Starting in January, debt collection agencies will be under the direction of the CFPB. Many have been waiting for the Consumer Financial Protection Bureau to bring that industry in, but time will tell if it is important.
New Sherriff finally here
There is a lot of hatred in the debt collectors business, which they probably deserve considering some of the things collectors do. Though there are good debt collectors out there, there are a lot of bad apples that give the industry a bad name.
In 2011, over 180,000 grievances were made about debt collectors to the Federal Trade Commission, according to the New York Times. That is a ton of growth from 2000 when it was only 13,950 grievances. Most of the bad activity is certainly with smaller firms since only 21 percent of grievances to the Federal Trade Commission were from the top 100 debt collectors.
A lot of people have waited for the Consumer Financial Protection Bureau to notice and deal with the issue, and the agency just announced its plans to do just that.
Extra guidelines soon
The Consumer Financial Protection Bureau will be in charge of debt collectors officially on January 2, 2013 and will make sure debt collectors are honest and civil in their communications with people. People should always pay their personal loans and other debt, but they also should not be abused when they neglect to. Companies will need to reconsider their debt practices.
The CFPB is authorized under the Dodd-Frank Act, which created the agency and its mandate, to regulate “non-bank financial institutions” which deal with customers.
The only problem with it all is that small businesses are off the hook since only businesses with $10 million or more in annual receipts are being watched, according to the Washington Post. The New York Times points out that it is still going to be $12.2 billion a year viewed and about 63 percent of business, which is great. However, only 175 of the 4,500 debt collectors are represented in that number.
Not as toxic as it seems
According to Forbes, about 5 in every one million people complain even though the top 100 corporations only accounted for 21 percent of complaints. There are not that many complaints regardless of the bad news of debt collection agencies.
The Consumer Financial Protection Agency is working on further rules to regulate the industry, but as Forbes points out, regulating the top players is not as pressing as it might seem. By virtue of being the largest firms, they work with the largest creditors, which mean much tighter scrutiny over practices.
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Author: Cornelius NunevThis author has published 11 articles so far.