CFPB Supervision Authority Expands to Debt Collectors

The Consumer Financial Protection Bureau (CFPB) has finalized a rule that will put debt collection agencies under federal supervision for the first time. The rule gives the CFPB supervisory authority over larger consumer debt collectors, or firms that have more than $10 million in annual receipts from consumer debt collection activities, and will take effect Jan. 2, 2013. “Millions of consumers are affected by debt collection, and we want to make sure they are treated fairly,” said CFPB Director Richard Cordray.  "We are announcing that we will be supervising the larger debt collectors in the market for the first time at the federal level. We want all companies to realize that the better business choice is to follow the law—not break it.”  Under the rule, the CFPB’s authority will extend to about 175 debt collectors, which account for 60 percent of the industry’s annual receipts in the consumer debt collection market, the CFPB stated. Pursuant to the CFPB’s authority, examiners are expected to assess for compliance with federal consumer financial law, including the quality of compliance management systems and review process, and potential risk to consumers. The CFPB also released a field guide examiners are expected to use to ensure that companies and banks engaging in debt collection are following the law.