ACA International officials on Monday introduced "The Path Forward: A Blueprint for Modernizing America’s Debt Collection System" - a five-point plan it hopes will improve collections by reducing, preventing and better resolving consumer complaints.
The plan examines industry public policy initiatives and practices.The goal behind it is to create a balance that allows collectors to do their jobs while also ensuring consumers are protected, ACA officials tell Collections & Credit Risk.
Current laws governing consumer collection are antiquated and were created for a different time and different circumstances, says Valerie Hayes, ACA's general counsel and vice president of Legal and Government Affairs. ACA is the largest association for collection agencies and creditors.
“The explosive growth in the use of cell phones, the Internet, social media, e-mail and other new technologies has changed how people communicate," she says. "ACA’s blueprint is intended to help remove unnecessary barriers to effective communication between debt collectors and consumers.”
The five points are:
• Use Modern Technology Responsibly: Allow consumers and collectors to efficiently communicate with each other using modern technology such as e-mail and cell phones.
• Better, Simplified Communications with Consumers: Allow consumers and collectors to better and more effectively communicate about debts.
• Advocate for Responsible Litigation in the Collection Industry: Ensure equal access to the judicial system for all classes of litigants and hold those litigants acting in bad faith accountable for their actions.
• Assure Proper Debt Documentation: Improve the flow of information by clarifying the specific debt information that must be maintained by creditors and asset buyers in order to allow debt collectors to provide documentation responsive to a consumer’s dispute regarding the amount of the debt, to whom the debt is owed or who is responsible for paying the debt.
• Adopt a Federal Seven-year Statute of Limitations for the use of Litigation to Collect Debts: Impose a seven-year Federal limitations period on the use of litigation to collect debt and prohibit filing or threatening to file suit on time-barred debts, while still allowing for the collection of the debt.
“ACA members will lead in working with lawmakers and regulators on state and federal issues including debt collection laws such as the Fair Debt Collection Practices Act, Telephone Consumer Protection Act and the Truth in Lending Act,” says Hayes. “Our aim is to collaborate with Congress, the Consumer Financial Protection Bureau [CFPB], state attorneys general, regulators, lawmakers and others to create a balanced system for debt collection that allows a vital industry to function and protect consumers.”
The plan comes one month before the collection industry is placed under the supervision of the CFPB. Until now, the Federal Trade Commission has regulated the industry an while it has had the ability to crack down on wayward collectors, it could not write rules and regulations. The CFPB will have the authority to do so.
Foremost on ACA's agenda is a need to update the Fair Debt Collection Practices Act (FDCPA), passed in 1977. ACA says the industry must have the ability to contact debtors using modern technology such as cell phones, e-mail and autodialers - all of which can run afoul of various FDCPA rules.
"The world has changed. Yesterday's laws aren't keeping up with today's new technology," ACA spokesperson Mark Schiffman said in an interview with Collections & Credit Risk. "We need to be at the table when these issues are discussed and be part of the solution. ACA and our various state units need to collaborate with regulators, lawmakers and attorneys general. They're deciding important issues impacting our industry.
"The blueprint also gives us the opportunity to be more open than we probably ever have before. [The advent of] the CFPB wasn't the impetus for this as it was in the works for about a year, but it does give us a chance to start fresh with a regulatory agency."
ACA Chief Executive Patrick Morris says the blueprint was achieved "through active collaboration with ACA members, lawmakers and regulators to modernize a system of critical importance to our national, state and local economies. Others have offered their proposals to reform the debt collection industry, this is our plan.”
Morris says ACA will provide education and training to help members, and their employees, better understand how and why they need to prevent, manage and resolve consumer complaints.
"Members must abide by a stringent code of ethics and those who engage in illegal activities should be held fully accountable to federal and state law," he says.
ACA's past industry initiatives include reating "Ask Doctor Debt" at www.askdoctordebt.com, a free resource for consumers to learn more about their rights in collections while getting questions answered.
