, we've got a whopper of a development to report to you about debt collection and field calling in particular. We've addressed this subject several times since the original Bureau Compliance Bulletin, In-Person Collection of Consumer Debt 2015-07. See our prior blogs addressing field-calling including CFPB New Year's Resolution: Crack Down on Debt Collection.
On June 12, 2018, the Bureau and Security Finance signed-off on a wide ranging Consent Order addressing Debt Collection. The Order also deals with the Furnisher Rule.
The debt collection component dealt with unfair, deceptive and abusive (UDAAP) collection tactics involving in-person collection visits to consumers' homes and places of employment, collection calls to consumers' places of work and calls to third-parties. The basic findings of UDAAP under the Order included:
- Disclosing consumers' delinquency to third parties
- Disruption of consumers' workplaces jeopardizing their employment
- Humiliating and harassing consumers.
The Consent Order is very instructive as to what not to do in debt collection, particularly in connection with “field calling.” Also, the Order assigned much significance to the fact that employees could not access “cease-contact request” notations logged by other Security employees.
The Consent Order also found violations of the Fair Credit Reporting Act's Furnisher Rule. That is the rule that requires creditors to have reasonable policies and procedures regarding the accuracy and integrity of the information that is furnished to credit bureaus. This Rule was the subject of a recent Back to Basics blog as well. Back to Basics, Continued–Furnishing Information to Credit Reporting Agencies.
The major points discussed in the Order are:
- Continuing to furnish information that Security had determined was inaccurate
- Not coding customer account information or responses to consumer disputes properly by using the Metro 2 Guide
- Failing to have sufficient policies and procedures to address accuracy of credit reporting
With this recent development, we again ask ourselves whether field calling is an appropriate debt collection technique. The lesson to be learned from the Security Finance Consent Order is that unless you have great control over your agents in the field, in-person debt collection is fraught with problems. It seems that the larger the organization, the more difficult it is to maintain quality control. Perhaps this is a collection technique best used by smaller creditors.
And, the lesson to be learned concerning the Furnisher Rule is the same as our practice pointer #1 stated in our third Back to Basics series blog Back to Basics, Continued-Furnishing information to credit Reporting Agencies:
“Identify practices or activities in your office that might affect the accuracy and integrity of information that you furnish to the CRAs by reviewing existing practices including technology systems as to both the ‘when' and the ‘how often' information is furnished to the CRAs. Evaluate existing policies and consider whether any changes need to be made. Review the effectiveness of the specific methods being used to transmit information to the CRAs, and consider how these methods may be coming up short.”
And, just like that—when you thought that the Bureau of Consumer Financial Protection was out of your life, it has reemerged in a big way.