How Does the Consumer Financial Protection Bureau Help People?
People have the right to be treated fairly and honestly by lenders. Borrowing terms should be easy to understand. When borrowers have a question or concern lenders should respond to them in a reasonable time and try to resolve issues. When lenders don’t follow these simple rules who can we turn to?
In 2008, financial markets crashed. No one in the country escaped the effects of the market crash and the Great Recession that followed. Average people, including older adults, were hurt the worst. Millions lost their jobs. Retirement account values plummeted. Housing prices plummeted. For the first time in modern history large numbers of homeowners, including many seniors, owed more on their homes than they were worth. Tens of thousands of people were unable to keep up with loan and credit card payments. Many lenders loaned people far more money than they could afford to pay. Loans were made with penalties and other traps buried in the fine print of loan agreements too hard for most people to understand. People wanted changes because no one was bailing them out of their financial troubles.
It was in this bleak atmosphere that Congress responded by enacting The Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank) in 2010. Part of Dodd-Frank created the Consumer Financial Protection Bureau (CFPB) to protect consumers from illegal and misleading lending practices. The CFPB website explains its goals this way: “We aim to make consumer financial markets work for consumers, responsible providers, and the economy as a whole. We protect consumers from unfair, deceptive, or abusive practices and take action against companies that break the law. We arm people with the information and stepstools that they need to make smart financial decisions.”
Many big banks, lenders, debt collection companies and their advocates in Congress want to dismantle the CFPB. But, are consumers being helped? Let’s look at the numbers. On July 21, 2016, the CFPB celebrated its fifth anniversary and published its report card. The CFPB has:
Provided $11.7 billion in relief to more than 27 million consumers. The CFPB made banks, credit card companies, payday lenders, for-profit colleges and debt collectors pay back to exploited consumers.
Handled nearly one million consumer complaints. Consumers have the right to be heard when they have a problem with a financial product or service. A consumer can submit a complaint to the CFPB about a company and it contacts the company for a response. In five years over 3600 companies have responded to the complaints filed by consumers with the CFPB. Not only does the CFPB contact the company and get a response, it publishes all complaints on its website. Having an advocate to get answers and a public forum to air complaints helps put consumers on a more equal footing with big companies.
Clarified and simplified loan disclosure forms. Consumers have the right to clear, reliable information about financial products and services so they can make informed decisions. The CFPB simplified and reduced loan disclosure forms for mortgages, student loans, auto loans, and other financial products and services to help consumers. Believe me, they are much better.
The CFPB is attacking abusive debt collection tactics. On July 28, 2016, the CFPB proposed new rules that would curb abusive debt collection practices. The CFPB reports abusive practices generated some 85,000 consumer complaints last year alone, more than any other issue. Many consumers report being harassed repeatedly to pay debts they don’t owe or have already
paid. Older adults file more complaints about abusive debt collectors than any other issue. The proposed rules would regulate how debt collectors can contact borrowers to collect debts and require them to substantiate that they have the right person before doing so. Current laws put no burden on debt collectors to verify the information they receive no matter how old. The rules would also make the process for disputing debts simpler.
Consumers now have an advocate with enough clout to make a difference. People can rely less on private attorneys to address disputes with lenders and debt collectors. The CFPB saves people money, opens the door for many who otherwise could not get help and gives people the power to stand up for their rights against big companies.
This article is not intended as legal advice. R. Kurtz “Kurt” Holloway is a partner in the law firm of Wells, Hoffman, Holloway & Medvesky, LLP.
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