The Consumer Financial Protection Bureau, or CFPB, was launched with a goal of protecting consumers in financial transactions with banks and lending institutions. However, its reach has extended much further.
Not all businesses are aware of the necessary requirements in order to comply with CFPB regulations now. And non-compliance can cost businesses enormous penalties, fees, and fines. It also can affect their overall brand reputation. In an effort to avoid these penalties, today’s companies must be more proactive when it comes to CFPB compliance.
Non-compliance can cost businesses enormous penalties, fees and fines.
What can your business do?
- Examine your current vendors. Make sure vendors understand and are capable of complying with CFPB regulations. Review their policies to ensure proper education and management of employees who interact with your consumers and/or are in a compliance role. Also, if necessary, revise contract language to include expectations about compliance, and always spell out penalties for non-compliance as defined by CFPB. Finally, if serious issues are identified, take action immediately.
- Require proactive compliance (with internal auditing) for vendors. Always call for vendors to complete an audit prior to CFPB examination by a third-party expert. It’s also important to request a mitigation plan and estimated timeline. If you have the time/resources, conduct your own internal audit of your company’s processes, policies, and internal controls through a non-bias, external partner. Be sure to take appropriate action based on the findings.
- Always put the consumer first. Find vendors who share fair, honest practices and who invest heavily in-valuable awareness and training that can support long-term customer retention strategies.
The CFPB regulations are not as daunting as you may think, but you want to make sure both you and your vendors are aware of them. Your goal should be to find those compliance holes and create a long-term, realistic plan.