A year ago, Congress passed the Dodd-Frank Act, a comprehensive overhaul of the financial regulatory system, and President Obama signed it into law. The legislation grew out of the morass of financial gobbledygook that caused the Great Recession...credit default swaps, subprime mortgages, and the like. A new federal agency, the Consumer Financial Protection Bureau, was created under the Dodd-Frank Act. Harvard Professor Elizabeth Warren was a leading proponent of the new agency, championing the rights of consumers who are often faced with unintelligible fine print in financial transactions.
Warren has been at the helm of the CFPB in its infancy, creating and ramping up the agency in anticipation of its official launch on July 21, 2011. Due to political blowback, she won't be the director of the new agency; if confirmed, former Ohio Attorney General Richard Cordray will. Cordray has a solid history of standing on the side of the consumer, so it appears that the CFPB will be in good hands.
Historically, the Federal Trade Commission has been charged with overseeing the federal Fair Debt Collection Practices Act, which outlines what debt collection agencies can and cannot do in their attempts to collect on consumer debt. Under the Dodd-Frank Act, the FTC will now share those duties with the newly minted CFPB.
What does this mean to consumers? While nothing is certain, if a director is named to the new agency, the CFPB will likely begin the rulemaking process. The agency may put into place new rules that have the effect of bringing the FDCPA up-to-date. For example, the FDCPA, which was enacted in 1978, long before email, texting, social networks, and other technologies. It addresses debt collector communication with consumers via snail mail and telephone, but does not cover other types of communication.
The CFPB may also have a hand in urging Congress to raise the potential awards for consumers who win lawsuits against debt collectors who violate the FDCPA. Currently, consumers are entitled to up to $1,000 plus attorney fees. Often, debt collectors see this low amount as a nuisance, or as a cost of doing business. For many, the low dollar amount simply isn't a deterrent to bad behavior.
While the FTC collected and tracked complaints against debt collectors and led enforcement actions against the most grievous offenders, the agency was not allowed to make new rules. It's likely that the CFPB will be even more hands-on than the FTC. If Elizabeth Warren's vision is realized, the CFPB will be a one-stop shop for finance-related consumer complaints. Depending on the outcome of the political game being played about the directorship (44 Senate Republicans want to water down the agency, insisting that they will not confirm any director until the agency is led by a board of directors, rather than a single individual), consumers just may have a fighting chance against unscrupulous debt collectors, payday lenders, mortgage lenders, and other financial institutions.
Warren has been at the helm of the CFPB in its infancy, creating and ramping up the agency in anticipation of its official launch on July 21, 2011. Due to political blowback, she won't be the director of the new agency; if confirmed, former Ohio Attorney General Richard Cordray will. Cordray has a solid history of standing on the side of the consumer, so it appears that the CFPB will be in good hands.
Historically, the Federal Trade Commission has been charged with overseeing the federal Fair Debt Collection Practices Act, which outlines what debt collection agencies can and cannot do in their attempts to collect on consumer debt. Under the Dodd-Frank Act, the FTC will now share those duties with the newly minted CFPB.
What does this mean to consumers? While nothing is certain, if a director is named to the new agency, the CFPB will likely begin the rulemaking process. The agency may put into place new rules that have the effect of bringing the FDCPA up-to-date. For example, the FDCPA, which was enacted in 1978, long before email, texting, social networks, and other technologies. It addresses debt collector communication with consumers via snail mail and telephone, but does not cover other types of communication.
The CFPB may also have a hand in urging Congress to raise the potential awards for consumers who win lawsuits against debt collectors who violate the FDCPA. Currently, consumers are entitled to up to $1,000 plus attorney fees. Often, debt collectors see this low amount as a nuisance, or as a cost of doing business. For many, the low dollar amount simply isn't a deterrent to bad behavior.
While the FTC collected and tracked complaints against debt collectors and led enforcement actions against the most grievous offenders, the agency was not allowed to make new rules. It's likely that the CFPB will be even more hands-on than the FTC. If Elizabeth Warren's vision is realized, the CFPB will be a one-stop shop for finance-related consumer complaints. Depending on the outcome of the political game being played about the directorship (44 Senate Republicans want to water down the agency, insisting that they will not confirm any director until the agency is led by a board of directors, rather than a single individual), consumers just may have a fighting chance against unscrupulous debt collectors, payday lenders, mortgage lenders, and other financial institutions.
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