CFPB Seeks Tighter Control of Credit Reporting Agencies and Debt Collection Agencies

The Consumer Financial Protection Bureau (CFPB) has targeted many industries since Richard Cordray was appointed the bureau’s director, such as banks, credit card issuers, mortgage companies, payday lenders, and private student lenders.   This agency was created to protect consumers. In February 2012, Cordray announced that he is targeting the consumer reporting and debt collection industries next. This was based upon receiving a considerable number of consumer complaints about their practices and the impact they have on millions of Americans.

CRAs

The Consumer Financial Protection Bureau is targeting consumer reporting agencies (CRAs) with at least $7 million in annual revenue, which includes 30 companies, representing 94 percent of the market and 7 percent of the companies.  The 30 include the three major consumer credit bureaus – Equifax, Experian and TransUnion. The main consumer complaints about them are the difficulty in updating reports and in correcting errors.

Collection Agencies

Approximately 175 debt collection agencies with annual revenue of at least $10 million are being targeted. The three major types of companies in the debt collection industry are: firms that collect debt owned by another company for a fee; firms that buy the debt and collect for themselves; and debt collection attorneys and law firms that collect through litigation. They represent 63 percent of the market and four percent of the collection agencies.  There have been numerous complaints filed against collection agencies regarding their abusive collection tactics. The Federal Trade Commission (FTC) receives the most consumer complaints about collection agencies.

“Unlike most services or products where consumers have power through their ability to shop around among different providers, consumers lack the power to do that with these businesses,” Richard Cordray said. “Consumers do not choose whether to have any of the consumer credit reporting agencies keep track of their credit history nor do they have the ability typically to choose their debt collector.”

Even though these industries are under the agency’s power for consumer protection already, Cordray wants to be tougher on the largest companies. He felt these companies had not been supervised by the federal government for years. He wants to supervise the bureaus and collection agencies using the same processes as the banks – review the books and records and meet with key executives.

As with the other industries targeted, there is a 60-day comment period of review to allow industry leaders to explain how their companies would be impacted by the proposed guidelines.  The proposal must be finalized by July 21, 2012 and the comment period follows.

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Monitoring, Credit Report, Credit Score, Government, Money & Identity

This post was written by John Ulzheimer