A new draft rule proposed today would allow the Consumer Financial Protection Bureau to supervise the largest consumer credit reporting agencies and debt collection companies in the same manner that the government supervises big banks.
The director of the agency, Richard Cordray, issued a statement explaining the move, which is by most accounts the most aggressive so far.
The proposal will undergo a sixty-day comment and review period, and will in all likelihood go into effect in July. That marks the two year anniversary of the CFPB, which only recently was able to truly begin its work due to opposition by Republicans who would not allow President Obama to seat a chairman until January of this year.
Debt collector companies affected by this ruling number about 175, and are determined by those who pull in over $10 million a year from consumer collections. This is a majority of the industry. For consumer reporting agencies, the number is about thirty firms and include those making over $7 million a year.
There are far fewer credit reporting agencies than debt collection firms, which means that almost all of them will fall under this new scrutiny.
This is good news for people trying to get out of debt, especially when it comes to enhanced regulation of collection agencies. While fairly decent procedures have been in place for years allowing consumers to correct erroneous information on their credit reports, bill collection has been nothing short of the wild west.
If you are being hounded by creditors who have sold your debt to bill collectors, remember that simply threatening to report them to the government can be a deterrent to harassment. Hopefully, now that the CFPB is going all-in with their enforcement, these threats won’t be hollow.