The DBA International Certification Council is proposing edits to the Receivables Management Certification Program. The Council is required to perform a review of certification program standards at least annually to ensure the program addresses “evolving industry best practices, input from key stakeholders and communities of interest, areas of Council concern, and recent regulatory and statutory changes.”

The proposed changes to the Certification Governance Document have been posted on the DBA International website here.  DBA International Members are encouraged to review the changes and email any comments they have to [email protected] no later than July 18, 2016.

While there are a number of non-substantive technical amendments contained in the revision, the major substantive changes are summarized below:

  • Article II (Definitions) – Adds definitions for “Charge-Off”, “Charge-off Balance”, and “Original Account Level Documentation” – these definitions were taken verbatim from recent CFPB consent orders.
  • Article III & IV (Board Approval) – Conforms the method used by the DBA Board to approve the Council’s selection of Council Chair, Certification Committee Chairs, and the members of Certification Committees to the existing requirement contained in section 3.7(C). The current methodology requires an affirmative vote of the Board, whereas section 3.7(C) does not require an affirmative vote if the Board is in concurrence with the actions taken by the Council. The Board would maintain override authority if they disagree with the Council’s decision.
  • Article III (Expands Timeline for Board Review) –  Changes the Board’s review time in section 3.7(C) from seven to 14 days to provide greater opportunity to discuss and potentially override a Council action before it goes into effect.
  • Article V (Version Effective Dates) – Changes the methodology used to calculate the effective dates for each revised version of the Certification Governance Document. Currently, Certified Companies are provided six months to become compliant with any new or revised standards. This timeframe is creating confusion for both the auditors and the company’s being audited as it can require two to three sub-audits for each audit due to changing criteria within an audit period. The proposed change will simplify the process by stating that for their next Full Compliance Audit, a certified company will be audited against the version they attested to in their most recent application for certification or recertification.
  • Standard # 4 (Employee Training Programs) – Adds “purchase contract or client-mandated compliance requirements” to the subject matter that certified companies must train their employees on.
  • Standard # 7 (Data Security Policy) – Adds detail on what a “reasonable data security policy” should include. The six components of a “reasonable data security policy” conform to the points DBA worked with the FTC on in November 2014.
  • Standard # 12 (Statute of Limitations) – Adds a prohibition on retolling/reviving an out of statute account through the receipt of a consumer payment. This is consistent with DBA’s position on the topic as outlined in DBA’s Out-of-Statute White Paper published in 2015.
  • Standard # 17 (Commissions) – This is a new “Series A” standard which would require all certified companies that provide commissions or bonuses based on collection activity to include compliance-related criteria for the payment of such forms of compensation.
  • Standard # 18 (Purchase & Sale Documentation Requirements) – Overhauls the current data and document standard to make it consistent with recent consent orders and OCC mandated practices. Given certain enhanced requirements, it will be applied prospectively. Paragraph (c) was listed as a recommended solution in the DBA Resale White Paper that was published in April 2016.
  • Standard # 19 (Representations & Warranties) – Adds a new contractual term that a purchaser should attempt to obtain from the seller when purchasing accounts. It reads: “Any account that was the subject of a consumer dispute while owned by the seller has been responded to or validated.” This was listed as a recommended solution in the DBA Resale White Paper that was published in April 2016.
  • Standard # 20 (Sale Restrictions) – Enhances the current standard by prohibiting the sale of accounts when: (1) the seller does not have access to “Original Account-Level Documentation”, (2) an account has been settled-in-full or paid-in-full, and (3) the Certified Company has not reviewed: (i) the purchaser’s financial strength, (ii) the data security measures the purchaser has adopted to preserve the integrity of Consumer Data, (iii) adverse information concerning the purchasing company and the purchasing company’s principals, and (iv) the volume and nature of consumer complaints filed with the CFPB’s consumer complaint system against the purchasing company in the prior two years. The remaining edits to the standard are non-substantive in nature.
  • Appendix D (Audit Review Manual) – Corresponding edits to the “Directions to the Auditor” for Standards 4, 7, 12, 17, 18, 19, and 20.
  • Appendix E (Remediation Procedures Manual) – Allows the Remediation Committee the ability to forgo a formal “remediation agreement” when the identified “nonconformity was minor in nature and is being resolved”.

30-Day Comment Period (ends July 18, 2016)
Send your response via email to [email protected] and (1) indicate “30-Day Comment” in the email subject line, (2) provide your name and company name in the body of the message, and (3) indicate the page and section number from the Certification Governance Document that your comment is referencing.

Based on comments received during this 30-day comment period, additional edits may be incorporated prior to final adoption.  If you have any questions, please contact the DBA International office at (916) 482-2462.
 
This Alert is intended for Members of DBA International and is for informational purposes only and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.