We have written about the Consumer Financial Protection Bureau (CFPB) since it was in the mind’s eye of Elizabeth Warren, the Massachusetts candidate for United States Senate. Ms. Warren, a professor at Harvard Law School, was a consultant to the United States Congress while the Dodd Frank legislation was pending, and was hired by President Obama to implement the legislation and to set up the CFPB. Politics being what they are, she would not be confirmed by the Senate, so she returned to Massachusetts to run for office.
In any event, the CFPB remains a strong, albeit new, advocate for consumers’ rights in the financial spheres. Recently they began monitoring the credit reporting agencies. Presently, the CFPB is starting a whole new monitoring system for debt collection companies. Clients of ours who file for Massachusetts bankruptcy often tell of instances in which debt collection agencies harass, trick and swindle them. This is especially true with our clients who are elderly and with immigrants who are sometimes threatened with immigration reporting.
Here’s the fact: 30 million Americans are behind on bills to the point where they are being pursued by debt collectors. The average debt is $1,500. However, beginning the first of the New Year, the CFPB will include all debt collection agencies that collect $10 million per year in consumer debts. This is the first time there will be such federal oversight. While this will only cover about 175 debt collection firms, or 4% of the national market, it should cover 63% of the debts in collection. The goal will be to assure that debt collectors provide adequate disclosures, accurate information, have compliant dispute resolution mechanisms, and that the process is undertaken honestly and with integrity. This will include both real law firms and “law firms” that are merely debt collection mechanisms.
The debt collection industry lobbied the CFPB to set the limit at $250 million. They argued that anything lower would be too onerous on “small businesses” and the new regulations would lead to layoffs. Their website’s news release even argues that employees of debt collection firms do 650,000 in community service; do they really think that a federal rule change will force employees to do less service? Perhaps more importantly, perhaps the small businesses would hire folks to keep them in compliance. Under the new regulations, the CFBP would still only protect 63% of the consumers who are the targets debt collectors.
In the past, only complaints to the Federal Trade Commission would result in any investigation. The FTC, however, is not used to working with small companies and had few laws and regulations to work with. Nevertheless, the FTC recently won a settlement against Asset Acceptance Corporation, one of the nation’s largest. The $2.5 million settlement was a result of Asset Acceptance’s aggressively attempting to collect debts that were legally too old to be collected.
The CPFB has its work cut of for it. The law that preceded it is the Fair Debt Practices Act (FDPA) which has the rules and regulations that have been effect. With the CFPB implementing a host of new rules and regulations, we can hope that consumers will be better served, and protected.
For information on how to fight back against debt collectors, or to file a personal bankruptcy in Massachusetts, call Attorney Neil Burns at 617-227-7423.