CFPB to target debt collectors and credit reporting agencies

CFPB to target debt collectors and credit reporting agencies

The new Consumer Finance Protection Bureau (CFPB) under the 2010 Dodd-Frank Finance Reform Law has proposed regulations that would let it examine the books of debt collectors and consumer reporting businesses as part of its program to supervise non-bank financial companies.

Our 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 we apply to the banks, said CFPBs director, Richard Cordray.

The regulation, which must be finalized by July 21, 2012 would bring credit bureaus such as Experian Plc (EXPN), Equifax Inc. (EFX) and TransUnion Corp (TRUN) under federal supervision for the first time. The proposal would cover, also for the first time at the federal level, debt collectors such as Asset Acceptance Capital Corp. (AACC), Portfolio Recovery Associates Inc. (PRAA) and Encore Capital Group Inc. (ECPG)

The new regulations would allow the CFPB to examine records and collect data from companies, and levy law enforcement actions if regulators find violations of the Fair Debt Collection Practices Act or the Fair Credit Reporting Act.

Under the CFPB proposal, debt collectors with more than $10 million in annual receipts from collection activities and new consumer credit reporting companies with more than $7 million in annual revenues will face supervision by the consumer bureau. CFPB says that would cover about 175 debt collection companies and 30 credit reporting companies.

As noted, the Finance Reform law requires the CFPB to issue a rule by July 21, on what larger participants in the non-bank consumer financial services market it will supervise. The bureau began examination of banks with assets above $10 billion on consumer issues on July 21, 2011.

Dodd-Frank directs CFPB to supervise mortgage originators, payday lenders and student loan companies. That program began on Jan. 5 of this year shortly after President Obama installed Cordray as the bureaus first director. The CFPB requested public comment via The Federal Register on the proposal to supervise debt collectors and credit reporters, the record for which remains open for another few weeks.