The new Consumer Financial Protection Bureau (CFPB) is beginning to aggressively set its agenda. After long-delayed implementation and attempts to block the seating of a Director of the new agency, this watchdog’s newest focus will be on debt collection and credit reporting companies. Because these industries’ have a reputation for being abusive and unscrupulous, the CFPB recently announced that it will begin examination into debt collectors who profit more than $10 million a year and credit agencies that profit more than $7 million a year. Thus, the CFPB will set its sights on 175 debt collectors, who make up two-thirds of the debt collection market, and thirty companies in the consumer credit reporting spectrum.
According to the New York Times: “Debt collectors and credit reporting companies are bracing for intense scrutiny after the government’s consumer finance watchdog unveiled a broad plan to regulate financial firms that have largely evaded federal oversight.”
For the debt collection and credit reporting industries, the CFPB’s oversight will initiate a new era for both groups. According to Travis Plunkett, the legislative director for the Consumer Federation of America, these industries have been able to skirt federal regulations because the regulators lacked enforcement power, and the regulators only “reacted” to abusive industry practices. Now, the CFPB has the authority to be proactive. Says Plunkett: “You’re looking at problems on the front end rather than going in after the fact. You can actually prevent problems.”
As the CFPB continues to set its agenda, it appears that check cashing services will be the next industry that it seeks to regulate. As many believe that the 2008 mortgage meltdown exposed numerous financial companies that abused consumers “[t]his oversight [will] help restore confidence that the federal government is standing beside the American consumer,” said Mr. Richard Cordray, the new director of the CFPB. “Debt collectors and credit reporting agencies have gone unsupervised by the federal government for too long,” says Cordray. “It is time to provide the kind of oversight of these markets that will help ensure that federal laws protecting consumers in these financial markets are being followed.”