By Stacey Silva
Now that 2024 is in full swing, it is clear that it is going to be a year of many unknowns. There are still economic headwinds, specifically, inflation and wages, combined with the many political maneuvers that candidates will take leading up to the November elections that may continue to cause uncertainty in the marketplace. How these seemingly uncontrollable factors will impact everyday Americans’ financial wellbeing remains to be seen.
One area of certainty, though, is that consumers and lawmakers can rely on the American Association for Debt Resolution’s (AADR) accreditation process and our commitment to create the standards for our member companies to do what is right. AADR continues its longstanding commitment to have consumers’ best interests front and center. That includes setting the highest industry standards and validating that AADR member companies are living up to those standards.
AADR and its member companies have built a foundation to strengthen the debt resolution industry. In fact, AADR member companies go above and beyond federal and states’ expectations by participating in the AADR’s robust accreditation program. Confirming a member company is following AADR’s consumer-first standards increases transparency and protects consumers throughout their journey in a debt resolution program. In fact, the Association’s Personal Cash Flow Assessment helps to qualify the potential client’s fit with a debt resolution program and the Third-Party Products and Services Policy protects consumers from untimely or unnecessary products and services, just to name a few. Once earned, the “AADR Accredited Member” seal assures consumers that they are in safe hands.
What AADR accreditation means
When a company joins AADR, it voluntarily commits to completing the accreditation process within six months, which means an AADR approved and a state accepted independent auditor examines the company’s conformity with federal and state regulations and AADR’s policies and guidelines.
The audit includes confirmation of more than 100 compliance points through rigorous examination of and a signed affidavit by the debt resolution service provider, including areas such as:
- In the last three years, the AADR member company has not been the subject of any action by a governmental body or governmental unit which resulted in the imposition of any civil or criminal penalty, whether by settlement, judgement or order, under any debt adjusting, debt pooling, prorating, credit service organization, unfair or deceptive trade practices, false advertising, consumer deception law or regulation or any other law or regulation of similar definition or words of similar import that was based on admission of guilt by the Member. Accreditation may be denied or revoked for violation of the industry’s north star, the Federal Trade Commission’s Telemarking Sales Rule (TSR). Members also must show they have not had an action against them for unfair, deceptive, or abusive acts or practices of financial products and services (UDAAP) outlined under the Dodd-Frank Act.
- No AADR member company will charge an advance fee for debt resolution services they provide. Only when the client has made at least one payment in furtherance of a settlement offer will the consumer be charged a fee, and that fee may only be assessed for the one debt for which a settlement has been agreed to by the consumer.
- AADR member companies must be transparent in communicating about:
- the impacts of a debt resolution program by providing an AADR Uniform Disclosure Statement to the client both in written and verbal forms prior to the agreement,
- the pre-qualification of the client for program suitability through the AADR Personal Cash Flow Assessment,
- the fact that the debt resolution company does not manage client funds, nor pay creditors on behalf of the client – that a specific client-owned FDIC-insured dedicated account is where the client deposits and manages funds, and
- how and when to reach company personnel with any questions or concerns.
- AADR member companies have formal and continual training for personnel in the areas of the TSR, the Fair Credit Reporting Act, UDAAP, the Fair Debt Collection Practices Act, and applicable federal and state data privacy standards and laws, including California’s Consumer Privacy Act.
- The AADR member company has a robust management framework. This framework must include, but is not limited to, the practice they are following specific company policies and procedures for client service level agreements and metrics for performance, a process to obtain a client’s approval of each settlement before any fees are charged on that settlement, and have defined and practiced record retention terms.
Expectations do not stop with the AADR member company. A client’s protections are extended when the AADR member company is conducting business with third parties in the debt resolution industry. That is because AADR member companies must attest that the product or service is in the best interest of the client and that the third party they are conducting business with also follows AADR’s marketing and advertising standards.
What accreditation signals to consumers
Once the company successfully completes the initial accreditation process, they have earned AADR’s approval to display the “AADR Accredited Member” seal on their website. Going forward, companies then expect to be audited annually — a full audit every other year and a “sales-focused” audit during the opposite year. The sales audit focuses on interactions with consumers and front-end activities.
AADR has the highest standards for the debt resolution industry, laying out a strong framework with clear measures for companies and consumers. Earning AADR accreditation means a company has elevated itself above the baseline the Federal Trade Commission and state policymakers set for operating practices.
In short, accreditation lets consumers know that they have partnered with a debt resolution company that is fully compliant with the standards set in the independent audit and AADR policies and will represent their best interests in negotiations with creditors toward their goal of a debt-free future.
Silva is AADR’s head of compliance. In this capacity, Silva leads the program that creates and oversees AADR standards and works with AADR member companies as they adhere to all federal and state laws.
