Federal Consumer Agency Ponders Its Next Crusades

January 10, 2014
New York Times 
The Consumer Financial Protection Bureau (CFPB) has made strides in recent months, winning billions of dollars in settlements from bad actors in the financial sector and putting in place new mortgage rules meant to keep borrowers in homes they can afford. Its authority will be tested going forward, however, as it tackles sticky issues on which industry will likely push back.

Among the challenges ahead, Ed Mierzwinski of U.S. PIRG believes forced arbitration may be most important. Millions of Americans, he says, are "ripped off" as a result of this contract clause that compels borrowers to waive their right to sue. Meanwhile, because banks have not completely reformed the practice of charging overdraft fees without consumer consent -- despite a 2010 Federal Reserve rule prohibiting this -- CFPB advisory board member Adam Levitin points to overdrafts as another area of focus. "Consumer advocates would like to see overdraft fees regulated to limit the number of times fees can be applied, how the fees are calculated and to have fees related to the amount of the overdraft," he says.

The regulator also may target debt collection in 2014, having received tens of thousands of complaints about this issue -- especially from people being pursued for money they claimed not to owe. "We want more information throughout the process, but we also want everyone in the process to be responsible to pass all of that information to the next buyer or collector of debt," notes the National Consumer Law Center's Margot Freeman Saunders. "There are no rules on the books like that right now."

Other problems that could draw CFPB action this year included unfair and abusive practices in the student lending sector; credit report disputes; and prepaid cards, which consumer advocates complain are basically becoming unregulated credit products.

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