Credit card operations should be aware of five regulatory issues as the new decade unfolds, according to InsideARM, a collection trade journal. The following are its rankings and Mercator’s comments:
California Consumer Privacy Act (CCPA)
In many ways, CCPA resembles Europe’s General Data Protection Act because it codifies consumer privacy and the use of personal data. Although the law intends explicitly to protect residents of the Golden State, almost 1 of every 3 Americans live in California, which requires nationally inclined credit card issuers to ensure they pass muster. Wirewheel provides a good comparison of GDPA and CCPA here. Suffice to say, if you do business in California, compliance is a must-do. Here is a listing to 2019 state legislations on privacy, compiled by the National Conference of State Legislatures.
CFPB final rulings
Mercator Advisory Group covered upcoming changes in third party collections in a recent report titled Credit Card Charge-Off Collections Takes Brains not Brawn and noted actions by the CFPB to harness collection practices. Expect to see final rulings on debt collection communications, digital contact, call frequency, and velocity.
CFPB is also expected to comment on disclosures for consumer debt and the statute of limitations. Out-of-statute debt standards vary by state, ranging from 2 years in California to 10 years in Rhode Island. Consumers will find that unpaid debts for more than the statute limit are outlawed from collection. Creditors may still pursue in the hopes that the consumer does not place an affirmative defense on the statute. Pending changes may require creditors to advise the consumer of their right to use the statute of limitations as a defense. This will have an adverse effect on debt buying firms.
Pivotal court decisions
We believe the CFPB adds value and integrity to the U.S. consumer credit function; a U.S. Supreme Court case is docketed for March 3, 2020 to understand if the CFPB structure is constitutional and falls within the requirements of separation of powers because of the single-director agency structure.
Turning tides on the FDCPA
In man-bites-dog cases, several courts react to consumer abuse of the Fair Debt Collection Practices Act (FDCPA). Five cases are cited, where courts are considering whether consumers use the FDCPA as a shield against debt collectors.
- Miller v. Trident Asset Mgmt. (D. Md. Dec 4, 2019)
- Campagna v. Client Services (E.D.N.Y. Dec. 3, 2019)
- Irvin v. National Credit & Collection (N.D. Ill. Sept. 17, 2019)
- Vougas v. Suttell and Hammer, PS (E.D. Wash. Sept. 3, 2019)
- Garcia v. Miramed Revenue Grp, LLC (N.D. Ill. Aug. 16, 2019)
Watch for Mercator’s upcoming review of collection technology vendors, including ACI Worldwide, CGI, EdgeVerve (Infosys), and FICO. These top platforms help credit card issuers avoid FDCPA issues with timing and velocity call controls.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group