Gov't consumer watchdog to oversee debt collectors
WASHINGTON (AP) — Expanding its reach, the government's consumer finance watchdog agency will monitor the day-to-day operations of big debt-collection companies, the agency said Wednesday.
It is the first time that debt collectors have been subject to federal scrutiny of their routine business practices.
The move lengthens the list of industries that face oversight by the Consumer Financial Protection Bureau. The agency was set up after the financial crisis to protect consumers from misleading marketing, unfair fees and other harmful practices.
Debt collectors have long been criticized for hard-knuckled tactics like calling the employers of people who fail to repay debts or filing lawsuits against people who owe relatively little money. Some of the practices may violate federal disclosure rules and protections against harassment and intimidation.
About 30 million Americans have, on average, $1,500 of debt that is subject to the debt-collection industry, the agency said. That information often is reported to credit bureaus, so debt collectors can affect a person's ability to finance a car or the rate she pays on a mortgage.
The bureau already supervises mortgage companies, private student lenders and payday lenders. Those industries were placed under its watch in the 2010 overhaul of financial laws, which established the agency.
Debt collectors are the second group, after credit bureaus, that the agency is choosing to include in its supervision program. The CFPB started overseeing credit bureaus last month.