The Consumer Financial Protection Bureau (CFPB) published a rule Wednesday that will allow the agency to federally supervise the larger consumer debt collectors. The bureau also released a field guide that examiners will use to ensure that companies and banks engaging in debt collection are following the law.
The CFPB’s supervision authority over these entities will begin when the rule takes effect on Jan. 2, 2013. Under the rule, any firm that has more than $10 million in annual receipts from consumer debt collection activities will be subject to the CFPB’s supervisory authority. The CFPB says this authority will extend to about 175 debt collectors, which account for more than 60% of the industry’s annual receipts in the consumer debt collection market.
CFPB Director Richard Cordray said in a statement that “millions of consumers are affected by debt collection, and we want to make sure they are treated fairly.” By supervising the larger debt collectors for the first time at the federal level, he said, “we want all companies to realize that the better business choice is to follow the law—not break it.”
Approximately 30 million Americans have, on average, $1,500 of debt subject to collection, CFPB says. “Debt collectors often report consumers’ collection status to the credit bureaus. If they get the information wrong, this can be the difference between getting approved or denied for such financial products as a mortgage or a car loan.”