August 2014

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By: Maria N. Lewis, Compliance Attorney

It is no secret that the debt collection industry has become an increasingly regulated industry in recent years. Stringent government oversight has been a staple of industries such as energies and utilities, health care, and pharmaceuticals for several years. While government regulation in the debt collection industry has been around since the creation of the Fair Debt Collection Practices Act (FDCPA), the industry has become significantly more regulated in the last four years due to the creation of the Consumer Financial Protection Bureau (CFPB).


The CFPB was created by Title X of the Dodd-Frank Act of 2010 and was embraced by President Obama following the Great Recession as a “core part of overhauling the financial industry.”[1] The purpose of the CFPB is to “regulate the offering and provision of consumer financial products or services under the Federal consumer financial laws.”[2] Under the Act, the CFPB is authorized to supervise certain consumer financial service agencies and institutions and their affiliates for consumer protection.[3] Further, the CFPB has been given the responsibility of implementing, monitoring for compliance with, and enforcing all federal consumer financial laws. Whether or not the industry agrees with the broad purpose and authority given to the CFPB, one thing is clear: the agency and its enforcement actions are here to stay at least for the foreseeable future.


Because debt collection law firms are affiliates of financial service agencies and institutions, they fall under the purview of the CFPB. As such, debt collection law firms must have policies and processes in place to ensure compliance with applicable federal laws and proper handling of consumer and regulatory complaints to avoid severe sanctions and fines that could be imposed by the CFPB.


A common term used by the CFPB in its Supervision and Examination Manual is “compliance management program.”[4] The CFPB has made it clear that in order to maintain compliance with the federal laws it enforces, an entity must develop and maintain a compliance management program. The CFPB has noted that compliance may be managed through an in-house department and staff, or by hiring an outside entity to assist with compliance management functions. Regardless of how a law firm organizes its compliance management program, which will likely be dependent on the firm’s size, the CFPB expects firms to comply with all federal consumer financial laws, as well as prevent and remedy violations of those laws.[5]


Now more than ever, debt collection law firms must take the necessary steps to comply with all applicable consumer financial laws, and handle any violations or complaints that may occur through its operations. Compliance must become a part of the daily responsibilities of all management and staff at debt collection law firms. No matter how large or small the firm, some sort of compliance management program should be developed and maintained in order to navigate through the new compliance-focused atmosphere in the debt collection industry.

[1] Lydia DePillis, A Watchdog Grows Up: The Inside Story of the Consumer Financial Protection Bureau, Washington Post, Jan. 11, 2014, available at
[2] Dodd-Frank Act Wall Street Reform and Consumer Protection Act of 2010, Pub. L. No. 111-203, 124 Stat 1021.

[3] Consumer Financial Protection Bureau, CFPB Supervision and Examination Manual, Version 2 (October 2012),

[4] Id. at CMR 1.   

[5] Id.

Posted: 8/12/2014 10:21:32 AM by Tom Connor | with 0 comments