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Finance

Feds Seek To Limit Debt Collector Use Of Social Media

Some banking institutions and debt collection agencies are taking to the social media to track down those who owe or to lure brand new customers. Regulators in Washington are putting a microscope on the methods.

Ways to keep away from rules

The Fair Debt Collections Practices Act, established more than 30 years ago, protects consumers from many abusive collection practices. However, those laws were established long before there was such a thing as the Internet or social networking. Therefore, the laws have been spongy on the matter.

The Association of Credit and Collection Professionals is an international trade association that Mark Schiffman is part of. He explained that member businesses should not use social media as the rules are not clear.

Not everyone states no to social media

Not every collector listens to the advice.

Lawyer Billy Howard spoke with author Carl Dougherty about the methods of some debt collectors for a piece in Bloomberg.

“You get a friend request from some chick in a bikini,” Howard said. “You say yes, and then somebody says ‘by the way, I’m a debt collector.'”

Some say the practice at times borders on stalking or harassment.

Problem on a federal standard

This issue has been noted by the Federal Trade Commission and Consumer Financial Protection Bureau. The agencies will decide if collectors can use LinkedIn, Facebook and other social online websites to contact consumers.

The federal organizations have already laid down rules for debt collection businesses, regulating aggressive rhetoric, making sure consumers are kept updated on any legal actions, and also making it easier for consumers to register complaints.

Financial institutions also in trouble

Meanwhile, The U.S. Federal Banking institutions Examination Council is urging the public to weigh in on its proposed guidance, seeking to lay down limitations for how banking institutions can use social networking in attracting business. To view that guidance, go to:

Their website

The Consumer Financial Protection Bureau points out that 30 million Americans are being pursued by collectors, and about $12 billion in revenue is made in the Accounts Receivable Management industry annually. That a ton of cash and a ton of abuse.

Do not be afraid to speak up

Get a hold of the Consumer Financial Protection Bureau for FTC if you feel you have been harassed by debt collectors.

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Finance

Further Consumer Bureau Row Caused By Credit Card Hotline

The latest fight over the Consumer Financial Protection Bureau involves a credit card hotline. The bureau would be able to act on information that was garnered directly from people that would be compiled in a database and would be acted on if and when the bureau felt it would be fitting. However, that is the kind of in-formation is effortlessly misused, which is why banks and card issuers want some restraints placed on how it can be used. This would help keep all pay day loan data private.

Credit cards to get crowdsourcing penalties

The latest issue of contention concerning the beleaguered Consumer Financial Protection Bureau is a credit card hotline that would be used to gather grievances about charge card issuers from customers, according to Daily Finance. The Bureau would take the data customers call in with reporting a business and give it to the states. The basic idea is that the data would be crowdsourcing for complaints. Card issuers could easily get fines from government officials without even considering what the grievances are about. Most banks and card is-suers are hoping to keep the complaints private. That means the data would stay between the financial institution, the government agency and the person who complained instead of having a public database.

Keeping data hidden

The flow of data can hurt banks a lot, which is they are fighting for private data. When the Consumer Financial Protection Bureau begins on July 21, so will the complaint line. The line is set up so the information can be seen by everyone who wants to see it. That means complaint data can effortlessly be accessed. Though it may seem that banks and card issuers want to keep this data from the public to keep everybody from seeing the dishonest practices they engage in, there’s a fair point to consider; some people are apt to complain about fees regardless of whether those fees were fairly levied. A way to get infor-mation straight from the public is certainly admirable, but without restraint it can effortlessly be used inappropriately.

How the future is looking

The Consumer Financial Protection Bureau will have authority to regulate, to some extent, vir-tually all manners of consumer finance like credit cards, mortgages, payday loans, debit cards and so on. However, the existence of the organization has brought on a fight in Congress to break out. Reuters states that there were three bills introduced to limit the bureau recently including two on the director. One bill would keep the CFPB from taking on regulatory activity from other agencies until it has a ded-icated director and another would replace the current structure from having a single director to having a five member panel. The majority of the Republicans don’t like the idea of Warren directing the bureau. She has helped get it set up as an adviser to the White House. The bureau may not really start in July as anticipated.

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Finance

Credit Cards Factor The Most Into Credit Scores

The CFPB has launched a brand new study on credit reports that figure out a consumers’ capability to get credit. According to the report, how a consumer uses his or her credit card is the most telling factor in getting a score.

Prove credit worthiness

Most people are not surprised by the fact that credit scores are impacted by charge cards. There are ways to use your card to be able to make it easier next time you need a loan for your car or your mortgage.

Richard Cordray is the Consumer Financial Protection Bureau director. He explained: “Credit cards are given great weight in credit profiles — a lesson that consumers could end up learning the hard way.”

Credit card companies provide more than half of the data that helps support a credit score.

Cordray said that during the holiday season some customers may be tempted to fill out a new retailer charge card application in order to obtain a discount on gift purchases. However, if they do not use that card in a responsible way, such as paying down all charges each month, they could find themselves easily falling into a debt spiral. He said, “it could end up costing a lot more down the line when they go take out a mortgage and that credit card is a black mark on their credit report.”

Hard on consumers

With the economy still not up to speed, there are a ton of troubles with money. There is high unemployment, stagnant wages, increased costs and more. That means many consumers are using charge cards for daily expenses instead of just for emergencies. American customers have not been able to stop during the economic downturn.

The CFPB teaching could be needed after all. About 40 percent of all low- to middle-income families use charge cards to pay daily expenditures such as food, rent and clothing, according to the CRL.

Help from government

One the other hand, many Americans have managed to lower high credit card balances in the recession’s aftermath. Much of that, however, can be attributed to credit card reforms, say some analysts. The Credit card Accountability Responsibility and Disclosure Act of 2009 eliminated or restricted many predatory lending practices, such as high penalties and fuzzy fee structures.

Make sure you Stay informed

Americans also fall down with regards to staying informed of their credit standing. According to the Consumer Financial Protection Bureau, less than 20 percent of consumers bother to get copies of their credit rating. Frequent monitoring of credit reports allows consumers to identify any reporting errors or incidents of fraud before being blindsided with the news when they go to take out a sizable loan.

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Finance

Debt Collection Agencies Now Under CFPB Supervision

Starting in Jan, debt collection agencies will be under the supervision of the Consumer Financial Protection Bureau. Many have been waiting for the Consumer Financial Protection Bureau to bring that industry in, but time will tell if it is important.

Taking care of good guys with CFPB

There is a ton of hatred in the debt collectors business, which they most likely deserve considering some of the things collectors do. Though there are good debt collectors out there, there are a ton of bad apples that give the industry a bad name.

In 2011, over 180,000 grievances were made about debt collectors to the Federal Trade Commission, according to the New York Times. That is a ton of growth from 2000 when it was only 13,950 grievances. Much of the bad activity is definitely with smaller firms since only 21 percent of grievances to the FTC were from the top 100 debt collectors.

Many have been waiting for the Consumer Financial Protection Bureau to bring in the industry’s practices and curb abuses and the agency has informed debt collectors that there is a brand new sheriff in town.

Getting guidelines in January

The Consumer Financial Protection Bureau will be in charge of debt collectors officially on January 2, 2013 and will make sure debt collectors are honest and civil in their communications with people. People should always pay their personal loans and other debt, but they also should not be abused when they neglect to. Agencies will have to reconsider their debt practices.

The CFPB is authorized under the Dodd-Frank Act, which created the bureau and its mandate, to regulate “non-bank financial institutions” which deal with consumers.

The only problem with it all is that small businesses are off the hook since only businesses with $10 million or more in annual receipts are being viewed, according to the Washington Post. The New York Times points out that it is still going to be $12.2 billion a year viewed and about 63 percent of business, which is great. However, only 175 of the 4,500 debt collectors are represented in that number.

Get the industry taken care of

It is unknown if this will actually help the customers. Though the top 100 accounted for 21 percent of grievances, that is also a lower rate of complaint; roughly 5 per 1 million people, than for other industries, according to Forbes.

The Consumer Financial Protection Bureau is working on further rules to regulate the industry, but as Forbes points out, regulating the top players is not as pressing as it might seem. By virtue of being the largest firms, they work with the largest creditors, which mean much tighter scrutiny over practices.

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