The Conference of State Bank Supervisors (CSBS) has developed a white paper, Reengineering Nonbank Supervision, and recently released its fifth chapter, Overview of Debt Collection.
Chapter 5 includes an overview of the debt collection industry and its history, and a summary of the debt collection and relief process. In addition, the chapter includes discussion of the current regulatory landscape at the state and federal level, including discussion of the role federal and state agencies play in the oversight and enforcement of nonbank financial service institutions. This chapter also mentions the FTC’s efforts to work closely with the CFPB and the states in conducting enforcement actions against debt collectors, including the use of the Consumer Sentinel, “an investigative tool that provides regulators and law enforcement with access to a national database of millions of consumer fraud complaints.” The state supervision section of the chapter lists the topics that states generally review when conducting licensed debt collector examination and common egregious collection practices, such as phantom debt collection, false threats, third party disclosure, and bogus fees.
The chapter also discusses the future of the debt collection industry and the potential challenges and advantages that the use of technology may bring.
Finally, the CSBS concludes that “[s]tate regulation of debt collectors, debt relief, and student loan servicing is an emerging area within the system of state supervision” and “[g]reater effort in developing uniform and comprehensive standards throughout the state system would result in better supervision of debt collection practices.”