Starting in Jan, debt collection companies will be under the direction of the CFPB. Many have been waiting for the CFPB to bring that market in, but time will tell if it makes a difference.
Taking care of good guys with CFPB
Few classes of companies are as reviled as debt collectors. Though many are reasonable enough and upstanding companies, the bad apples, as with any business or group of any sort, give the industry a bad name. Given some of their behavior, they possibly have it coming.
In 2011, over 180,000 grievances 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 grievances. Most of the bad activity is definitely with smaller firms since only 21 percent of complaints to the Federal Trade Commission were from the top 100 debt collectors.
The Consumer Financial Protection Bureau has finally publicized that it is prepared to bring in the industry's behavior, which many people have been waiting for.
Getting guidelines in January
The Consumer Financial Protection Bureau will be in charge of debt collectors officially on January 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. Agencies will need to reconsider their debt practices.
The Dodd-Frank Act created the bureau and is what allows the Consumer Financial Protection Bureau 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 annual receipts, or about 175 of the 4,500 debt collection companies operating nationwide. However, they also represent 63 percent of the business done by the industry, which according to the New York Times makes up roughly $12.2 billion per year as a whole.
Not all that bad
It is unknown if this will actually help the consumers. Though the top 100 accounted for 21 percent of complaints, that is also a lower rate of complaint; roughly 5 per 1 million people, than for other industries, according to Forbes.
It is not worth regulating top players considering they do not account for the majority of the issues, though the Consumer Financial Protection Bureau is still working on extra rules for the industry. There is more scrutiny with practices because they are the largest creditors and largest firms.
Taking care of good guys with CFPB
Few classes of companies are as reviled as debt collectors. Though many are reasonable enough and upstanding companies, the bad apples, as with any business or group of any sort, give the industry a bad name. Given some of their behavior, they possibly have it coming.
In 2011, over 180,000 grievances 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 grievances. Most of the bad activity is definitely with smaller firms since only 21 percent of complaints to the Federal Trade Commission were from the top 100 debt collectors.
The Consumer Financial Protection Bureau has finally publicized that it is prepared to bring in the industry's behavior, which many people have been waiting for.
Getting guidelines in January
The Consumer Financial Protection Bureau will be in charge of debt collectors officially on January 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. Agencies will need to reconsider their debt practices.
The Dodd-Frank Act created the bureau and is what allows the Consumer Financial Protection Bureau 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 annual receipts, or about 175 of the 4,500 debt collection companies operating nationwide. However, they also represent 63 percent of the business done by the industry, which according to the New York Times makes up roughly $12.2 billion per year as a whole.
Not all that bad
It is unknown if this will actually help the consumers. Though the top 100 accounted for 21 percent of complaints, that is also a lower rate of complaint; roughly 5 per 1 million people, than for other industries, according to Forbes.
It is not worth regulating top players considering they do not account for the majority of the issues, though the Consumer Financial Protection Bureau is still working on extra rules for the industry. There is more scrutiny with practices because they are the largest creditors and largest firms.
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