Tag Archives: consumer financial protection bureau

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

American Express Settles Suit For $85 Million In Refunds

The Consumer Financial Protection Bureau isn’t really content to sit tight. The agency has passed new regulations and started waging suits against financial providers that run afoul of consumer protection laws, with charge card businesses being the very first in the firing line. After winning lawsuits against Discover and Capital One, American Express is the latest to settle with the Consumer Financial Protection Bureau, along with other agencies, and has agreed to refund $85 million to customers.

CFPB not happy with charge card corporations

The CFPB is not wasting much time getting stuck in and performing the job that it was created to do. Besides creating new regulations to better defend consumers and proposing reforms, it has also begun lodging lawsuits against financial service providers that have fallen afoul of regulations, in conjunction with other federal agencies.

Credit card corporations have thus far been first in the firing line. Suits involving the CFPB have been brought against Discover and Capital One, according to NBC News, both resulting in settlements in excess of $200 million, much of going to refunding customers.

Another lawsuit was just recently settled with American Express too, according to CBS. However, the lawsuit did not just consist of the CFPB. There were also complains from the Federal Reserve, regulators in Utah State, the Federal Deposit Insurance Company, and the Office of the Comptroller of Currency.

Cash handed back

American Express is in trouble for breaking multiple laws, including failing to report billing disputes and regulations about debt collection and reporting. It also charged late charges over legal limits and made false claims about rewards. Also, applicants over the age of 35 were discriminated against.

American Express decided to refund $85 million to consumers and pay $27.5 million in fines.

One issue was with subsidiary American Express Centurian Bank who never gave consumers the $300 reward promised for signing up for an American Express “Blue Sky” cad. CBS explained that the corporations were charging late fees based on a percentage too, according to CNN. The problem with that was that they were charging more than already established limits.

Though it is technically discrimination, one of the subsidiaries was using a credit scoring system that was depending on age.

Another issue with debt

At American Express and its subsidiaries, there were lies being told from 2003 until now, according to CBS. The lie was that customers could increase their credit ratings if they paid off debts older than 7 years. These debts do not even show up on a credit score after that time period.

In March 2013, about 250,000 people will get part of the $85 million concessions, according to NBC News.

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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

Probe By CFPB Of Capital One Results In $200M Fine

The Consumer Financial Protection Bureau has finally finished its first regulatory investigation. The investigation was conducted into credit card-related goods sold by distributors employed by Capital One, in an unlawful manner. The Consumer Financial Protection Bureau Capital One case has led to the bank spending more than $200 million in fines and restitution.

CFPB, Capital One resolve first enforcement by agency

The Consumer Financial Protection Bureau, despite its controversial beginnings and controversial appointment of a director, hasn’t really done much in the way of enforcement, besides proposing some rules and so forth, at least until now.

When the Consumer Financial Protection Bureau found that Capital One, a credit card issuer, was not very clear about who was selling what with its third-party distributors who were selling financial products to go with the cards. That was why the CFPB started the investigation and then the suit. The Wall Street Journal publicized that the bureau has finished enforcing its first motion against the business.

Poor target group

The bank also offers some additional services to go with having a Capital One charge card, according to ABC, which is sold through third-party distributors. Those services contain credit monitoring and payment protection, used if a person is injured or sick and cannot make a payment due to missing work. In that case a minimum payment is made on their behalf, a sort of insurance against missing a credit card payment.

If a customer called the call center to activate a card and had poor credit, it took at least 8 minutes to get through the call while listening to a lot of sales pitches from operators who would over exaggerate the service a ton. There was a ton of pressure in those phone calls to get the extra things. The typical consumer would only be on the phone for 2 minutes and did not have to listen to any sales pitches.

There were false promises from the operators, such as telling those without jobs that they could get a few payments from payment protection even though the customer would not really qualify. They would also promise that a credit rating would improve with the product.

Huge fines assessed

The probe concluded that Capital One, now part of ING, lost the ability to regulate what these distributors were selling and the way they were selling it to customers. As a result, Capital One has agreed to pay $210 million in fines. Of that, $25 million will go to the CFPB, a further $35 million will go the Office of the Comptroller of the Currency and $150 million will be paid in restitution to Capital One clients that had been deceived. The bank will even stop selling ancillary charge card products until it can ensure proper conduct.

Capital One dealt with a comparable case in England in 1997, according to ABC, which also require consumers to get paid out money. There will be 2.5 million corporations in the United States who will receive their money soon, according to USA Today. A Consumer Financial Protection Bureau investigation like this is being done with Discover Financial as well.

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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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