Starting in January, debt collection agencies will be under the supervision of the CFPB. Many have been waiting for the Consumer Financial Protection Bureau to bring that industry in, but time will tell if it is important.
Taking care of good guys with CFPB
There is a lot of hatred in the debt collectors business, which they probably deserve considering some of the things collectors do. Though there are good debt collectors out there, there are a lot of bad apples that give the market a bad name.
In 2011, over 180,000 complaints were made about debt collectors to the Federal Trade Commission, according to the New York Times. That is a lot of growth from 2000 when it was only 13,950 complaints. Most of the bad activity is clearly with smaller firms since only 21 percent of complaints to the FTC were from the top 100 debt collectors.
Many have been waiting for the CFPB to bring in the industry's practices and curb abuses and the agency has informed debt collectors that there is a new sheriff in town.
New guidelines starting in January
The CFPB will be in charge of debt collectors officially on Jan 2, 2013 and will make sure debt collectors are honest and civil in their communications with people. People should always pay their personal loans and other debt, but they also should not be abused when they neglect to. Companies will have to reconsider their debt practices.
The Dodd-Frank Act produced the bureau and is what allows the CFPB to deal with non-bank financial institutions.
However, the direction doesn't bring even the majority of debt collectors under its purview. CFPB supervision, according to the Washington Post, will cover those with $10 million or more in yearly receipts, or about 175 of the 4,500 debt collection agencies operating nationwide. However, they also represent 63 percent of the business done by the market, which according to the New York Times makes up roughly $12.2 billion per year as a whole.
Not as poisonous as it seems
According to Forbes, about 5 in every one million people complain even though the top 100 businesses only accounted for 21 percent of grievances. There are not that many complaints despite the bad news of debt collection agencies.
The Consumer Financial Protection Agency is working on further rules to regulate the market, but as Forbes points out, regulating the top players is not as pressing as it might seem. By virtue of being the largest firms, they work with the largest creditors, which mean much tighter scrutiny over practices.
Taking care of good guys with CFPB
There is a lot of hatred in the debt collectors business, which they probably deserve considering some of the things collectors do. Though there are good debt collectors out there, there are a lot of bad apples that give the market a bad name.
In 2011, over 180,000 complaints were made about debt collectors to the Federal Trade Commission, according to the New York Times. That is a lot of growth from 2000 when it was only 13,950 complaints. Most of the bad activity is clearly with smaller firms since only 21 percent of complaints to the FTC were from the top 100 debt collectors.
Many have been waiting for the CFPB to bring in the industry's practices and curb abuses and the agency has informed debt collectors that there is a new sheriff in town.
New guidelines starting in January
The CFPB will be in charge of debt collectors officially on Jan 2, 2013 and will make sure debt collectors are honest and civil in their communications with people. People should always pay their personal loans and other debt, but they also should not be abused when they neglect to. Companies will have to reconsider their debt practices.
The Dodd-Frank Act produced the bureau and is what allows the CFPB to deal with non-bank financial institutions.
However, the direction doesn't bring even the majority of debt collectors under its purview. CFPB supervision, according to the Washington Post, will cover those with $10 million or more in yearly receipts, or about 175 of the 4,500 debt collection agencies operating nationwide. However, they also represent 63 percent of the business done by the market, which according to the New York Times makes up roughly $12.2 billion per year as a whole.
Not as poisonous as it seems
According to Forbes, about 5 in every one million people complain even though the top 100 businesses only accounted for 21 percent of grievances. There are not that many complaints despite the bad news of debt collection agencies.
The Consumer Financial Protection Agency is working on further rules to regulate the market, but as Forbes points out, regulating the top players is not as pressing as it might seem. By virtue of being the largest firms, they work with the largest creditors, which mean much tighter scrutiny over practices.
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