PR - ACA Proposes Changes After FTC Workshop

The debt collection industry is fundamentally different than it was 30 years ago at the enactment of the primary federal law regulating the industry, according to ACA International, the Association of Credit and Collection Professionals (ACA). The association today outlined a series of legislative proposals following a historic Federal Trade Commission workshop examining changes in the debt collection industry and how laws like the Fair Debt Collection Practices Act (FDCPA) have kept pace.

ACA General Counsel Rozanne Andersen, ACA President Chris Wunder and seven additional ACA members participated as panellists in the FTC workshop, Collecting Consumer Debts: The Challenges of Change, October 10-11. The summit brought together policymakers, consumer advocates and industry leaders to discuss major trends in the collection business, including industry growth, legal compliance, technological advancement and their effect on consumers.

ACA CEO Gary Rippentrop was encouraged by the workshop discussions. "This healthy exchange of ideas has united the industry behind a comprehensive platform of improvements. Our dialogue was very open and constructive. ACA is confident that the key issues have been well represented and we believe the workshop will lead to a successful review of our legislative needs."

The association responded cooperatively to the concerns raised at the workshop by consumer groups and industry professionals alike, with a set of proposed improvements that will clarify the responsibilities of each party in the collection process.

ACA’s plan includes:

1. Dispute resolution program. ACA is negotiating with a third party to administer a nationwide program that will help consumers resolve their disputes with a debt collector. The association’s code of ethics requires each member company to provide contact information for an officer with the responsibility and authority to handle consumer complaints. This is the first step in what is intended to become a self regulatory organization with the support of the FTC.

2. Improved methodology for reporting complaints. ACA takes exception with the methodology used by the FTC to report to Congress its assessment of the extent to which compliance with the FDCPA is being achieved. ACA recognizes the FTC as the industry’s chief law enforcement authority and understands how its current complaint system assists the commission in focusing its enforcement actions. However, ACA urges the FTC to adopt a new method of analyzing the industry’s level of compliance for purposes of its Annual Report to Congress so that the alleged acts of a few do not tarnish the reputation of an industry committed to consumer protection. ACA believes the FTC should be held to the reporting standards established by the Office of Management and Budget for all other federal agencies when reporting consumer complaints to Congress.

3. Federal preemption for the FDCPA. A uniform federal law would hold all debt collectors to the same standards of behavior and bring consistency to collection practices. The existing patchwork of state laws which mirror or supplant the FDCPA hinders interstate commerce and prevents consumers from equal protection under the law. However, ACA does not seek to impede or alter state enforcement activities or licensing requirements.

4. Liability for disclosure. Consumers may prefer to communicate with debt collectors using modern methods such as e-mail, fax, or voicemail, but the FDCPA currently poses a barrier to the use of these technologies. ACA proposes collectors be relieved from liability for unintended or inadvertent disclosure of a debt to a third party. This change would recognize both the collector’s responsibility to carefully direct communications about the debt to the consumer, and the consumer’s corresponding responsibility to limit access to his or her communications by third parties.

5. Consumer’s Communication Preferences. Consumers should be able to advise debt collectors of their preferred time, place and manner of communication. Debt collectors should be able to use all reasonable means of communication to resolve consumer debts and provide meaningful identity only when they have determined they are communicating with the consumer as defined by law.

6. Required audits and extended retention of documentation of sold debt. The Office of the Comptroller of the Currency, Federal Reserve Board and other such regulators who perform audits of financial institutions should be required to audit the documentation provided by creditors upon the sale of any consumer debt portfolio. The minimum period for which a financial institution must maintain documentation to support the verification of debt sold to any third party should be extended to seven years or the statute of limitation, whichever is longer. Creditors should be required to provide the best information available about the identity, residence and location of the consumer upon sale of a consumer debt to a debt purchaser and to transfer all relevant personal financial information to the debt buyer or otherwise make such information available through a data-housing provider.

7. Prohibition of the sale of disputed debts. Finally, creditors, debt buyers and financial institutions should be prohibited from selling or reselling a debt that has been disputed in writing by the consumer, or which the collector was unable to verify at the consumer’s request. However, this hold should be lifted upon obtaining the information necessary to verify the debt. ACA believes a coordinated effort with the credit reporting industry may result in a cost effective solution to this concern.

"The common theme to all our proposals is responsibility," said ACA General Counsel Rozanne Andersen. "Our system imposes certain duties on each party involved in a business transaction. The consumer has a responsibility to pay for the goods or services he has received. The creditor has a responsibility to handle personal data securely. The credit reporting agency has a duty to maintain accurate credit records, and the collector has the obligation to treat consumers with dignity and respect. If at any point in the process one party doesn’t live up to its responsibilities, the entire credit system breaks down."

"ACA members have been living and breathing the FDCPA for 30 years. The past few days have offered the exciting opportunity to look back over our wealth of experience and determine what is working well, and how we can better serve businesses and consumers," said ACA President Chris Wunder. "ACA strongly supported the passage of the FDCPA in 1977 and we will continue to work with policymakers to more clearly define the rights and responsibilities of each party in the debt collection process."