More than 14 percent of consumers have one or more debts in collection. Debt collection, the business of recovering money owed on these delinquent accounts, can create economic value, but it can also be a source of abuse against consumers. In fact, nearly 50 percent of complaints about debt collectors obtained under the Fair Debt Collection Practices Act cite harassment.
Personal hardships such as divorce, family member death, illness or job loss are often the precursors to a household falling behind on debt payments. Without resources that explain people's rights and responsibilities when dealing with debt collectors, coercive collection tactics can easily pressure consumers into making decisions that aren’t in their best financial interests.
The Consumer Financial Protection Bureau, or CFPB, will change all that. For starters, the Bureau will work to help people understand their obligations as borrowers, as well as the protections available to them when they deal with all types of financial service providers, from debt collectors to credit card companies to mortgage lenders. Secondly, the Bureau will establish and enforce rules that put an end to unfair, deceptive, or abusive practices at the hands of these providers, many of which have never been regulated before.
To learn more about CFPB, the first-ever Federal agency charged with protecting American consumers, see:
- Consumer Financial Protection Bureau 101: Why We Need a Consumer Watchdog
- America's Consumer Watchdog: President Obama appoints Richard Cordray to head the Consumer Financial Protection Bureau
- Reining in Predatory Lenders with a Consumer Watchdog