November 30, 2012 /24-7PressRelease/
-- The Federal Consumer Financial Protection Bureau will oversee the daily operations of the nation's largest debt collection agencies starting in January 2013. It will be the first time that the burgeoning debt collection industry will be regulated by the federal government. The bureau hopes that overseeing the operations of debt collection
agencies will protect consumers from harassment and predatory collection tactics.
Consumer protection group will target the nation's largest collectors
Only debt collection agencies that handle more than $10 million in annual receipts will be subject to CFPB oversight. This amounts to 175 of the roughly 4,500 companies that operate in the United States and nearly two-thirds, or $7.7 billion, of the industry's total annual receipts.
Three types of collection agencies will be monitored by the CFPB. The agency will oversee companies that purchase defaulted debt from other creditors and then collect the proceeds for themselves, companies that collect debt for creditors for a fee and lawyers who collect debts through litigation. Included among these categories are collection agencies that pursue overdue student loan debt that have contracts with the Department of Education.
New powers of the CFPB
Starting in January, the CFPB will be able to demand information from the collection agencies under its oversight, even if there is no suspicion of the companies violating federal law. The CFPB may demand phone scripts used by debt collectors, marketing materials and consumer disclosure documents. It will begin its oversight with an assessment of whether the collection agencies under its supervision are following federal laws or if they have deceived or harassed consumers.
The bureau will also be able to file civil suits against any company that violates federal disclosure laws and the federal statutes protecting Americans from harassment and intimidation, regardless of whether or not the company is under the bureau's supervision.
Oversight of debt collection agencies is the latest addition to the CFPB's regulatory duties. Founded in 2010 after the economic crisis, the bureau already supervises credit bureaus, payday lenders, private student lenders and mortgage companies.
The problem with debt collection agencies
Debt collection agencies have caught the attention of the media in recent years with their predatory collection tactics and willingness to pursue judgments against debtors regardless of whether or not that debt had been repaid or ever owed in the first place.
Large collection agencies file "cookie-cutter" lawsuits using extensive databases that may be inaccurate and include people who have never owed debt or have already repaid their debts. As an example, the large, publically-traded debt collection agency Encore Capital Group filed nearly 250,000 lawsuits in 2009 alone.
In 2011, consumers filed 180,000 complaints about debt collection agencies with the Federal Trade Commission, up from 13,950 complaints filed just over a decade ago. The industry collects $12.2 billion every year, and 30 million Americans have an average of $1,500 handled by a debt collection agency.
Advocates for debt collection agencies argue that oversight is uncalled for and that the threshold of $10 million in annual receipts is much too low. However, other consumer advocate groups believe the threshold is too high, citing needed enforcement of fair debt collection practices
. Judging by the number of complaints filed against collection agencies with the FTC each year, oversight of this previously unregulated industry is a wise move.
If you have been pursued by an unscrupulous debt collector, contact an experienced bankruptcy lawyer who can help you understand the federal laws that protect you against harassment and help you file a complaint against the company with the Federal Trade Commission.
Article provided by Law Offices of Chad M. Hayward, P.C.
Visit us at www.haywardlawoffices.com---
Press release service and press release distribution provided by http://www.24-7pressrelease.com
# # #Read more Press Releases from FL Web Advantage: