CFPB wants authority over two more industries
WASHINGTON (Legal Newsline) - The new federal consumer protection agency created by regulatory reform wants to supervise debt collectors and consumer reporting agencies.
The Consumer Financial Protection Bureau, headed by former Ohio Attorney General Richard Cordray, announced Thursday that it was proposing a rule that would give it the power to oversee those industries.
"Consumer financial products and services have become more complex over the years and they have expanded well beyond traditional banks," Cordray said.
"Our proposed rule would mean that those debt collectors and credit reporting agencies that qualify as larger participants are subject to the same supervision process that we apply to the banks. This oversight would help restore confidence that the federal government is standing beside the American consumer."
State attorneys general have increasingly targeted debt collectors as consumer complaints have grown. In fact, Illinois Attorney General Lisa Madigan announced in January that her office received more than 1,100 complaints in 2011 - part of nearly 6,000 debt-related complaints.
Madigan is participating in a program within the CFPB, which was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, that targets scams against the elderly.
State AGs have been given the power to enforce federal law by the CFPB. Earlier this month, 19 attorneys general settled with debt collector NCO Financial Systems for $575,000.
Under the proposed rule, the CFPB would regulate debt collectors with annual receipts of at least $10 million and credit-reporting companies with at least $7 million in annual receipts. The CFPB has the authority to supervise "larger participants" in the markets of residential mortgage, payday lending and private education lending.
For 30 million Americans with debt under collection, the average amount is $1,400, the CFPB says. The rule would allow the CFPB to oversee 63 percent of annual receipts in the debt collection market.
The Consumer Data Industry Association says there are 36 billion updates to consumer reports, and that the three largest consumer reporting agencies maintain information on 200 million Americans.
Lenders use the reports to evaluate applications for credit cards and loans.
From Legal Newsline: Reach John O'Brien by e-mail at email@example.com.