The CFPB has a mandate to educate consumers about their rights and remedies in the collection area, as well as many others. I believe that reforming, modernizing, unifying and publicizing rules that protect debtors from unreasonable collection tactics are among the Bureau's most important tasks. No matter how competent any regulatory organization may be, no one is capable of protecting you better than you… as long as you know your rights. (I believe everyone should read "Debt Collection Answers" by Credit.com expert Gerri Detweiler and Mary Reed—though worth its weight in gold, it's priced as if it were paper.)
4. Prosecute the Law Breakers
The CFPB will no doubt come across countless debt collectors and scammers posing as debt collectors who may be guilty of brazenly breaking the law. The CFPB must have a close working relationship with the Department of Justice to ensure that these people are brought to justice. For example, the proliferation of overdue debt and the concomitant growth in the debt collection industry has spawned a truly vicious new kind of scam which exploits the fear and confusion of many Americans who are at the moment financially weakened. In 2009, the Better Business Bureau put out an emergency alert warning people about debt collectors who were harassing people who had no bad debt as part of an identity theft scheme. The reason that these attacks work is because the criminal is already in possession of enough information about the alleged "debtor" so as to terrify the target on the other end of the phone. No agency of any government is today equipped to assuage this problem; only a highly directed, broadly empowered, fully fanged and funded Consumer Financial Protection Bureau can handle this one.
5. Protect the Privacy of Debtors
The scam artists who try to collect those phony debts are able to do so because the personal information of so many people is so easily available in so many places. No reader of this column can doubt that personal information is not adequately protected by law, or by any other way. But even if a given debt collector is not a hardened criminal, the banks and other vendors who sell off their bad debts necessarily include the personal information of the debtor as part of the sale! So yet again, you can't know who's got their hands around the neck of your identity. But given the fact that abuses are commonplace and complaints are soaring, the CFPB needs to take immediate steps to ensure that whatever information is given to debt collectors, there are strong procedures and incentives designed to be certain that dogged pursuit of the debtor cannot extend to the abuse of his identity. At the very least, there must be a due diligence requirement such that banks and other vendors cannot simply sell off their bad debts willy-nilly to the highest bidder; sellers of that debt must know their customers so that there is at least some assurance that your personal information is not being handed over to the modern equivalent of the James gang.