An article about state debt collection regulators in the November 2017 issue of Collector magazine is a timely reminder to agencies operating across the United States. Penned by Editor Anne Rosso May, “Getting Your Ducks in a Row: How to make your life easier when state regulators come knocking” serves as a checklist for agencies to review in anticipation of licensing audits by state and local regulators.

“Licensing audits are a fact of life for collection agencies working in cities and states that require them to be licensed, yet it’s still easy to feel blindsided when they pop up,” writes Rosso May.

She points out that state debt collection regulators are interested in reviewing agency policies, procedures, consumer interactions, record keeping, and of course, financials.

Some states conduct annual audits of agencies while others do them randomly or in response to a “history of discrepancies or complaints.” If responding to a complaint, regulators will likely review multiple agency practices.

Agencies should also be aware that regulators from different regions often share the content of federal, state and local audits, and that some states require agencies to notify them if another regulator has issued citations or fines. Furthermore, failure to make such notifications could cost agencies their licenses.

Regulatory “Red Flags”

The article mentions red flags that will prompt audits by state debt collection regulators: (1) companies that don’t have a compliance officer or someone on staff who is responsible for compliance; (2) failure to notify state regulators of operational changes such as a new owner or branch location; or (3) failure to comply with audit-documentation-request deadlines without advance notification to regulators.

Satisfying State Debt Collection Regulators

The following tips are a distillation of detailed content about satisfying state debt collection regulators:

Create a calendar for renewal dates and deadlines.
Carefully read the submission requirements.
Be mindful of licensing material processing dates (e.g. postmarked submissions versus opened submissions).
If necessary, ask regulators to explain their interpretation of regulations or requirements, and try to get those communications in writing.
Establish a professional relationship with state regulators.
Be prepared for anything because regulations vary dramatically from state to state.
Track and record all litigations and consumer complaints.
Conduct self-reporting.
Assess the scope of the audit and if needed, ask regulators for an extension.
Compliance with state licensing rules can yield long-term benefits.

Two other items are worthy of consideration in the state debt collection regulatory space.

First, regulators from states that have migrated to the Nationwide Multistate Licensing System and Registry expect agencies to follow changes disseminated via the NMLS site. Regulators also expect agency collection letters to comply with standards.

Collecting in All 50 States

Individual states cannot establish lower standards than what is mandated by federal law, but they are allowed to be more stringent.

Optio Solutions is licensed, bonded and qualified to collect in all 50 states, and exercises its due diligence in complying with all relevant federal and state debt collection laws, including the Gramm Leach Bliley Act (GLBA), Health Insurance Portability and Accountability Act (HIPAA), Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA) and Telephone Consumer Protection Act (TCPA).

Compliance is maintained with the help of multiple ACA certified Credit and Collection Compliance Officers in the Compliance and Quality Assurance department. Led by the in-house counsel and manager of corporate compliance, the department:

Ensures that behavior within the organization meets Optio’s standards of conduct and that all employees conform with all relevant laws
Reviews and evaluates compliance issues and concerns
Monitors changes in federal and state laws
Develops and maintains policies and procedures
Monitors and evaluates collector phone conversations
Provides reports to clients and the Optio management team

Finally, Optio certifications include SSAE 16 SOC I Type II (audited financial reporting) and a Professional Practices Management System (PPMS) by ACA International (achieved by less than 2 percent of US agencies). Agencies must complete a rigorous application and auditing process to become certified. Optio has been PPMS certified since January 2013.

Contact Optio today to discuss a compliant, individualized debt collection strategy at your organization that delivers a favorable ROI in conjunction with brand protection and customer retention.

About the author

Joe Gargiulo

Editor Joe Gargiulo has 20-plus years in copy writing, public relations and marketing. He enjoys connecting story leads to all aspects of the human experience.