Quote:
Originally Posted by KENNYTRANPLUSEV
if you are a big boy in this space, the name of the game is COMPLIANCE. cfpb bulletins have dictated that all supervised entities (i.e. everyone) are responsible for serving as quasi-regulators for their vendors. so any big time clients are now placing big time demands as far as quality assurance, compliance management, etc., on anyone who will work with them. this is a huge strain on any small to mid size business. JP Morgan Chase just shut down there unsecured collection litigation as a result of the pain in the ass + the recent OCC consent decree .. that timing is not a coincidence.
on top of that, anyone who wants to keep buying debt has other **** to worry about. DBA international (vegas conference, woop!) is imposing "certification"-type requirements, and any seller subject to any real CFPB oversight is going to vet the **** out of their buyers. again, look at chase. in the crash they bought the card departments of a ton of regional banks, and that all used to get sold. that flow has stopped.
to OP, i'm really happy for you that you're making it work. but I can tell you that this space is on rocky ground right now. there will always be a spot for the small side of the business - doing local work, small volumes, for local businesses that will never garner CFPB scrutiny (unless they screw up massively) - however, be aware that the regulations are scooping out the mid-size of this industry ... in order to handle the big-time clients, you need to be able to minimize the marginal cost of compliance (i.e. distribute the cost of compliance over many files, many dollars collected). stay vigilant, and don't you dare get greedy and overextend yourself. seems like you've got a good thing going.. don't screw it up.
maybe all this limitation on liquidity of unsecured debt will pinch the credit market for high-risk borrowers (i.e. the ones all this **** was supposed to protect in the first place), and we can get some meaningful legislation/regulation that both protects consumers and allows for the fair collection of delinquent debt. a pipe dream? yeah, but it's what this space needs right now. it's chaos out there.
I agree with you for the most part. I'm nowhere near the point of the CFPB turning my client away from me. Any client that takes on non-0 agency PDLs is not the type of client that is going to be scared away by an agency that has a lawsuit or two filed against them. If I was attempting to collect on 0s or 1s as far as credit cards, well then I think I would be SOL because of the massive compliance issue. I agree with you that medium size agencies may be squeezed out of that arena simply because they do not have the manpower dedicated to keeping them out of hot water as far as compliance goes.
However, as a small company that is not the area I will be playing in. If I work c/c debt, it will most likely be 2nds, terts or quads that are purchased by myself. The big boy C/C I have no chance of getting my hands on anyway.
However, you hit the nail on the head when you said I would be running into trouble there. I'm smart enough to know I'm not the smartest guy out there, and I know enough to stay in my lane. Right now, PDLs are what we do and we are fairly good at it. I would like to expand into other asset classes eventually, but with the environment being what it is, now is not the time. I may expand into retail, installment, etc, but I am not fooling myself into thinking I should enter the fray of what you are talking about at this time.
On a side note, some people that I respect very much do not think very highly of the DBA certifications and are waiting to see what comes of that process before giving any merit to it.
You sound like you know a lot more about this industry than I do even now though, and I'd love to chat a little bit more if you'd like. Shoot me a pm if you want to shoot the **** about the industry, or if you have any tips you want to pass on to a poor kid trying to make it in this crazy world.