SACRAMENTO, Calif. – A new study conducted by Professor Todd Zywicki of the Mercatus Center at George Mason University indicated that careful evaluation of the current regulatory environment was necessary to ensure that the debt collection and debt buying industries continued to fulfill their critical role in the economy. The study also found as the Consumer Financial Protection Bureau (CFPB) considers new regulations on debt collection, it must take into account the intended and unintended consequences of any regulations before they are adopted.
DBA International, the nonprofit trade association representing the purchased receivables secondary market, commends the Mercatus Center and George Mason University for conducting the study titled “Law and Economics of Consumer Debt Collection and its Regulation.”
“This industry has historically had a lack of data-driven information and analysis available,” said DBA International Board President Kaye Dreifuerst. “Effective regulation necessitates understanding the role of debt collection in the consumer credit cycle and correctly identifying the purported market failure to be corrected. Proposed regulations need to be evaluated to ensure the benefits of the regulations exceed the cost to consumers.”
Professor Zywicki’s extensive data-driven study makes the following key points:
- Consumer debt collection is already a highly regulated industry at the federal and state levels and has been since the 1970s.
- Bad regulations can injure consumers and the economy.
- Riskier borrowers (those most likely to default) tend to be most harmed by restrictions on collection practices. Additional regulations often force lower income users to turn to higher-risk products such as payday lending and auto title loans.
- Small businesses should not be disproportionately burdened by unnecessary regulatory compliance costs. Regulators should not promote unnecessary consolidation within the debt collection industry.
- Regulations should be based on careful cost-benefit analysis and consider changing consumer lifestyles and communication technologies.
“Effective standards and rules governing debt collection are essential to the efficient operation of the consumer credit economy. DBA has addressed many of the concerns raised by consumers and the regulatory community by adopting an industry-leading national certification program,” said DBA Executive Director Jan Stieger. “This certification program ensures our member companies endorse responsible consumer protections through the adoption of uniform industry standards and best practices creating greater transparency for the consumer. This certification program is the ’gold standard’ as in many areas it goes above and beyond state and federal regulations.”
About DBA International
DBA International (DBA) is the nonprofit trade association that represents more than 575 companies that purchase performing and nonperforming receivables on the secondary market. DBA’s Receivables Management Certification Program and its Code of Ethics set the “gold standard” within the receivables industry due to its rigorous uniform industry standards of best practice which focus on the protection of the consumer.
DBA provides its members with extensive networking, educational, and business development opportunities in asset classes that span numerous industries. DBA continually sets the standard in the receivables management industry through its highly effective grassroots advocacy, conferences, committees, taskforces, publications, webinars, teleconferences, and breaking news alerts. Founded in 1997, DBA International is headquartered in Sacramento, California.