The Consumer Financial Protection Bureau (the “CFPB”) is a federal agency that holds primary responsibility for regulating consumer protection with regards to financial products and services in the United States. The CFPB was founded as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the bureau began operation on July 21, 2011. Likening itself to “a neighborhood cop on the beat,” the CFPB was tasked with supervising banks, credit unions, and other financial companies.
On October 24, 2012, the CFPB issued new rules that will allow for direct federal supervision of debt collectors and debt collection law firms. The issuance of these new regulations marks the first time that the debt collection industry will be subject to federal oversight.
Beginning on January 2, 2013, the CFPB will regulate 175 debt-collection firms that each bring in more than $10 million in annual receipts — accounting for 63% of the market. Examiners at the CFPB will begin assessing whether debt collectors are complying with requirements of federal consumer financial law, including providing consumers with disclosures and accurate information. They will also investigate whether debt collectors have harassed or deceived consumers in the pursuit of payment.
Even if your company will not fall under the “watchful eye” of the CFPB come January 2013, you should still take the time to become familiar with these new regulations. After all, it may not be long before the CFPB turns its attention to the remaining 37% of the collection industry.