Debt Collectors Face a New Watchdog

For the first time, debt collectors have a federal regulator. Starting on Jan. 2, the Consumer Financial Protection Bureau will supervise companies that collect at least $10 million a year in consumer debts. In the past, debt collectors faced some supervision at the state level and consumers could complain to the Federal Trade Commission. But there was no federal agency actively policing the beat.

The CFPB says its examiners will try to ensure that debt collectors provide proper disclosure and accurate information, that they have good complaint- and dispute-resolution processes, and that they “communicate civilly and honestly” with consumers. The authority will cover the three main types of debt collectors: companies that buy up debts for pennies on the dollar and then get to keep whatever they collect for themselves; companies that get a fee to collect debts on behalf of other companies; and lawyers who pursue debt collection through litigation.
This new regulation is part of the authority the Dodd-Frank financial reform bill gave the CFPB to identify and oversee companies that aren’t banks but are still “large participants” in consumer finance. In its first use of that power, last month the CFPB began supervising credit-reporting bureaus for the first time. Other areas it may soon begin to oversee include auto financing, installment loans, and remittances, according to the agency.

Read more: http://www.businessweek.com/articles/2012-10-24/debt-collectors-have-a-new-watchdog#r=hpt-ls