Consumer Financial Practices Bureau
In it’s first expansion of powers, the Consumer Financial Practices Bureau (CFPB) (also @CFPB on Twitter) has set it’s regulatory sites on debt collectors (and credit bureaus), privately sending shock-waves throughout the industry.
“Debt collectors and credit reporting agencies have gone unsupervised by the federal government for too long,” CFPB Director, Richard Cordray, told reporters
While no industry wants to be regulated by the government, if ever there was an unregulated industry that needed government supervision, it’s debt collection. According to the FTC, no industry has more complaints from consumers then debt collection.
The CFPB proposal includes the bold act of sending regulators into the offices of the largest debt collectors to observe their practices first hand. While an aggressive move, that will no doubt receive industry opposition, it’s is also wise one. As my mother would say, “an ounce of prevention is worth a pound of cure.” Levying charges for debt collector violations — after the fact — is nowhere near as helpful to consumers as preventing the violations from occurring in the first place.
Today, ten states do not regulate debt collectors, with regulations in the other 40 states varying greatly. This has created a “patch-work quilt” where consumers are treated differently based solely on their state borders. This action by the CFPB is the first, sorely needed, step in providing a uniform set of rules.
With this quick and bold action Richard Cordray is proving he’s up to the CFPB Directorship. (And I suspect, somewhere in Massachusetts, Elizabeth Warren must be smiling too.)
