Three Regulations CU Collectors Should Keep an Eye On wrote an article about three regulatory policies its collections team ought to know whether internal or outsourced. Credit union collections can oftentimes be a thankless task.  But if you outsource, no credit union wants to be at reputational risk if the member files a complaint because of a lack of training of the outsourced collections personnel, you could ultimately be held liable.

At the very least, there are three major policies that any good collections staff, internal or external, should be familiar with and have appropriate policies in place:

Unfair, Deceptive, or Abusive Acts or Practices (UDAAP)

UDAAP prohibits firms offering financial services from engaging in unfair, deceptive, or abusive acts or practices. According to the CFPB, an unfair act or practice takes place when: 

  • It causes or is likely to cause substantial injury to consumers;
  • The injury is not reasonably avoidable by consumers; and
  • The injury is not outweighed by countervailing benefits to consumers or to competition
  • While it is certainly difficult for any collection operation to fully understand what constitutes an "unfair," "deceptive," or "abusive" act, a well-trained collection staff will have a thorough understanding of their expectations under UDAAP when dealing with borrowers, will know how to identify potential complaints, and know what steps to take in order to resolve complaints.

Fair Debt Collections Practices Act (FDCPA)

The FDCPA was enacted to protect consumers from abusive, deceptive, and unfair debt collection practices, particularly from third-party debt collection agencies. It restricts the time of collection calls, states that repeated calls can be deemed harassing or abusive and provides guidelines for acceptable and unacceptable behavior by debt collectors. It is particularly critical for a collections staff to have appropriate training of this law. In fact, our team of collectors are given two chances during their onboarding and training process to pass the required FDCPA training and become certified. If they are unable to do so, unfortunately, they are terminated. While this is obviously not an easy decision for our management team, managing our clients' risk is a top priority to our organization.

The Telephone Consumer Protection Act (TCPA)

To protect consumers from unwanted and/or harassing telemarketing, the Federal Communications Commission (FCC) enacted the Telephone Consumer Protection Act (TCPA), which includes debt collection calls when made with an auto-dialing system or by a prerecorded message to wireless phones. To prevent or reduce TCPA violations, outsourced collection staff should be thoroughly trained on all aspects of the law, and continuously monitored to catch and correct violations.

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