Debt Collection Now Regulated By The Consumer Financial Protection Bureau
“Millions of consumers are affected by debt collection, and we want to make sure they are treated fairly,” said Richard Cordray, director of the Consumer Financial Protection Bureau (“CFPB”). “We want all companies to realize that the better business choice is to follow the law—not break it,” he added.Starting January 2, 2013, debt collection agencies will be receiving federal supervision from the CFPB. The overseeing authority comes under the Dodd-Frank regulatory law that deals with nonbank financial companies.Many debt collection agencies employing aggressive and abusive tactics have been the target of numerous complaints handled by the Federal Trade Commission (“FTC”). The FTC has received more than 180,000 grievances against debt collectors last year, a record high compared to 13,950 in 2000.Besides monitoring companies that specialize in collecting payments for household, family or personal debt from debtors, the CFPB will also start supervising debt collectors who deal with overdue student loans. The CFPB will be coordinating this oversight with the Education Department. Officials say that the Education Department has at least $850 billion in student loans outstanding.The laws will cover collectors that have annual receipts exceeding $10 million. There are about 4,500 debt collection companies in the United States and roughly 175 of these will be subjected to the CFPB’s rules.Consumer protection agencies often receive complaints from customers alleging that debt collectors repeatedly threaten them with imprisonment for failure to pay debts. As a solution, the CFPB will screen companies to ensure that they “civilly and honestly” communicate with consumers, including identifying themselves properly and thoroughly disclosing the amount of debt owed.However, debt collectors believe that consumer protection agencies have mislabeled them, especially on how they answer customer complaints. ACA International, a group representing collection companies, protested against the CFPB’s proposed rules, saying that they are arbitrary and do not follow the law. ACA explained that the $10 million threshold was too low because the way the CFPB measures annual receipts. ACA wishes to push the threshold to $250 million. On the other hand, the National Consumer Law Center recommended that the threshold be lowered to $7 million. Starting January of 2013, the CFPB will begin requiring debt collectors to submit reports, and will be conducting examinations of companies’ procedures and practices.If a collection agency has harassed you, you may be entitled to money damages up to $1,000.00, based on the Fair Debt Collection Practices Act (FDCPA). The FDCPA has been around for almost 35 years. The FDCPA is a federal law that applies to every state. In other words, everyone is protected by the FDCPA. The FDCPA is essentially a laundry list of what debt collectors can and cannot do while collecting a debt, as well as things debt collectors must do while collecting a debt. Plus, the FDCPA has a fee-shift provision. This means, the collection agency pays your attorney’s fees and costs. Founding attorney, Michael Agruss, has settled over 1,500 debt collection harassment cases. Contact Agruss Law Firm, LLC, at 888-572-0176 for a free consultation. We want to help you, too.
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