The nation's consumer financial watchdog is stepping up its oversight of debt collection companies.
On Wednesday, the Consumer Financial Protection Bureau (CFPB) announced that it sent notices warning companies that they could be held accountable for illegal behavior.
The agency also published letters for consumers to consult when they correspond with debt collectors, and will begin to accept complaints from people who feel they have been treated unfairly."Consumers need to know that they have someone who will stand on their side, and we want to ensure them the dignity of being treated fairly, even in adverse economic conditions," CFPB Director Richard Cordray said at a field hearing in Portland, Maine, according to prepared remarks.
He added, "There is no reason why debt collectors cannot treat consumers with dignity and respect, even as businesses are able fairly to collect the money that is actually due to them."
The CFPB is considering whether to issue new regulations for debt collection.
Banks and financial institutions can collect their own debt, hire an outside company to collect it or sell the debt to a third-party company.
An estimated 30 million consumers deal with a portion of the debt-collection industry and hold an average of about $1,400 in debt each.
In January, the CFPB first started to supervise debt firms that collect more than $10 million each year.
"We recognize that debt collectors represent a wide spectrum of firms," Cordray added, and said they are "an essential part" of the credit market.
In the two bulletins published on Wednesday, the CFPB clarified how deceptive practices about a consumer's debt or credit information can violate the law.
Among the illegal practices the notices warn against are threatening action against consumers that the company cannot pursue, falsely representing information about a consumer's debt and how it can be waived and improperly posting payments to a debtor's account.
"Illegal practices by anyone harm consumers, erode consumer confidence, and undermine fair competition by responsible providers in the financial marketplace," said Cordray.
Consumers who think that a debt-collection company they are dealing with might be violating the law will be able to report complaints to the CFPB.?
The agency expects that companies respond to most complaints within 90 days with a plan to resolve the issue.
The announcement comes a day after the Federal Trade Commission announced a record $3.2 million agreement with the world's largest third-party debt collection firm.?
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