Wells Fargo reportedly has ceased sales of its customers' unpaid consumer loans to third-party debt collection agencies. The bank's move follows JPMorgan Chase's more drastic decision to freeze most of its credit card debt-sales activities. Sources say Wells Fargo appears to be reviewing its operations to ensure they comply with regulators' increasingly stringent guidelines for: the process through which banks sell defaulted credit card loans; who collections rights are sold to; and what data they provide to third-party debt collectors. The Office of the Comptroller of the Currency has put together a list of best practices and is working on more binding guidance, while the Consumer Financial Protection Bureau has pledged to crack down on debt-collection industry. The Federal Trade Commission is taking action on the matter as well, as are a number of state attorneys general. Consumer advocates believe the scrutiny will force other big banks to reconsider their debt-collection practices, especially with regard to how much documentation they retain and provide to third-party buyers. "I just don't think this [previous industry practice] can continue, and I think anyone who's stopping it [debt sales] realizes that after the mortgage robo-signing fiasco, there's potential reputational damage from continuing," remarked National Association of Consumer Advocates head Ira Rheingold. "The writing is on the wall."
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