WASHINGTON — The government’s newest regulator is ready to crack down on the nation’s large credit reporting and debt collection companies, proposing tough new oversight on two arcane financial groups that affect nearly all consumers.
The Consumer Financial Protection Bureau proposed to subject the companies to federal oversight for the first time as part of its broad authority to regulate firms outside the banking system.
By sending examiners to review their operations on a regular basis, the bureau hopes to spot problems before they arise at companies that book-end the consumer financial experience — firms that help determine who gets credit in the first place and those that pursue people unable to pay their bills.
“Debt collectors and credit reporting agencies have gone unsupervised by the federal government for too long,” Richard Cordray, the bureau’s director, said Thursday in announcing the effort.
The proposed rule, which is expected to be enacted in the next few months, was Cordray’s first major move since being installed by President Barack Obama last month in a controversial recess appointment.
Debt collection has been second only to identity theft in consumer complaints to the Federal Trade Commission in recent years. The bureau estimated that 30 million Americans have debts in the collection process.
One of the nation’s largest firms, Asset Acceptance, agreed to pay a $2.5 million civil penalty in January to settle a Federal Trade Commission lawsuit for misrepresentations in dealing with consumers, including failing to disclose when a debt was too old to be legally collected.
“It will improve things immensely because most debt collectors are operating in an either illegal or amoral way,” said Bill Bartmann, chief executive of debt collection company CFS II in Tulsa, Okla., who has been a longtime critic of some industry practices.
The three large credit reporting companies, Experian Information Solutions Inc., Equifax Inc. and TransUnion, have records on 200 million Americans and hold the key to getting a credit card or mortgage — and increasingly even a job.
Their practices have been mysterious to consumer advocates for years, and the new federal oversight should help reduce the number of mistakes on credit reports, said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group.
“The CFPB is saying they should no longer be operating as a black box,” Mierzwinski said. “We should look inside the credit bureaus because they are gatekeepers to financial success, and we should see if their algorithms are fair to consumers.”
Credit reporting companies and debt collectors already fall under the bureau’s power to enforce consumer protection laws and enact new regulations. Cordray proposed to subject the largest of those companies to additional oversight because of their key role in consumer finance.
I wonder how many Republicans will comment here, advocating against government regulation… How many will say they’re really prefer that credit reporting firms and debt collectors have a God-given right to do as they please, no matter whose lives they damage…
So you think it is ok to steal? You borrow money and do not pay it back that is STEALING. Just like a criminal record your credit report tells others your a risk. From your tone towards us republicans I am guessing your the other side. I am sure you are aware of the damage Mr Barny Frank did to the current market by REQUIRING banks that used Fanny and Freddie to loan money to those who where known not to be able to repay it. If he had left the system alone then we likely would not be in the crap we are in now. That is what liberals do steal form those who EARN and give to those who do not so why not just steal formt hose with money to begin with right?
Please read the article, especiallythe part that refers to “misrepresentations in dealing with consumers.”
The purpose of the proposed regulations is to catch credit reporting firms and debt collectors who are either doing shoddy work or purposely committing fraud.
Do you really advocate for no control of these companies? What if it was your own credit record that was damaged by a credit reporting firm’s shoddy practices, so that some other person’s poor credit history got mingled with your own stellar history? Your credit would be ruined, and the company could be as lazy as it pleased in making changes. What if a debt collector hounded your elderly mother, calling night and day to demand she pay money she did not actually owe?
I agree. My cousin is being harassed by a debt collector about a debt that owed by his neighbor! He barely knows the woman. The debt collector insists that the woman gave them his number as a contact number. Apparently she has a cellphone and the agent can’t find her number.
I told my cousin he should call the woman’s Mother and tell her he needs to contact her daughter ASAP and see if she will give him her daughter’s number. If that didn’t work, I told him to go over to Hamilton Marine and buy one of those canned boat horns, and blow it off into the phone the next time the debt collector calls.
If you are being called and you do NOT owe the debt call the police and report the harrasment. If people paid there debt these places would not exist. It is a CRIME to harrass someone. Of course the mahority of people complaining are the ones who get called at say work when they change there home number to avoid such calls.