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New Rules Proposed for Debt Collectors and Reporting Agencies
The Consumer Financial Protection Bureau (“CFPB”) announced a proposed rule on Feb. 16, 2012 to include debt collectors and credit reporting agencies under its nonbank supervision program. These consumer financial market participants are not currently subject to federal supervision.
The proposed rule includes law firms and covers consumer debt collectors earning more than $10 million from the activity. Based on available data, the CFPB estimates that the proposed rule would cover approximately 175 debt collection firms ' or 4% of debt collection firms ' and that these firms account for 63% of annual receipts from the debt collection market.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, authorizes the CFPB to supervise nonbanks in the specific markets of residential mortgage, payday lending, and private education lending. In addition, for other nonbank markets for consumer financial products or services, the CFPB has the authority to supervise “larger participants.” As directed by Dodd-Frank, the Bureau must define such “larger participants” by rule, and an initial such rule must be issued by July 21, 2012. Last summer, the CFPB sought public comment about possible markets to include in the initial rule and available data sources the Bureau could use to define larger participants in nonbank markets.
According to the CFPB, debt collectors and consumer reporting agencies affect about 30 million American consumers with an average debt under collection of $1,400. There are three main kinds of debt collection firms dominating the market: firms that collect debt owned by another company in return for a fee; firms that buy debt and collect the proceeds for themselves; and debt collection attorneys and law firms that collect through litigation. A single company may collect through any or all of these activities.
Under the proposed rule, consumer reporting agencies with more than $7 million in annual receipts from consumer reporting activities would be subject to supervision. This would include approximately 7% of consumer reporting agencies based on the CFPB's available data. The proposed threshold would allow the Bureau to cover about 30 consumer reporting agencies. The CFPB estimates that these 30 companies account for about 94% of the annual receipts from consumer reporting.
This is the CFPB's first in a series of rulemakings to define larger participants. The CFPB chose annual receipts as the criterion for both debt collection and consumer reporting because it approximates market participation in these two markets. As the CFPB adds new markets, it will choose the best criteria and the appropriate thresholds for each market.
The proposed rule can be found at www.consumerfinance.gov/notice-and-comment/. It is open for comment until April 17, 2012.
The Consumer Financial Protection Bureau (“CFPB”) announced a proposed rule on Feb. 16, 2012 to include debt collectors and credit reporting agencies under its nonbank supervision program. These consumer financial market participants are not currently subject to federal supervision.
The proposed rule includes law firms and covers consumer debt collectors earning more than $10 million from the activity. Based on available data, the CFPB estimates that the proposed rule would cover approximately 175 debt collection firms ' or 4% of debt collection firms ' and that these firms account for 63% of annual receipts from the debt collection market.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, authorizes the CFPB to supervise nonbanks in the specific markets of residential mortgage, payday lending, and private education lending. In addition, for other nonbank markets for consumer financial products or services, the CFPB has the authority to supervise “larger participants.” As directed by Dodd-Frank, the Bureau must define such “larger participants” by rule, and an initial such rule must be issued by July 21, 2012. Last summer, the CFPB sought public comment about possible markets to include in the initial rule and available data sources the Bureau could use to define larger participants in nonbank markets.
According to the CFPB, debt collectors and consumer reporting agencies affect about 30 million American consumers with an average debt under collection of $1,400. There are three main kinds of debt collection firms dominating the market: firms that collect debt owned by another company in return for a fee; firms that buy debt and collect the proceeds for themselves; and debt collection attorneys and law firms that collect through litigation. A single company may collect through any or all of these activities.
Under the proposed rule, consumer reporting agencies with more than $7 million in annual receipts from consumer reporting activities would be subject to supervision. This would include approximately 7% of consumer reporting agencies based on the CFPB's available data. The proposed threshold would allow the Bureau to cover about 30 consumer reporting agencies. The CFPB estimates that these 30 companies account for about 94% of the annual receipts from consumer reporting.
This is the CFPB's first in a series of rulemakings to define larger participants. The CFPB chose annual receipts as the criterion for both debt collection and consumer reporting because it approximates market participation in these two markets. As the CFPB adds new markets, it will choose the best criteria and the appropriate thresholds for each market.
The proposed rule can be found at www.consumerfinance.gov/notice-and-comment/. It is open for comment until April 17, 2012.
Major Differences In UK, U.S. Copyright Laws
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The Article 8 Opt In
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Strategy vs. Tactics: Two Sides of a Difficult Coin
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Removing Restrictive Covenants In New York
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