CFPB to Oversee Debt Collectors

debt billsBy DANIEL WAGNER

WASHINGTON -- Expanding its reach, the government's consumer finance watchdog agency will monitor the day-to-day operations of big debt-collection companies, the agency said Wednesday.

It is the first time that debt collectors have been subject to federal scrutiny of their routine business practices.

The move lengthens the list of industries that face oversight by the Consumer Financial Protection Bureau. The agency was set up after the financial crisis to protect consumers from misleading marketing, unfair fees and other harmful practices.

Debt collectors have long been criticized for hard-knuckled tactics like calling the employers of people who fail to repay debts or filing lawsuits against people who owe relatively little money. Some of the practices may violate federal disclosure rules and protections against harassment and intimidation.

About 30 million Americans have, on average, $1,500 of debt that is subject to the debt-collection industry, the agency said. That information often is reported to credit bureaus, so debt collectors can affect a person's ability to finance a car or the rate she pays on a mortgage.

The bureau already supervises mortgage companies, private student lenders and payday lenders. Those industries were placed under its watch in the 2010 overhaul of financial laws, which established the agency.

Debt collectors are the second group, after credit bureaus, that the agency is choosing to include in its supervision program. The CFPB started overseeing credit bureaus last month.


Under the program of ongoing supervision, regulators can demand information from any larger company, even when there is no indication that the company did something wrong. Supervisors and examiners can review marketing materials, phone scripts, consumer disclosures and other aspects of a business.

Before the CFPB was created, banks faced similar routine oversight by other regulators that focused mainly on their financial strength. In granting the consumer bureau the authority to supervise non-bank companies, Congress vastly strengthened the federal government's tools for identifying and preventing practices deemed harmful to consumers.

The agency can file civil charges or take enforcement action against any company that violates consumer laws, even if the company is not part of its supervision program.

Supervision of debt collectors will begin Jan. 2. Only companies with more than $10 million in annual receipts will be subject to the heightened scrutiny. That includes about 175 debt collectors that account for more than 60 percent of the industry's annual receipts, the agency said.

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Daniel Wagner can be reached at www.twitter.com/wagnerreports .

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microcapmillionaires

Being in debt surely does suck. These companies will settle for 40 cents on the dollar eventually though.

October 26 2012 at 6:57 AM Report abuse rate up rate down Reply
The Paterfamilia

A good start would e to lift the Main Stream News in America out of their "NEWS BLACK-OUTS". Allow them to release truthful Finance Disclosures regarding how many other Countries have been successful in their recoveries... Search on these terms in your favoriite Browser or Search Engine, "ICELAND FORCES DEBT FOREGIVENESS". My last count was that 23 Third World Countries have forced their Government either to turn in their Resignations, Pass on the Bail-Outs of the IMF (The World Currency is Based on our American Dollar causing American Austerity to be the most Severe in the World) and The U.S. Federal Reserve. Or Both, such as in Iceland which should be a Poster Child of Monetary Recovery!!!

October 24 2012 at 3:03 PM Report abuse rate up rate down Reply
papabudlight

Nothing but leaches.

October 24 2012 at 11:31 AM Report abuse +1 rate up rate down Reply
jdykbpl45

When you don't borrow, nobody can collect. Please pass to Bernake.

October 24 2012 at 11:09 AM Report abuse +1 rate up rate down Reply
sensibility2

I say about time. It's been long overdue given a lot of abuse in the industry as a whole. The question is, "Why did it take so long?"

October 24 2012 at 10:50 AM Report abuse +2 rate up rate down Reply
1 reply to sensibility2's comment
jdykbpl45

Nancy Pelosi opposed it.

October 24 2012 at 11:10 AM Report abuse -1 rate up rate down Reply