Consumer-finance watchdog targets debt collectors

Feb 16, 2012, 8:55 PM

AP Business Writer

WASHINGTON (AP) – The nation’s new cop on the consumer-finance beat is zeroing in on debt collectors and credit reporting companies.

The Consumer Financial Protection Bureau said Thursday that it wants to add debt collectors and credit bureaus to the list of industries that agency officials can supervise in person.

The agency has already started supervising payday lenders, mortgage companies and private student lenders. It gained that power last month, after President Barack Obama installed its director.

The CFPB can also write rules to supervise big companies in other industries. Thursday’s announcement was a first step toward defining which industries the CFPB wants to scrutinize.

The housing bust and recession have transformed debt-collection and credit-reporting companies, making them a much bigger part of consumers’ lives, agency Director Richard Cordray told reporters.

More people have overdue debts that have been handed to collection agencies, he said, and many people’s credit scores have been hit by foreclosures, a lost job or a family member hurt by the recession, he said.

About 30 million Americans have debts in collection, Cordray said. He said debt collectors receive more complaints than any other industry, according to a database of complaints maintained by the Federal Trade Commission.

Consumers are vulnerable to abuse by debt collectors and faulty credit reports because they can’t take their business elsewhere, Cordray noted.

Oversight by the CFPB will help companies follow the rules by clarifying how they will be enforced, one industry executive said.

“Agencies like ourselves are really hoping that the CFPB, if they’re going to have increased regulation of the collection world, they’ll provide clarity on what you can and can’t do,” said Tim Smith, senior vice president of banking and financial services at Firstsource Solutions. Smith’s division collects debt for many of the nation’s biggest credit-card issuers.

Firstsource and its competitors expect the CFPB to stir major changes over the next year, and many are ramping up internal controls and audits to prepare for the new oversight, he said.

Banks have long been subject to strict scrutiny by regulators focused on their safety and financial stability. Yet much of the abusive lending that inflated the housing bubble occurred far from that spotlight, because the lenders were not subject to bank oversight.

The CFPB was created in part to close the regulatory gap. Its officials can visit, inspect and collect information from a broad slice of the financial-services market that previously lacked such oversight.

Until now, the government could bring lawsuits against companies that broke laws aimed at protecting consumers from heavy-handed debt collection tactics. Bank-style supervision allows officials to look closely at the practices of healthy companies that are not accused of wrongdoing.

The list of industries subject to CFPB supervision will continue to grow. In a preliminary outline of its plans last June, the agency named prepaid debit cards, money-transfer services, check cashers and debt-relief firms, among others.

Under Thursday’s proposal, debt collectors with more than $10 million in annual receipts and consumer reporting agencies with more than $7 million in consumer-data revenue would be subject to supervision. The CFPB estimates that it will cover agencies that do 63 percent of the nation’s debt collection and generate 94 percent of the consumer credit revenue.

___

Follow Daniel Wagner at
www.twitter.com/wagnerreports.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

United States News

FILE - People visit a makeshift memorial honoring the victims of the Oct. 1, 2017, mass shooting in...
Associated Press

Vegas survivors signal hope even as mass shootings persist

LAS VEGAS (AP) — It’s been five years since carnage and death sent his family running into the night, leaving them separated and terrified as a gunman rained bullets into an outdoor country music festival crowd on the Las Vegas Strip. The memories don’t fade, they sharpen, William “Bill” Henning said as he prepared for […]
14 hours ago
In this image from video broadcast by RTB state television, coup spokesman Capt. Kiswendsida Farouk...
Associated Press

Protesters attack French Embassy in Burkina Faso after coup

OUAGADOUGOU, Burkina Faso (AP) — Angry protesters attacked the French Embassy in Burkina Faso’s capital Saturday after supporters of the West African nation’s new coup leader accused France of harboring the ousted interim president, a charge French authorities vehemently denied. Lt. Col. Paul Henri Sandaogo Damiba was overthrown late Friday less than nine months after […]
14 hours ago
From left, A.J. McCullough of Sunset Beach, NC, mother of bride Monroe McCullough, an unidentified ...
Associated Press

Despite Ian’s punch, wedding day saved on wet Pawleys Island

PAWLEYS ISLAND, S.C. (AP) — Saturday turned out to be a sparklingly beautiful fall day in Pawleys Island, an idyllic spot for an early fall wedding in South Carolina, sandwiched between the Atlantic oceanfront and expansive marshland that typify the state’s coastal beauty. But the perfect wedding day almost didn’t come together for two families […]
14 hours ago
FILE - Democratic candidate for Georgia governor Stacey Abrams poses for a portrait in front of the...
Associated Press

GOP attacks Georgia’s Abrams on voting as judge rejects suit

ATLANTA (AP) — When Democrat Stacey Abrams narrowly lost the Georgia governor’s race to Republican Brian Kemp four years ago, she didn’t go quietly. She ended her campaign with a nonconcession that acknowledged she wouldn’t be governor, while spotlighting her claims that Kemp had used his post as secretary of state to improperly purge likely […]
14 hours ago
This is an aerial view of a damaged trailer park after Hurricane Ian passed by the area Saturday, O...
Associated Press

Ian leaves dozens dead as focus turns to rescue, recovery

FORT MYERS, Fla. (AP) — With a death toll nearing three dozen, rescuers searched on Saturday for survivors among the Florida homes ruined by Hurricane Ian, while authorities and stunned residents in South Carolina began surveying their losses and assessing the damage from the powerful storm’s strike there. Ian, one of the strongest hurricanes ever […]
14 hours ago
Associated Press

Governor’s office reports at least 4 N.C. storm fatalities

RALEIGH, N.C. (AP) — The remnants of Hurricane Ian downed trees and power lines across North Carolina, and at least four fatalities connected to the severe weather were reported Saturday. In Johnston County, outside of Raleigh, a woman found her husband dead early Saturday morning after he went to check on a generator running in […]
14 hours ago

Sponsored Articles

...
Quantum Fiber

How high-speed fiber internet can improve everyday life

Quantum Fiber supplies unlimited data with speeds up to 940 mbps, enough to share 4K videos with coworkers 20 times faster than a cable.
...
Day & Night Air Conditioning, Heating and Plumbing

Ways to prevent clogged drains and what to do if you’re too late

While there are a variety of ways to prevent clogged drains, it's equally as important to know what to do when you're already too late.
...
Sanderson Ford

Don’t let rising fuel prices stop you from traveling Arizona this summer

There's no better time to get out on the open road and see what the beautiful state of Arizona has to offer. But if the cost of gas is putting a cloud over your summer vacation plans, let Sanderson Ford help with their wide-range selection of electric vehicles.
Consumer-finance watchdog targets debt collectors