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Data for today’s episode is provided by Mercator Advisory Group’s report – Credit Card Charge-off Collections Takes Brains not Brawn
The CFPB is modernizing rules around credit collections, here are the changes:
The new rules are designed to curtail harassment, false representation & unfair debt collection practices
1) Define the rules, frequency, and velocity of call attempts
2) Add clarity to collection disclosures and simplify disputes
3) Establish standards for the use of voicemails, emails, and text messages
4) Curtail the collection of time-barred accounts outside statute of limitations
5) Harness the use of credit bureau updates until cardholders have time to respond
6) Debt collectors must wait seven days after a successful contact before attempting again
About the Report
The Consumer Finance Protection Bureau is in the process of modernizing the Fair Debt Collection Practices Act (FDCPA), which is an appropriate move for the credit card industry. It is the perfect time for credit card issuers to consider their current collections strategies while the economy is performing well. Mercator Advisory Group’s latest research report, Credit Card Charge-Off Collections Takes Brains not Brawn The report explains the importance of third-party collection agents and why proposed regulatory updates are appropriate for the U.S. credit card business.
Readers will learn how the credit card aging process works, why third-party agencies help manage financial institution account overflow, and how the FDCPA creates guard rails for the industry.
“The timing of the original Fair Debt Collection Practices Act was perfect. Revolving debt in the U.S. hit $50 billion,” comments the author of the research report, Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group. “Today, the U.S. credit card market has more than $1 trillion of revolving debt. Loss rates are at normal levels, yet more than 1 million U.S. cardholders end up at collection agencies each year. FDCPA was born in a world before cellphones, email, and texts. FDCPA 2.0 addresses all these functions and curtails litigation in zombie debt. Both are appropriate next steps,” says Riley.
This research report contains 22 pages and 11 exhibits.
Companies and other organizations mentioned in this research report include: ACI Alorica, Banco Bradesco, Citi, Encore Capital Group, Equifax, Experian, Expert Global Solutions,FICO, NCO, Portfoliio Recovery Associates, PRA Group, TransUnion
