ARM Industry Legislative Primer

The current political climate in Washington, D.C. is geared toward increased oversight of the financial services and the accounts receivable management (ARM) industries, and there are several hot topics before congress that have the potential to change the way credit & collection professionals do business. Here are the major developments that are underway:

Consumer Financial Protection Agency (CFPA)
This Administration proposal would consolidate existing regulatory authority and provide the new agency with open-ended rulemaking authority over federal laws including the FDCPA and FCRA. The financial industry believes this proposal would constrict consumer lending, and it is not considered likely to be implemented in its current form. Alternative ideas include creating a new Treasury Department regulator for ARM; creating a new consumer protection council made up of existing regulators; and giving rulemaking authority to the FTC.

Fair Debt Collection Practices Act Reform (FDCPA)
Nearly everyone involved sees the need for this act to be modernized to address technological advancements since the 1977 law was enacted. The FTC and the GAO have both released recommendations to congress that include the need to update the laws to address modern technologies, improve information flow, and enable more aggressive rule enforcement.

Healthcare Reform and Education Effort
Major healthcare reform that would materially impact ARM is unlikely to happen in this congress, however, punitive provisions related to ARM were in early drafts of the Senate Finance Committee bill. Thanks to industry advocates like the ACA, these measures have been kept out of subsequent drafts, but continued monitoring is needed.

TCPA Autodialer Prohibition
The current Telephone Consumer Protection Act (TCPA) prohibits use of an automatic dialing device to contact wireless phones; however a recent FCC ruling states that the number provided to a creditor is authorization to collector to call. The law requires further clarification.

Student Loan Reform
The President has committed to converting all federally-subsidized student loans to direct loans. The House passed legislation that would terminate the FFEL loans and create new Federal Direct Perkins Loans, managed by the federal government. This will drastically impact the student loan sector of the ARM industry.

Bankruptcy Amendment
Collectors are held to a strict liability standard for contacting a consumer after bankruptcy filing; however collectors are not informed when a filing has been placed. There is a new proposal out to correct the Bankruptcy Code to require consumers to provide notice to “known third-party debt
collectors.”

Labor Relations: “Card Check”
The original “Card Check” legislation would have removed secret ballot in unionizing votes. Industry advocacy helped convince a key Senator to change from support to opposition of the legislation, and it is now considered unlikely to pass this Congress.

ACA International and Kaulkin Ginsberg provided details on the status of pending legislation, with insights into how these developments may impact the industry during a live webinar at EXPO 3.0.  The session, “ARM Industry Legislative & Regulatory Update,” is now available on-demand in the Webinar Center (free registration required to access).

Patrick manages all content for insideARM.com. Contact him with your news and comments at editor@insidearm.com , or call 240-499-3828.