Debt Deception?

Published — June 23, 2011 Updated — May 19, 2014 at 12:19 pm ET

Credit bureaus, auto-title lenders, debt collectors among priorities of new consumer agency

CFPB asks public to weigh in on which financial products should be included in new rule


The Consumer Financial Protection Bureau (CFPB) today indicated that it is focusing on debt collectors, auto-title lenders, consumer credit bureaus and prepaid card issuers as it prepares to take up its new regulatory powers.

A Debt Deception series of stories published by iWatch News is examining challenges facing the CFPB as it tries to rein in abusive and predatory lending practices that make it difficult for consumers to get out of debt.

Last month, the iWatch News project investigated how unregulated credit bureaus largely determine whether most Americans can qualify for mortgages, car loans, insurance, credit cards and other financial transactions. Some payday lenders, also now unregulated by the federal government, have affiliated with Indian tribes to claim sovereign immunity from lawsuits and regulation. But auto loans – typically the second-biggest debt held by most Americans – are specifically exempt from any CFPB regulation because of heavy lobbying by car dealers.

The Dodd-Frank financial reform law gave the CFPB authority to oversee how large banks, thrifts and credit unions comply with federal consumer regulations, as well as supervision of residential mortgage brokers and servicers, private education lenders and payday lenders. But for other financial services, the CFPB can regulate only those that are “a larger participant” as defined by the agency.

Companies that fall under the CFPB’s risk-based supervision may be required to register with the agency, submit periodic reports to regulators, and to comply with onsite examinations by CFPB employees.

“The examination of non-bank companies will be a crucial piece” of the CFPB agenda, said Elizabeth Warren, the presidential adviser and Harvard law professor overseeing the bureau’s start-up. “The CFPB will be able to examine companies that have never been subject to federal oversight to ensure that no one is gaining an unfair advantage by breaking the law.”

The agency must issue a final rule defining “larger participant” by July 21, 2012 — one year after it formally open its doors.

In a notice issued today, the CFPB asked consumers, industry groups and financial services experts to weigh in on how regulators should set a threshold size, and suggested that the following six consumer financial markets are among its top priorities:

  • Debt collection
  • Credit bureaus and consumer credit reporting
  • Auto-title loans, small-dollar installment loans and similar consumer credit lending
  • Money transfers and check cashing
  • Prepaid credit and debit cards, and store gift cards
  • Debt relief service companies

Consumers can offer their views by filling out an electronic form at, within CFPB docket No. CFPB-HQ-2011-2 .

Read more in Inequality, Opportunity and Poverty

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