The Consumer Financial Protection Bureau (CFPB) is well on its way to exercising its full power under its newly confirmed director Richard Cordray. Although the CFPB has been active since July 2011, it was until it had a confirmed director that it could exercise jurisdiction over nonfinancial institutions, payday lenders and other fringe financial markets.
One new initiative the CFPB launched last week is the “Ask CFPB” page where consumers can post questions and read answers to 350 basic financial questions in categories such as credit cards, mortgages and vulnerable populations. This database will help further the CFPB’s mission to promote financial literacy and engage consumers on how to better protect themselves from fraudulent and predatory financial services and products. The answers, which are easy to understand and are written in a simple, concise language, also includes definitions, explanations, and situations in order to educate consumers about financial products and services. The page is interactive and users can rate whether the answers were “helpful”, “too long,” or “confusing.”
Another step the CFPB has taken to improve consumer protection is filing its first annual report to Congress on complaints and enforcement actions under the Fair Debt Collection Practices Act (FDCPA). Complaints about debt collectors totaled over 27% of all the complaints received by the FTC in 2011. The FDCPA was created to protect individuals from abusive practices in the debt collecting industry; however, the market has changed substantially since its enactment 35 years ago. Players such as debt buyers and collection law firms have entered the scene and technological advances allow collection firms to use more sophisticated methods to identify and reach debtors. According to the report, approximately 30 million individuals, or 14% of American adults had debt subject to the collection process.
To address the rise in debt collection complaints the CFPB has proposed a rule that would cover debt collectors with more than $10 million in annual receipts from debt collection activities. The CFPB estimates that this rule would cover 175 firms that collect over 63% of the annual receipts from debtors. The CFPB is in the process of reviewing over 10,000 comments from the public, including advocacy groups, elected officials, trade groups and consumers on the proposed rule and will issue the final regulations shortly. In the meantime, consumers can also turn to the “Ask CFPB” page for answers about debt, including what times debt collectors can and cannot call your home, what information debt collectors are required to give you and are forbidden from giving to others.
This blog post was coauthored by Alison Terkel.