The Consumer Financial Protection Bureau and The Larger Participant Rule
Posted: Wednesday, April 10, 2013
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
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.
If you have been the victim of
abusive collection tactics and are interested in a free case review, contact SmithMarco P.C.