Update on Recent ACA Board of Directors Actions

July 29, 2009

ACA International's Board of Directors decided to move forward with the creation of a self-sustaining Debt Collector Registry and National Debt Collection Dispute Resolution Program for the industry.

Congress is in the process of determining whether the financial services industry, including the debt collection industry, should be regulated by a new governmental entity called the Consumer Financial Protection Agency (CFPA). Legislation currently under consideration by the House would likely transfer rulemaking, policy making and possibly enforcement authority of the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA) from the Federal Trade Commission (FTC) to the CFPA.

In December 2008, 2008/09 ACA President Jay Gonsalves seated a Self Regulatory Organization Research Task Force to determine the viability of creating a self regulatory organization (SRO) for the collection and debt purchasing industry. Last month, after much research and discussion and in light of the current happenings in Congress with the debt collection industry, the SRO Research Task Force recommended the Executive Committee seek to create a Debt Collector Registry and National Debt Collection Dispute Resolution Program.

Based on the SRO Research Task Force's recommendation, the Executive Committee brought such a proposal to the ACA Board of Directors at its July 13, 2009, meeting. After much debate, the Board of Directors voted to authorize ACA to move forward with the creation of a self-sustaining Debt Collector Registry and National Debt Collection Dispute Resolution Program for the industry.

The Board of Directors also requested an opportunity to review the development and implementation of the registry and dispute resolution program through quarterly updates. The Board will be responsible for discussing and reviewing the recommended policies and procedures, organization structure, budget, rules and regulations for the program.

The purpose behind the program is to address the concerns of Congress, the FTC, state attorneys general, state regulators and consumer groups regarding the growing number of complaints received about the collection and debt purchasing industry. In addition, these programs will help address the concern this industry has regarding the manner in which the FTC reports to Congress the number of complaints it receives regarding the debt collection industry each year versus the number of complaints that are actually inquiries made by consumers.

Based on the U.S. Treasury Financial Regulatory Reform proposal and the CFPA legislation being reviewed by Congress, there is a movement for the government to develop a registry for the industry and a complaint resolution program. ACA has the opportunity to proactively be part of the solution developed by Congress rather than be responsive to a program implemented by the government.

The Debt Collector Registry would require all entities, including individuals, who fall within the definition of debt collector under the FDCPA or state law to register as a debt collector and pay an annual registration fee that is yet to be determined. The individual debt collector would be required to take and pass an exam evidencing his or her knowledge of the laws regulating the industry in order to be eligible for registration.

The National Debt Collection Dispute Resolution Program would work to resolve any complaints filed by consumers against collection agencies and individual debt collectors and debt purchasers. The program would have the FTC, state attorneys general and state regulators forward the complaints they receive for resolution. The Dispute Resolution Program would provide mediation and arbitration services for the debt collection and debt purchasing industry.

ACA's Executive Committee will determine how to move forward with the board's directive to develop a Debt Collector Registry and National Debt Collection Dispute Resolution Program. The Executive Committee will regularly communicate with the Board of Directors as to the progress that is made. The Executive Committee will also provide updates to the ACA membership through ACA Online and e-mail.