House Pushes CFPB Reform, But to What End?

The House of Representatives passed a resolution Wednesday permitting floor debate on a bill that would overhaul the leadership structure of the Consumer Financial Protection Bureau. HR 3193, sponsored by Rep. Sean Duffy (R-Wisc.), would create a five-member commission to lead the Bureau and submit the CFPB to the Congressional appropriations process.

In addition, the bill would align the pay rates for bureau employees with the pay schedule of other federal employees, require the CFPB to get permission from consumers before collecting financial information, mandate that the Bureau consider the “financial safety and soundness” of financial institutions during the rulemaking process and give the Financial Stability Oversight Council the ability to overrule any CFPB rules with a majority vote.

The House is currently in recess until February 24, so it’s unlikely that debate or a vote on the bill will happen before then. The bill is expected to pass along party lines. ACA International released a bulletin detailing the future of HR 3193 and its impact on the CFPB.

But once the bill clears the House, it basically has no future. The Senate is as likely to take up the bill as it is to take up one of the 47 House bills repealing the Affordable Care Act. And the White House has already clearly stated that President Obama will veto the bill if it ever reaches his desk. White House Press Secretary Jay Carney held a press briefing Tuesday to criticize House Republicans for pushing such partisan legislation.

“Since its creation, the CFPB has put in place safer national mortgage standards to protect borrowers; begun to implement protections governing non-mortgage products; improved disclosure requirements so that consumers are better informed; created a national consumer complaint center that has handled nearly 270,000 consumer complaints to date; secured more than $3 billion in relief for nearly 10 million consumers through enforcement actions against bad actors who violated the law; and established federal oversight of important financial industries for the first time, including non-bank mortgage lenders, payday lenders, debt collectors, and credit-reporting agencies,” Carney said. “We should be working together to continue the progress that we’ve made.”

So as it stands, the CFPB isn’t going anywhere any time soon, and the debt collection industry needs to be on guard for its growing supervisory role. One of the “hottest” issues the CFPB is monitoring in the debt collection industry is compliance with UDAAP: Unfair, Deceptive or Abusive Acts and Practices. In the past two years, the Bureau has taken a number of high-profile enforcement actions against collectors and creditors that had UDAAP violations.

For example, in 2012, the CFPB found that American Express lied about consumer debts to obtain payments in the collection process. The Bureau fined American Express $27.5 million and forced the company to pay restitution of $85 million. And recently, in December 2013, the CFPB took its first action against an online loan servicer (CashCall) – and an affiliated debt collection agency (Delbert Services Corporation) – arguing that the companies violated UDAAP and collected money consumers did not owe.

Learn more about why UDAAP compliance matters – and how to master it – with our new report, Compliance Overview: UDAAP. Get the top 10 compliance tips, sourced from industry experts, to make sure your agency and vendors are keeping up with UDAAP requirements (pg. 6). Use our comprehensive checklists to ensure your compliance management system goes above and beyond the requirements for a CFPB examination (pg. 16). This is a resource no company should be without!

Also, as the CFPB ramps up enforcement actions and audits across the board, from creditors to debt buyers to collection agencies themselves, don’t miss our timely webinar from insideCompliance: How to Survive a CFPB Audit, on Tuesday, February 25 at 2 p.m. Eastern with Nicole Strickler of Messer & Stilp Ltd. Getting organized early can help avoid confusion when the CFPB asks to see your policies; it may even reduce the odds of the Bureau setting up an in-house presence during the exam. Learn from real-world examples about how the CFPB measures accountability, so you can do the same.