July 4, 1776; Dec. 7, 1941; Sept. 11, 2001.
They are dates that forever changed America.
Attorney Lawrence Rolfe would add July 21, 2010, to that list.
It’s the day President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“It created a regulatory nightmare,” said Rolfe, who has worked in debt collection law since three days after he graduated from law school in 1973.
According to the text of Public Law 111-203 enacted by the 111th Congress, the law is intended to promote the financial stability of the United States by improving accountability and transparency in the financial systems, to end “too big to fail,” to protect the American taxpayer by ending bailouts and to protect consumers from abusive financial services practices.
That last phrase led to the establishment of the Consumer Financial Protection Bureau.
It consolidates most federal consumer financial protection authorities in one place and has one goal — “watching out for American consumers,” according to its website, consumerfinance.gov.
Procedural requirements created and enforced by the bureau changed the rules on collecting defaulted consumer debt and that changed how they do business at Rolfe & Lobello.
Before the recession and the new regulations, his firm had seven attorneys and 20 debt collectors.
Now, there are three collectors and five attorneys — one of whom is a compliance officer who is exclusively dedicated to ensuring the firm complies with the regulations, including documentation of nearly all the work done by everyone there.
The firm is periodically audited by its clients and all phone calls to and from the office are recorded, both to document compliance. The firm is required to have a succession plan to ensure preservation of records, he said.
“Collection law hasn’t changed, but the collection process sure has,” said Rolfe. “Everything we do has to have a written manual. All of our processing in writing has to be duplicated for the CFPB.”
He admits “in the old days, the collection process could be a little harsh on consumers,” but the regulations that went into effect due to Dodd-Frank have caused a paradigm shift in the specialized practice.
Failure to pay a debt is still a breach of contract under the law, but, “we don‘t view ourselves as debt collectors anymore. We facilitate the arrangement to get people to pay their debts,” Rolfe said.
“We don’t even ask for payment in the first letter to a debtor. The first letter is all about disclosure,” he added.
In addition, if a debtor merely asks the collector to stop calling them on the phone about the debt, the collector is required by law to cease and may be subject to penalty if they do not comply.
Rolf readily admits consumer debt collection law may be a dying art.
There are only half as many debt collection law firms as there were 10 years ago, statewide or locally, and the trend is not looking like it will turn around.
“Very few firms are getting into this business,” he said.
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