WASHINGTON ( Legal Newsline) - A rule published Oct. 24 will allow the Consumer Financial Protection Bureau to supervise the larger consumer debt collectors.
The CFPB also released a field guide that will be used to ensure companies and banks that are working to collect debts are following the law.
When the rule takes effect Jan. 2 this will allow the Bureau to oversee every stage of the process, starting with the origination of credit complete through debt collection.
The three main types of debt collectors that are affected by this rule are firms that buy defaulted debt and collect the funds for themselves, firms that collect defaulted debt owned by another company in return for a fee, and debt collection attorneys that collect through litigation.
To become subject to the CFPB supervisory authority the firm must have more than $10 million in annual receipts from consumer debt collection.
The supervision will cover more than 60 percent of the industry's annual receipts in the consumer debt collection which is about 175 collectors.
Examiners will be evaluating whether debt collectors provide required disclosures, provide accurate information, have a consumer complaint and dispute resolution process, and provide civil and honest communication with consumers.
This procedure is an extension to the CFPB's general Supervisory and Examination Manual to provide guidance on how the Bureau will be conducting its monitoring of debt collection activities.
"Millions of consumers are affected by debt collection, and we want to make sure they are treated fairly," said CFPB Director Richard Cordray, who is a former attorney general of Ohio.
Approximately 30 million Americans have, on average, $1,500 of debt subject to collection.