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Saturday, January 19, 2013

Compliance, Compliance, Compliance

2012 set the stage for 2013, and while everything is important in successfully running your business, nothing is more important than staying on top of compliance in our industry. We saw the CFPB start to come in to our industry in 2012, and it has definitely set the tone for what all skip, repo and forwarding companies need to prioritize in 2013. It's also sent a shiver down the spine of the nations largest lenders, as not all their vendors are as compliant as they can be, or as the lenders need them to be. For this reason we've seen lenders closely auditing their vendors, and we've seen some lenders actually cutting off some "productive" vendors, and some lenders have brought previously outsourced work back in house in fear of what their vendors could be doing. They're also recognizing the difficulty they have in staying on top of what their vendors are actually doing with their accounts. When we started Skipbusters in 1988, we didn't need to have any policy or security manuals. When we sold the company in 1999, we had company handbooks for HR, and procedural manuals to insure we were in observance of all relevant laws regarding skip tracing. When we started FJD in 2007, we had a company handbook covering all HR related issues, a detailed business plan, security, and network security diagrams to insure the protection of our employees, our clients and their information, and our clients customers and their information. We also developed detailed manuals and training and testing in regard to how we operated in relation to the state and federal laws surrounding skip tracing and compliance management. I was never audited by a client at Skipbusters, and we're now audited about once a month at FJD. We went through a six hour, in house, detailed audit with one of the largest Credit Unions in the US this past week. In addition to that, we had dozens of hours of answering hundreds of questions and providing documentation in advance of the auditors arrival. We now have a full time compliance and a full time security person who keeps us up to date, and in compliance in all areas. We have everything from Physical Security detailed plans to Pandemic Emergency plans and documented testing plans to prove we are covered in the case of a Pandemic emergency. Seriously. Last year, we were not only audited by at least a dozen large lenders, but we also were audited on our software side by all three credit bureau's and several of the largest data providers in the country. The good news is we passed every one of these. The challenge is operating a profitable business under this type of compliance and regulatory scrutiny. The other challenge is not everyone understands the skip tracing industry as we're not repossessing, we have no field employees and we are not collecting debts. With that said, we still train and test our staff to follow most FDCPA type laws as they just fall under what best practices we should be following anyway, i.e.: 1. Don't repeatedly call people 2. Don't disclose personal information to 3rd parties 3. Don't use threats, profanity, don't be rude, etc. and the list goes on and on... In the end, its a good thing as I am a consumer just like you, and I hate it when I am bothered or harassed by someone on the phone, or in person. As a knowledgeable person regarding the laws surrounding contact management and collection, skip tracing and repossession, I do my best to insure that our staff understands the policies and procedures we train them on. In the end we are all human, and mistakes can happen, but what everyone wants to avoid are intentional mistakes, or downright flagrant violations of laws. If a mistake is made, find out what happened and correct it so the same mistake doesn't happen again. When you run a skip company, etc. you will occasionally have an employee who makes a mistake, and when that happens, make sure it was not intentional and if it was, act quickly and terminate them, and use that as a message and lesson to your other staff members. If you are a client, insure your vendors are honest, reputable, stable, and most importantly, that they understand your needs in the eyes of the CFPB and other regulatory agencies, as we are now operating in an arena where all lenders are 100% responsible for their vendors actions.

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