The Difference Between Holding a License and Keeping It

Terri Haley
Director of Compliance, the iA Institute

In the past, the majority of ARM industry focus on regulatory oversight was with the federal government’s enforcement of the FDCPA.  Originally these reviews were conducted primarily by the FTC.  Then came the origination of the CFPB and its publications on UDAAP, so we had to start taking a more in-depth look at everything we do that could possibly have a negative impact on consumers.  Without the specific guidelines language given by the FDCPA our internal reviews have hopefully become broader in scope and more thoughtful overall.  At the same time these changes were taking place we began to see a significant increase in oversight by individual states.

Holding a license and keeping it current are no longer enough to pass muster.  Many states now conduct extensive audits of collection agencies, law firms and debt buyers who are communicating with consumers living within their borders.  The states continue to evaluate and expand the laws governing this activity.

The recent sweeping reform in New York was just the latest example of this heightened focus at a state specific level.  Other states have taken a page from the CFPB playbook, joined forces and are now conducting onsite audits together.  The audits are comprehensive in nature and more methodical than in the past.  A number of the states have moved to centralized licensing and reporting systems which require extensive information and documentation to allow a continuation of good standing.  The requirements for reporting specific to the state and consumers who reside in those states is growing.  The obligations for policies and procedures, account documentation, record keeping and review and auditing will continue to increase in both intensity and complexity.

The good news is that because of the changes and improvements agencies have made driven by the reporting requirements for the CFPB, we don’t have to start from the beginning to meet the various state requirements.  Much of what is asked both from activity and reporting, should already be in place within your existing structure.  If you already have a strong working CMS you are in a good position.  Pay particular attention to your complaint management and reporting policies and practices.  The states will want to see what you are doing specific to their consumers.

As the states evolve their review policies, the need for the industry to stay on top of current events becomes more crucial.  insideARM has recently updated the information contained on its state licensing site.  We will work to expand the site to include more about the unique state requirements.  The Compliance Professionals Forum will also dig deeper into these changes as they are proposed and implemented, and continue the discussions with its members on best practices.