MADISON, Wis. – Credit unions face numerous regulatory pitfalls in the consumer lending process, but they should be particularly mindful of requirements of the Military Lending Act, the Telephone Consumer Protection Act, and litigation trends related to collection letters, CUNA Mutual Group is cautioning.
CUNA Mutual’s Andrea Stritzke, director, product management, and Ken Otsuka, senior risk management consultant, broke down the key regulatory hazards of each and offered compliance tips during a Discovery Conference breakout session.
“The MLA has existed since 2007, but credit unions generally haven’t been concerned, because they didn’t offer the types of loans covered by the Act,” Stritzke said. “They need to pay attention now, because the DOD recently expanded the scope of the MLA to cover more types of consumer credit commonly offered by credit unions.”
The TCPA also poses compliance traps throughout the loan process, especially when credit unions contact a member’s cell phone for advertising, telemarketing, or certain aspects of debt collection, Stritzke said. Adopted by the Federal Communications Commission in 1991, the TCPA addresses unsolicited telephone calls and text messages to wireless telephone numbers and residential landlines.
“With heightened litigation on TCPA violations, credit unions should understand the TCPA requirements and ensure compliance to minimize the risk of litigation, which could result in significant penalties,” Otsuka said.
Otsuka also addressed issues with collection letters, specifically the required notices for handling repossessed collateral.
“Credit unions are facing high-dollar litigation because these notices are not meeting Uniform Commercial Code (UCC) requirements, including state variations,” said Otsuka.
For more detailed coverage from CUNA Mutual Group’s seventh annual Discovery Conference, look to CUToday.info’s The boost all next week.