(Newswire.net — January 2, 2014) New London, NH —
Debt collection has become an important part of the banking industry, but collecting delinquent debts is not as simple as making a few phone calls or sending standard collection letters. To avoid possible legal consequences, strict adherence to collection laws is necessary. Recently there have been many more stringent regulations that have been enacted which has made debt collection compliance by banks even more complicated.
Keeping up with all the latest changes to laws and regulations concerning debt collection compliance by banks can pose problems for most banks and credit unions. (http://www.ibshome.com/collection-compliance.php)There are numerous state and federal regulatory agencies that are overseeing the collection process and failure to comply with these regulations results in severe penalties being imposed on banks. To protect themselves, many banks have started using Bank Collection Software which can greatly reduce or even eliminate exposure to legal liability in the debt-collection process.
One of the premiere providers of bank collection software is Intelligent Banking Solutions, Inc. (http://www.ibshome.com/bank-collection-software.php) located in New London NH. A spokesperson says that “bank collection software helps banks achieve substantial operational, regulatory and financial gains by automating debt collection and special asset recovery activities.”
Most software packages have additional automated features to help ensure overall bank compliance. However, “the IBS bank collection software enables financial institutions to effectively meet challenges including charge offs, delinquencies and complex state and federal collection regulations. It makes it easier to achieve objectives that have the biggest impact on profitability and productivity such as maximizing non-interest income growth; improving compliance; lowering risk; and simplifying access to business-critical information.”
The Consumer Financial Protection Bureau (CFPB) has increased its debt-collection industry oversight and released thousands of reports to its Consumer Complaint Database. The bureau intends to gather data concerning various industry issues, including tactics of debt collectors and the accuracy of information they use when attempting to collect debts.
The Federal Trade Commission and other government regulators receive more complaints about debt collection than they receive about any other subject areas. Since July of 2013, when the Consumer Financial Protection Bureau began receiving complaints about debt collection, it has been one of the chief categories of grievances, with complaints directed to original lenders as well as to collectors. Some of the usual complaints include unwarranted threats, demands for payment of debts not owed and harassment.
Providing protection from harassment for consumers, the 1977 Fair Debt Collection Practices Act (FDCPA) is the primary law governing debt collection. The 2010 Dodd-Frank Act revision of the FDCPA made the Consumer Financial Protection Bureau the initial agency with authority to issue significant rules under the act. The Dodd-Frank Act allows the bureau to oversee all aspects of debt collection, beginning with the offer of credit to the acquisition of charged-off debt by collection companies. The bureau announced that banks exempt from the FDCPA requirements must also implement steps to prevent mistreatment of consumers during debt-collection procedures. In addition, banks and other companies that provide data to credit bureaus about consumers’ debt-paying records must reply to those consumers who dispute the information supplied.
Debt collectors are currently pursuing about 10 of every 100 Americans, and many in the collection industry support efforts to clarify how they can comply with the laws regarding debt collection. Subject to increasing oversight from the U.S. Consumer Financial Protection Bureau, those in the industry must be alert to new regulations written by the bureau under a federal law that governs collections and searches for violations.
Attempts at debt collection compliance by banks have not always been successful. In recent years, banks have spent more than $100 billion for legal costs because of mistakes made in efforts to collect debts, and U.S. regulators plan to increase enforcement penalties unless banks stop making those errors. Some settlements are sizeable, and continued non-compliance with the rules will result in even greater penalties. Failure to maintain debt collection compliance by banks can have serious consequences that may include civil lawsuits as well as government penalties.