In a post earlier this week, I blogged about the inception and purpose of the Consumer Financial Protection Bureau (“CFPB”). When creating this agency the federal government required the submission of an annual report on the Fair Debt Collection Practices Act (“FDCPA”) explaining the agency’s progress on supervising the entire collection industry. In an effort to better achieve its consumer minded goals, the agency adopted the “large participant” rule to protect consumers from the strong arm of collectors. Under this newly adopted rule, any third-party debt collector, debt buyer and/or collection attorney with more than $10 million in annual receipts from consumer debt collection activities will be subject to the supervision of the CFPB.
The “large participant” rule essentially grants the CFPB authority over approximately 175 of the nation’s 4,000 consumer debt collection agencies, accounting for 60% of the industry’s total annual debt. Accordingly, the CFPB will use its newly granted authority to assess risks to consumers and more closely monitor whether the collection industry is adhering to the laws of the FDCPA. Based on complaints received by consumers, the CFPB plans to focus its efforts on four areas of concern requiring collectors to provide required disclosures, provide accurate information to consumers during the collection process, create a consumer complaint and dispute resolution process and to communicate respectfully and openly with consumers.
Included in the supervision of these 175 collection agencies are three types of businesses: companies that may buy defaulted debt and collect the proceeds for themselves; companies that may collect defaulted debt owned by another company in return for a fee; and collection attorneys that collect through litigation. The rule will require these entities to submit reports to the CFPB and subject themselves to random investigations by the agency.