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Debt Collectors Escape CFPB Oversight - For Now

July 23, 2012

The Consumer Financial Protection Bureau has released new rules governing credit reporting agencies and credit reporting companies. For the first time, these companies will be supervised by an agency at the federal level.

Specifically, companies that have more than $7 million in annual receipts will be supervised by the CFPB. This amounts to about 30 companies that take in 94 percent of the industry’s annual receipts. The companies will be subject to on-site examinations, compliance systems and procedures, production of relevant reports and visits with relevant CFPB personnel.

So where does this leave debt collectors?

Last February, the Bureau released a proposed rule regarding the supervision of both the credit reporting and debt collection markets. Both industries fall under the Bureau’s jurisdiction according to Dodd-Frank.

The CFPB currently supervises mortgage originators, mortgage servicers and payday lenders and has added credit reporting agencies to its portfolio. In regard to debt collectors, a recent press release stated that CFPB officials would develop rules on debt collection sometime this fall.

While supervising credit bureaus means that debt collectors will have a more difficult time submitting false information about consumers without dispute, delaying supervision of this industry only hurts people who are already suffering the stresses of being unable to pay their debts.

According to a report issued by Fox Business, over 180,000 Americans delivered complaints about debt collectors to the Federal Trade Commission in 2011. Most complaints involve excessive calling or a rude telephone manner. However, some debt collectors take extreme measures that stray into harassment.

Debt collectors have been known to call and threaten the family members and even the pets of people in debt. Some gain access to people’s cell phone accounts and send barrages of text messages, while others gain access to social media accounts and post threatening messages on platforms like Facebook (News - Alert).

The Fair Debt Collection Practices Act prohibits repeated calls and all forms of harassment and is currently enforced by the FTC. Distributing responsibility among multiple agencies only makes complaint resolution more confusing for customers.

While credit reporting does affect more people than debt collection does, the level of abuse directed toward customers by unscrupulous debt collectors deserves more attention—and quicker action—from the CFPB.

Edited by Stefania Viscusi

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