CFPB Proposes to Add Greater Restrictions on Debt Collection Firms
Written by Emil Fleysher | March 4, 2012 | Bankruptcy
Rules have been proposed by the Consumer Financial Protection Bureau to supervise large debt collectors and credit reporting agencies. The rule covers consumer debt collectors, including law firms, earning more than $10 million from the activity. This works out to 4 percent of consumer debt collectors but about 63 percent of annual receipts from the debt collection market. Consumer credit reporting agencies with more than $7 million in annual receipts are subject to supervision under the rule. This would cover about 30 agencies that account for about 94 percent of the business.
The CFPB has the authority to supervise non-banks of all sizes engaged in residential mortgage, payday lending and private education lending. The CFPB has the power to oversee larger participants providing other nonbank financial services.
The proposed rule would mean that those debt collectors and credit reporting agencies that qualify as larger participants are subject to the same supervision process that is applied to banks. Supervision is described as an inspection by the CFPB and submitting periodic reports, but the details are not spelled out in the draft rule. CFPB may also require companies to submit financial records and other documents to determine if they are subject to supervision.
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