The Consumer Financial Protection Bureau has begun paying stricter attention to debt collectors and the major credit bureaus. They are now adding these companies to their list of industries that can be supervised in person. Payday lending companies, private student lenders and mortgage companies are all on the CFPB’s radar now.
The economic difficulties faced by consumers over the past few years have caused more and more to be forced into relationships with debt collection companies. The CFPB now has the authority to determine what practices are considered legal when it comes to collecting debts. Many consumers today have debts that have been turned over to collection agencies and their credit scores have been adversely affected. It is estimated that around 30 million United States consumers currently have debts that have been placed in collection status. In addition, debt collecting companies receive more consumer complaints than any other consumer finance related industry on a yearly basis. Consumers have become vulnerable to practices by debt collection agencies that cross the line between collection and abuse.
Supervision by the CFPB will help many collection companies to know how to properly collect debts and what practices they should avoid when doing so. Banks have been subject to scrutiny by government regulation due to their consumer handling for years. Much of the abusive lending that led to the housing crisis however, was not stopped because the lenders engaging in many of these loans were not subject to oversight by the CFPB. Regulators hope that the inclusion of collection agencies and companies in the CFPB’s realm of jurisdiction will help to close the gap between financial agencies and how consumers are treated during collections. The government could up to this point sue any company that broke the law designed to protect consumers from abusive collection methods. This new supervision however will enable regulators to focus on healthier companies that were not originally considered to be abusing consumers during collections.