In the recovery industry, Consumer Finance Protection Bureau (CFPB) compliance is still the topic everyone is talking about. Compliance has felt like a winter storm you know is coming, but hasn’t arrived yet. For your clients, the auto lenders, it’s a different story. CFPB regulations have hit them hard and created a “comply or die” situation.
Now, that storm is hitting repo. As the repo industry begins to grow again, compliance may be what separates the repo winners from the losers.
According to a recent Auto Finance Excellence (AFE) article, small to medium size operators are most at risk for being left out in the cold. The AFE quotes Jerry Wilson, president and CEO of Premier Adjusters Inc. in Houston. Wilson says:
… one-truck operators and even bigger “mom-and-pop” outfits will have a hard time operating in this new world, where complying with Consumer Finance Protection Bureau regulations is critical.
Those smaller players cannot meet the criteria that lenders are demanding to stay in compliance with the CFPB. The banks are under tremendous scrutiny from the CFPB and they are going to make sure their subcontractors, like me, are compliant.
Complying With Lenders
So for repo operators, complying directly with CFPB regulations is not the challenge. The challenge is meeting the lender’s requirements for subcontractors. You’ve got to demonstrate you’ve built consumer-protection compliance into all aspects of your operations.
In the AFE article, Robert J. Stankovitch, president, of Peak Service Corp., a repossessor, says:
Over the past few years, I’ve had more lenders come out for surprise inspections looking at our facilities, how we handle personal property, looking at our equipment and staff. If that’s what the CFPB is concerned about, I’m happy; that’s going to help us. They’ll go back to using the bigger, better operators that are doing everything in compliance.
Is it more difficult for “mom-and-pop” repossessors to do everything in compliance? Is it too costly to meet these requirements?
Repo Compliance Requirements
Commonly, these are things lenders will require of repo operations, big or small:
- Yearly corporate financial statements
- Proof of general liability policies
- Secure facilities–vehicle yard, personal property storage and disposal
- Disaster recovery planning
- Data security and back-up
These requirements for facilities, back-office and planning aren’t the domain of big business. These are things every good business addresses in their operations.
Debtor Communication Compliance
Beyond physical and financial operations, clients are also limiting repossession methods, such as communication with debtors prior to recovery. Though this varies from lender to lender, it’s understood that past skip tracing methods, such as caller ID spoofing, expose Lenders to tremendous risk.
Because of fears that smaller operators may still use this, or similar, non-compliant techniques, some lenders do not allow debtor communications. The lender’s fear of compliance violations means skip tracing work, and its revenue, has shifted away from full-service repo companies. It’s a handicap for small operators who need to get paid for the full range of service they provide, not just hooking up the vehicle.
The Costs of Compliance
Some in the recover industry say the long list of compliance requirements is too much for smaller operators. In the AFE article, Wilson says:
The smaller players cannot comply with that. It costs a lot of money. They will never be able to be compliant and work for the large lenders. Everybody sees a lot of money in the repossession business but they don’t take the contingent liability into consideration.
The costs and liability of maintaining compliance does make it more difficult, but not impossible, for single-truck operators to stay competitive against regional players. The reality is, compliance has emerged as the business issue which could define the winners and losers as auto lending and repossessions continue to grow. More than ever, compliance is essential for repo businesses of every size.
Technology Levels the Playing Field
The repo industry is always changing. New technologies are making it easier to receive assignments, spot cars, and work from the field. Technology is also making it easier to maintain compliance in skip tracing and debtor communications—leveling the playing field for operators of all sizes.
BellesLink is a skip tracing platform for compliant debtor communications. It’s a cloud-based system that includes everything a repo company needs to verify assignments and contact subjects. It has tools for searches, calls, text, and email with built-in compliance rules to meet CFPB and lender requirements.
Using cloud-phone and database technology, BellesLink is redefining skip tracing and debtor communications for repossessions. Every company, big and small, can benefit from the compliance upgrade and cost savings this technology offers.
- Database searches are built right into the platform.
- Cases are private, secure and backed-up in the cloud.
- Communications—calls, text, emails—are all linked to a case. You can track your work and never lose a detail.
- Click-to-call, click-to-answer browser-calling is saves time on every call.
- Number scrubbing, batch calling, and call scheduling eliminate wrong numbers and save time over manual dialing.
- Custom greetings and voicemail messages are effective and easy to set up.
- Costly phone systems and phone lines aren’t needed, a browser on your laptop or tablet becomes your phone.
Platforms like BellsLink offer all companies a way to significantly reduce their overhead, improve their skip tracing results and upgrade the compliance of their debtor communications.
If compliance is going to determine the winners and losers in the recovery industry, repossessors who want to stay in the fight can look to technologies like BellesLink to give them an edge.