To account for changes in technology, cyber security, and legal policies, compliance in the collections space is constantly evolving. Collection agencies, like many businesses, rely on a network of technology vendors and systems providers to manage their operations. It stands to reason, then, that the vendors who support these agencies are equally as concentrated on compliance changes and updates. This is especially true of payment processing providers.
Section 808(1) of the Fair Debt Collection Practices Act (FDCPA or Act) prohibits debt collectors from collecting unauthorized amounts, such as pay-to-pay fees. The Consumer Financial Protection Bureau (CFPB) clarifies that this prohibition includes convenience fees applied to payments made electronically or over the phone, if they are not expressly authorized in the agreement to create a debt or permitted under applicable laws.
In this example, payment-processing vendors play a crucial role in ensuring FDCPA compliance for, and on behalf of, collection agencies. This is not an overly complex or sophisticated requirement (making sure debt collectors are not collecting unauthorized fees), but the complexity increases as payment processors consider various State Laws and Card-Brand Rules. Visa®, for example, has clear and unambiguous rules for convenience fees, two of which require the fee to be (a) a fixed amount, and (b) processed as a single transaction (the principal amount of the payment and the fee together, as opposed to two separate transactions).
Simultaneously, satisfying these requirements (FDCPA and Card-Brand Rules) requires regulatory technology (RegTech) at both the gateway and processor level. In other words, payment processing providers must be capable of enabling the appropriate systems and solutions to help collection agencies maintain compliance. This is a crucial responsibility for vendors in this vertical, and Payscout takes this responsibility very seriously.
At Payscout, we strive to guarantee our clients' utmost compliance and security in the collections space, so they can rest assured of up-to-date data protection standards. We have been actively following all new legislative changes, bills, legal requirements, and other compliance updates to provide the best practices for our customers.
Overall, the ever-evolving compliance landscape in the collections space is critical for both collection agencies and payment processors to remain informed and compliant. Payscout has been at the forefront of compliance for years, staying up to date on all laws, bills, legal changes, and requirements that impact our customers' ability to collect payments. We are committed to providing cutting-edge solutions with the latest technology and security measures so you can be sure your collections and payments are compliant, secure, and efficient.
Click here to read a Case Study on Payscout's 360˚ Fee-Free Payments program, the only fully compliant convenience fee model available to the Collection and Accounts Receivable Management (ARM) industries that adheres to FDCPA Regulations, State Law, AND Card-Brand Rules. This program was implemented by a large, respected collection agency with operations throughout the United States, and the results were (much) lower payment processing costs, increased revenues, and improved agent productivity — all while maintaining the highest level of compliance and security.
One of the most important factors to consider when selecting a payment processor is the banks they are accredited and partnered with. Finding the right payment partner is one thing; making sure it aligns with your business risk and needs is another battle.
A partnership with a payment processing company that is integrated with your software shows your customers that you want to help them to make more money, and in the end, that is all everyone wants; to make more money.