Having intuitive bank collection and recovery software, custom configured to your institutions specific collection compliance requirements, helps take the assumption out of it being in compliance. This is especially important with the greater focus on specific practices.
For example, a March 1, 2016 report said the Consumer Financial Protection Bureau (CFPB), the CFPB handled approximately 834,400 complaints about all financial products, including 219,000 about debt collection.
Debt gathering represents 26% of the total cumulative complaints submitted to the CFPB. Of all debt complaints handled, the most widespread matter identified by consumers is “continued attempts to collect debt not owed” (38 %). Next were communication tactics.
Our robust software helps any bank or credit unions stay in compliance, if the client owes the financial institution. Work flow automation to deliver (and document) voice messages, letters, texts and/or emails eases compliance challenges, reduces costs while preserving your institutions culture.
Putting Context to Complaints
Based on analysis of CFPB complaint data, there were 14.8% fewer complaints related to debt in February 2016 compared to February 2015 (3,483). Of the 2,968 complaints filed in February 2016, agencies responded to 93% (2,753) in a timely manner.
The CFPB also highlighted consumer complaints in Florida in the report. Residents there filed 80,200 of the 834,400 complaints to the CFPB since July 2011. Complaints from Miami, Orlando and Tampa Bay accounted for nearly 60% of all the complaints in Florida. Mortgages are the most complained about product in Florida and debt collection issues reflect national trends, according to the CFPB.
ACA International continues to be concerned that the CFPB once again released a complaint report about the industry without any kind of normalization to put the data in context.
Given that third-party consumer debt collectors make approximately one billion contacts to consumers per year, this huge number of contacts opens the door to a higher number of complaints compared to industries that have less consumer contacts on an annual basis. Without having this critical context, consumers will lack important information for how to understand various complaints.
The leveraging of powerful and compliant up-to-date collection software, such as CARM-Pro, limits the risk of complaints while balancing a borrowers’ rights. Such advanced technology can strengthen compliance, protect your value system and deliver automation allowing full internal collection efforts (avoiding outside agency cost, compliance risk).
Student Loan Scam
The CFPB also took action to halt a student loan debt relief fraud that it said illegally tricked borrowers into paying fees for federal loan benefits and misrepresented itself as affiliated with the Department of Education. The CFPB is ordering the student debt relief company to pay a penalty, halt debt relief services, and stop charging affected customers.
“We see more and more companies and websites demanding large upfront fees to help student loan borrowers enroll in income-driven plans that are available for free,” CFPB Director Richard Cordray said. “These practices bear a disturbing resemblance to the mortgage crisis where distressed consumers were preyed upon with false promises of relief. We will continue to shut down illegal scams and address sloppy servicing practices that victimize consumers.”
Student Aid Institute is a debt relief services company that offers to reduce consumers’ student loan payments.
The CFPB said specifically, Student Aid Institute:
- Charged illegal advance fees: Federal law requires at least the renegotiation, settlement and reduction of one debt before a charging a fee for debt relief services.
- Deceived borrowers about the benefits and terms of its services: The company misrepresented to consumers how much they would save, whether they were eligible for loan forgiveness, preapproved for specified programs, and whether the fees were required to participate in the federal programs.
- Failed to provide required privacy notices: The Bureau also found the company failed to provide its customers with privacy notices required by law.
- Falsely represented an affiliation with the Department of Education: The company’s marketing materials falsely implied that the federal government endorsed it. Our Online Self-Guided User Training Modules provides interactive training, to ensure consistent and compliant representation approaches, at no additional cost to support IBS clients, allowing platform users to take the online classes based on their availability.