Obama Administration puts debt collectors under federal supervision for first time in history
Debt collectors are notorious for using hard knuckled tactics to get consumers to pay their debts. Most recently, a disabled veteran was told by a debt collector that he should’ve died in the war since he couldn’t pay his debt. But for the first time in American history, the debt collectors are coming under federal control. Meaning that very soon, debt collectors will be monitored by a federal government agency.
Starting in January, the Consumer Financial Protection Bureau (CFPB) will oversee large debt collection agencies and work to prevent the use of aggressive tactics against Americans struggling to pay off loans and other monies they owe. About 30 million Americans are currently being pursued by debt collectors, with the average amount coming in at $1,500.
The biggest question is what kind of latitude the CFPB will have over the debt collectors and whether the organization will have any real power. Many people believe that if the agency had been headed up by Elizabeth Warren, who is now running for Senate in Massachusetts, the administration would’ve had a much better chance at being effective.
President Obama passed Warren over for a leadership position at the new agency.
Richard Cordray, the CFPB’s director, said, “Sometimes collection methods involve harassment or deception, and they are typically illegal. Intimidation, abusive tactics, profane language, or threats of arrest are widely known to be out of bounds. Even placing certain kinds of calls–such as calls at unusual hours–is unacceptable and against the law. Wherever we find unlawful practices, we will take steps to eliminate them, thereby helping to protect consumers and, again, supporting those collectors that take care to comply with the law.”