Credit Counseling Compliance Requirements

Credit counseling agencies operate in a highly regulated environment, rife with daunting challenges to profitability and growth.  In addition to proper management and customer service, one of the most important aspects of operating a successful credit counseling agency is to constantly review and update your compliance policies to ensure they address every facet of your operations.  Failure to do so may result in unwanted scrutiny from governmental agencies, including the newly established Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). An effective compliance management system should address four key matters:

  • Board and management oversight;
  • Regulatory Compliance;
  • Response to consumer complaints; and
  • Compliance audits.

Compliance policies should be written down in a well-organized compliance manual, which is regularly updated on a consistent basis by a Compliance Management Officer (CMO).  The CMO should conduct monthly compliance reviews to ensure that all policies are operating smoothly and effectively.  Relevant aspects of your policies should be communicated to your staff and consumers.  For example, intake agents should be well aware of their responsibilities with respect describing your service accurately and completely.  Consumers should receive a written policy statement regarding the use of their personal financial information.

The manner in which your company advertises its services justifies special attention.  Be certain that any statements regarding your company are truthful, not misleading, and substantiated, regardless of where and how they are made.  This includes statements made over the telephone, on your website, and on social media platforms.

In addition, policies must be established to govern how your organization oversees the activities of third parties that operate on your company’s behalf.  Federal agencies are increasingly holding principals legally responsible for the actions of their independent contractors.  In other words, claiming to be unaware of how your marketing partners operate will not protect you from any violations.

Finally, be certain to pay attention to maintaining your tax-exempt status.  The IRS has been carefully scrutinizing tax-exempt credit counseling agencies and has conducted 254 audits over the past few years.

Author: Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.

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