A few years ago I was in another state (which shall go unnamed here) working with a group of collateral recovery business owners to pass a minimum, sensible and effective law regulating the licensure and oversight of those who provide self-help (non-judicial) repossession services. It was a State Senate hearing and there were a number of collateral recovery business owners there supporting our Bill. However, in the crowd there was one business owner who opposed our efforts. His reason, which he really did say openly to the Senate Committee, was that “if this legislation passed into law he would have to terminate several of his employees because they were convicted felons”. The Bill passed in the Senate but was not taken up by the House so that State still has no regulatory authority to ensure the public safety by properly regulating those who offer repossession services.
It struck me at that moment that with more than 35 courts across the country including District Courts, Appellate Courts and State Supreme Courts ruling that there are “inherent” risks associated with self-help repossession activity and with state legislators taking an oath to “protect the public safety”, why would these legislators (servants of the people) not pass a law that simply states: “OK, ladies and gentlemen, if you want to provide such services here is how it works; If you are a convicted felon, a sex offender, a pedophile, drug abuser, have a propensity for violence, have a history of mental illness, etc., etc. you can’t do this kind of work in our state.” I don’t know about anyone else but I think I would be OK with that, which leads me to my topic.
Fast forward to today, it appears that without the efforts of state legislatures the creation of the Consumer Financial Protection Bureau (CFPB) will address, through new compliance mandates to the lending community, the criteria for hiring collateral recovery specialists to service their self-help repossession needs. The question is, will these new criteria’s bring about more communications and cooperation between the lending community and their “business associates” and if so, will it begin to create a beneficial result for both parties?
There is no question that the new compliance mandates for the lending community has begun to change the criteria for qualifying collateral recovery specialists. Will this be a good thing for those collateral recovery business owners who already run their businesses on a professional level? I would think so, and I would hope so. My belief is that the new compliance requirements will filter out the unscrupulous recovery agents just like the law did in the State I mentioned. As a byproduct the professionals in this industry who meet these mandates should see their business increase.
And speaking again about minimal, sensible and effective regulatory authority by the states, the FTC has indicated that the states which have demonstrated such regulatory responsibility can request exemptions from the federal mandates.
If you have been following the actions of the CFPB it is clear that their primary attention is currently on mortgage and credit card fraud but will eventually “trickle” down to all aspects of the lending process which includes self-help repossession services.
It may well be a little too soon to see how all this “shakes” out so I can only hope that the professionals in our industry try to maintain a positive attitude and continue to improve their respective operations.
In my third article I will attempt to address the need for independent, third party assistance in helping collateral recovery business owners and the lending community in complying with the new mandates and how you might go about choosing that third party company. In the meantime, think “Time, Money and Liability” which my third article will address.
RISC is recognized within the collateral recovery industry as a leader in the fields of CFPB consumer protection training, risk management and industry standard compliance requirements. RISC services include: RISC Vendor Compliance Reporting (VCR), Compliant Agent Network (CAN) membership, certification through the C.A.R.S. National Certification Program, compliance vetting and training, continuing education courses, office and storage facilities inspections, business consulting, repossession insurance consulting, lock-smith training and supplies, automotive key codes, discount programs, and a $1 million Client Protection Bond for members of the RISC Complaint Agent Network. For more information please email RISC at services@RiscUS.com, call 866-996-RISC (7472), or visit our website at www.RiscUS.com.
Director of Education