|Commercial Law League of America|
Commercial Collection Agency Certification Program Standards and Requirements
Goal of the Program
The goal of the CLLA commercial collection agency certification program is to demonstrate that certified agencies adhere to relevant regulations in the collection of commercial debt, that the agency is using Generally Accepted Accounting Principles (GAAP) or other accepted accounting principles, and adheres to standards to protect and safeguard their clients' funds.
A. General Requirements
1. Agency must fully and accurately complete the CLLA Application for Certification.
The Certification Program and/or Application require:
a) A certification that the Agency's business is commercial-related.
b) A certification that the Agency has been in the business of collecting commercial claims for at least four (4) years, as of the date of application, and that the Agency has a minimum of five (5) full-time employees inclusive of sales, collections, compliance, and accounting staff.
c) A certification that the Agency is in compliance with all relevant federal and state laws and regulations governing the collection of debts, including but not limited to the Consumer Financial Protection Bureau, Fair Debt Collection Practices Act, Privacy Act of 1984, the Health Insurance Portability and Accountability Act of 1996, the Gramm-Leach-Bliley Act of 1999, Fair Credit Reporting Act, Telephone Consumer Protection Act (TCPA) and the Operative Guides for Forwarders and Receivers adopted by the CLLA.
d) A certification that the Agency is in compliance with all relevant and applicable state and jurisdictional registration and licensing requirements.
e) A certification that the Agency maintains documented policies and procedures consistent with all relevant federal and state laws and regulations governing the collection of debts.
f) Disclosure of all claims against Agency bonds as well as complaints and litigation filed against the Agency.
g) Disclosure of all current and previous ownership.
h) That all owners, partners, officers, directors, office managers, or key employees answer personal disclosure questions.
i) Membership in both the IACC and the CLLA. The agency must a member of IACC with a designated officer, manager or representative of the agency a member of the CLLA.
2. A list of documents required to be furnished for certification. The Agency should submit all applicable documents with the completed application.
3. Agency must authorize CLLA, or its independent, third-party agent, to conduct an on-site visit and review of agency's main location of business.
4. The Agency and its controlling owners must authorize the CLLA, or its independent, third party agent, to obtain a criminal background report on all shareholders of the company.
5. Agency must authorize the CLLA, or its independent, third-party agent, to obtain a trade report on the agency.
6. The agency must furnish to CLLA, or its independent third-party agent, a representative sample of the forms, pamphlets and advertising materials which the agency distributes to prospective customers. The agency must also furnish a representative sample of forms and form letters it sends to debtors from whom it is attempting to collect accounts.
7. Agency must furnish to CLLA, or its independent, third party agent, an attestation from the agency's CFO or equivalent that funds in the trust bank account(s) are equal to or in excess of the trust liability at the end of each quarter in the past year.
8. Agency must meet annual education (competency) requirements. The criteria for educational requirements are stated in Section C below.
9. Agency must obtain a surety bond to protect client funds. The criteria for said bond are stated in Section D Item 2 below.
10. Agency must fully and accurately complete, on an annual basis, the CLLA Renewal Application for Certification and provide all required certifications, documents, and authorizations necessary for renewal certification.
11. Agency must agree to allow CLLA to publish, or make available to the public, the Agency's name, mailing address, and website address as well as its designee's name and contact information.
12. Agency, and its owners, partners, officers, managers, and directors, must demonstrate good character and as such must conform to the Certification Program Standards and Requirements. Further, Agency must acknowledge that violations may result in disciplinary action being taken by the Certification Committee, including, but not limited to termination from the Certification Program.
13. Only Certified Agencies, whose certification is active, shall be authorized to display the Certification Program logo. Making reference to holding an active certification, displaying or utilizing the Certification Program logo shall immediately cease if after certification the Agency: (a) withdraws its certification; (b) has its certification suspended during such period; or (c) has been terminated from the Certification Program.
14. Agencies will be asked if they carry E & O Insurance and the amount of coverage.
B. Certification Program Fee
1. The certification program fee covers the costs of CLLA, and/or its independent, third-party agent reviewing the application; obtaining individual credit reports; up to four (4) individual background checks; an agency trade report; and internal administrative costs.
2. The following annual certification program fees include costs associated with the application and reapplication process:
*Travel costs for the on-site audit are covered up to $350 for new certifications. Any on-site audit travel cost beyond $350 is the responsibility of the agency applying for certification. In the event all application requirements are not met, the applicant will be responsible for all additional costs associate with remediation of such requirements. The CLLA will invoice the agency for such additional costs, which the agency will pay within 20 days after receipt. No certificate will be issued to the agency unless and until all invoices have been paid in full.
3. In years two (2) and three (3), no on-site audit will be required unless there is a material change in the agency which would include, but not be limited to a change of ownership, change in executive management, a change in the agency's business model, a move of the home office, a change of banks or accounting firms, a lawsuit materially affecting the agency's financial performance or a significant decrease in agency revenue. The fees listed above shall be due and payable on or before June 30 and then due and payable June 1 of each subsequent year.
Every four (4) years, agencies must recertify by completing, meeting and adhering to all requirements listed in Section A, General Requirements.
C. Competency Requirements
Certain agency personnel must obtain annual continuing education credits.
1. Up to three (3) members of senior management, chief compliance officer, chief operations officer, or director of operations must attend a cumulative 10 hours of continuing education programs per year which must include at least five (5) credit hours obtained at a CLLA meeting , CLLA qualified event, or up to 5 at an IACC meeting.
2. Webinars from CLLA or IACC may count towards the continuing education requirement.
Certain agency personnel must pass a competency examination once every five (5) years.
1. Preparation courses will be offered to cover examination topics.
2. Examination will cover basic collection laws and procedures, bankruptcy laws, accounting practices, ethics and customer relations.
D. Independent Review of Agency Financial Practices
1. In year two of the program and every other year after that, an independent audit firm selected by CLLA will perform a random audit of the agency's trust account. All documents selected will be submitted directly to the independent CPA firm. This would include evaluation of bank statements at random, and comparing them to deposits made to trust accounts on certain dates, as well as the applicable remittances to the agency's clients.
2. The following is the bond fee requirements based on gross contingency fees for the previous year:
• $0 - 1,000,000 $ 150,000 bond
• $1 million - $5 million $ 300,000 bond
• Over $5 million $ 500,000 bond
E. Certification Committee
The Certification Committee will consist of the following members: The Executive Vice-President of the CLLA, the Executive Director of the IACC, a CLLA staff employee whose primary responsibility will be administration of the certification program, the President-Elect of the CLLA and a representative of the third-party certification agent. No member of the Certification Committee will be an owner, officer or employee of any collection agency.
The Certification Committee will:
1. Have the authority to outsource, to an independent, third-party agent, the review of each new and renewal application and associated required documents submitted.
2. Review each application and associated required documents submitted to the CLLA for consideration of certification.
3. Review each renewal application and associated required documents submitted to the CLLA for consideration of certification renewal.
4. Review all quarterly documents submitted to the CLLA by the agency's CPA.
5. Maintain records concerning the status of each agency's compliance with certification requirements, including but not limited to education credits, payment of fees and timely submission of required documents.
6. Have the authority to suspend the certification of any agency that has not complied with one or more of the certification requirements and issue notices of non-compliance which set time limits for an agency to cure any event of non-compliance.
7. Approve an application for certification.
8. Reject an application for certification by advising the agency of the grounds for rejection.
9. Have the authority to condition approval of an application for certification or renewal of certification of an agency by requesting the agency to, within a designated period of time, correct, implement or cease an act or activity that does not conform to the requirements of certification.
10. Annually review the Certification Program Standards and Requirements, and other related documents.
11. Have the authority to change the Certification Program Standards and Requirements contained in this Document, or any other, related documents based on the effectiveness of the Certification Program, changes in laws and regulations, and the evolution of best practices.
12. Strive to create a Certification Program based on uniform principles that are formed by statutes, regulations, ethical standards, interactions with regulatory agencies, and best practices.
F. Grievance Procedures and Requirements
The Board of Governors of the CLLA shall appoint the members of an Agency Certification Grievance and Appeals Committee (the "GAC").
1. The GAC will be comprised of an unbiased panel of at least two CLLA bankruptcy lawyers, one bankruptcy judge, the Chair of the CLLA's Creditor's Rights Committee, the Chair of the CLLA Grievance and Arbitration Committee and a certified public accountant . The terms of the GAC panel members shall be for no less than two (2) years and shall continue until the Board of Governors appoints their replacement(s).
2. The rules and procedures governing the GAC and its litigants shall substantially conform to the rules and procedures governing the CLLA Arbitration and Grievance Committee.
3. The GAC shall have the power to terminate or revoke an agency's certification or impose such other relief as the circumstances dictate.
G. Certification Renewal
Each certified agency shall be required to renew its certification annually in June. In order to renew its certification, an agency must:
1. Submit to the CLLA an application and all required documentation updating all information contained in the agency's prior year's application and renewal documents.
2. Be in good standing and in compliance with all certification requirements (Sections A and D above) at the time of submitting its renewal application.
3. Each agency must have the persons identified in Section A above pass a competency examination once every five (5) years.
Information submitted as part of the Certification Program shall be kept confidential and used for the limited purpose of determining eligibility for certification and compliance with certification.
Committee Members, CLLA staff, vendors and any independent third-party auditing agents of CLLA utilized in the administration of the Certification Program shall sign a Confidentiality Agreement where they agree to keep all information submitted as part of the Certification Program confidential.
Tasks performed by an independent third-party auditing agent of CLLA, in the administration of its Certification Program, and deliberations of the CLLA Certification Committee, concerning an agency's certification or potential certification, shall be conducted in strict confidence and any information obtained will only be shared with those directly involved with the certification process.
Revised April 2016
The CLLA Program is endorsed by the IACC. To learn more, about IACC, visit their website.
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