In the wake of the collapse of the housing market and exposure of the sub-prime lending scandal, the 2010 Dodd-Frank Act created the Consumer Financial Protection Bureau. The Act charged the new bureau with the task of protecting U.S. consumers in the consumer financial products and services market. Lawmakers wanted to consolidate enforcement of consumer credit rights scattered across various federal agencies and increase government accountability for those businesses offering financial services to consumers. In furtherance if its mission, the CFPB announced plans in February, 2012 to begin regulating debt collection firms and credit reporting agencies.
Roger Corday, director of the CFPB, said that the proposed rules would subject larger debt collections firms and credit reporting agencies to the same oversight the government currently applies to banks.
The CFPB’s proposed rules would affect debt collection firms with more than $10 million in annual receipts and credit bureaus that earn more than $7 million per year. The CFPB estimates this includes about 175 debt collectors and 30 credit reporting firms.
Need for Oversight
Corday stated he believed the rules were necessary to restore Americans’ confidence that the government is looking out for consumers’ interests. He noted the current economic climate, in which many are struggling with debt and unemployment, makes oversight of debt collectors and credit reporting agencies particularly important.
Credit reports touch on many aspects of people’s lives, including whether they qualify for loans and what interest rates lenders will charge. More employers are also running credit checks as part of the hiring process, and if credit reporting agencies are not reporting accurate information then it hurts people’s employment prospects.
Additionally, debt collectors are more active than ever. About 30 million Americans have debts that have gone to collection agencies, with an average of $1,400 per debt. Debt collectors have more complaints registered with the Federal Trade Commission than any other industry, and debt collection firms have paid large civil penalties for using deceptive collection practices in violation of the Fair Debt Collection Practices Act.
Consult an Attorney
The proposed CFPB rules will be open for comment for 60 days before the CFPB takes any further action. That may seem like an eternity for those currently facing creditor harassment, however. If debt collectors are hounding you, talk to an experienced creditor harassment lawyer today.