No matter what kind of business you’re in, compliance is an essential part of keeping operations running smoothly and staying on top of legal requirements. With concern to a debt collection agency, a compliance strategy is of paramount importance as it ensures that all organizational activities are conducted in accordance with relevant laws and regulations. It helps maintain a level of transparency and consistency designed to protect both the organization and its customers from any potential risks.
There are numerous laws and regulations such as CFPB (Consumer Financial Protection Bureau), FDCPA (Fair Debt Collection Practices Act), TCPA (Telephone Consumer Protection Act) and many more that Collection Agencies have to be complied with in order to minimize legal exposure for both them and the companies they represent. Moreover, collection agencies also have to adhere to federal and state government laws that are not directly in line with their industry. To put it in simple words, a compliance strategy is necessary to ensure smooth and legal operations of a company, helping mitigate risk and financial liability associated with potential violations.
Common pitfalls to avoid when it comes to debt collection
Not Being Aware of your State Laws
Each state has its own set of laws when it comes to debt collection. It’s important for businesses to be aware of each state’s specific requirements so that they do not violate any laws or regulations. This includes being familiar with the state’s statutes of limitations, which dictate how long a creditor has to collect a debt before it expires. Knowing your state laws will help you stay compliant when collecting debt from consumers in different states.
Having Incomplete data/Mismanagement of data
The significance of data is not an understatement. Without complete, up-to-date internal data, it can be difficult to adhere to standards and gain invaluable insight into customer habits.
Also, the Fair Credit Reporting Act (FCRA), passed in 1970 has enumerated certain regulations regarding credit information and sharing of the same by collectors. Customers have certain rights which have to be complied with by the collection agency, failing which will invite legal actions that can drastically affect business.
Ignoring Consumer Rights
Collectors must also be aware of a consumer’s rights. The Fair Debt Collection Practices Act (FDCPA) outlines what a collector can and cannot do when communicating with a consumer about an outstanding debt. Some examples include not using profane language or making threats, not discussing the debt with third parties, and providing written notice before taking legal action against the consumer. Violating any of these rights could result in serious consequences for the collection agencies or companies.
FCS and its compliance strategy
Being a debt collection agency, we have a strict compliance strategy in place to keep track of all the data and records with respect to federal and state guidelines. We employ an innovative compliant calling strategy that is in line with customer engagement laws and regulations while ensuring one of the highest collection rates in the industry.
First Credit Services (FCS) is a leading omnichannel debt collection agency that concentrates on First-Party and Third-Party collections. First-Party or Early-Stage collections focus on reducing the number of accounts that go to bad debt, thus improving a company’s cash flow. While Third-Party or Late-Stage Collections focus on recovering bad debt through innovative debt collection strategies with the help of digitally-enhanced and consumer-centric omnichannel engagements.
Above all, we strive to keep improving our collection processes and stay diligent to ensure compliance with all federal and state laws. Providing our clients with risk-free and high-performing collections process. Click here to know more about our compliance strategy process.