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The Consumer Financial Protection Bureau finalized a new rule that will allow the federal agency to oversee and regulate the largest debt collection agencies.
Now those who hound you over unpaid debts will be hounded themselves by the feds.
The rule is slated to go into effect January 2, 2013 and could benefit a significant portion of the 30 million indebted Americans, reports CNN Money.
The new rule will allow examiners from the federal agency to go into the offices of large debt collectors to ensure they follow ethical practices. The federal agents can make sure the debt collectors clearly and accurately identify themselves, truthfully disclose the amount of debt owed, and not attempt to collect debt that doesn't exist or has been paid off, writes CNN Money.
However, the new rule will not affect all debt collectors. Instead, the rule's application is limited to only debt collection companies with $10 million or more in receipts. So a large number of the 4,500 debt collection companies in the U.S. will not fall under the agency's close scrutiny.
Still, some oversight is better than no oversight.
Since the Consumer Financial Protection Bureau was created last year, the agency has gone after credit card companies like American Express, Discover, and Capital One for deceptive practices, reports CNN Money.
The agency was formed to protect consumers from shady or fraudulent transactions and oversees all financial companies, including banks, credit unions and private mortgage firms that do business with the public. The agency has the authority to create or improve rules to govern all consumer transactions, including loans, home mortgages and credit cards and is responsible for enforcing those rules, such as with this new rule affecting debt collection agencies.
Consumers should know that even if a debt collection agency does not fall under the immediate oversight of the agency, unethical debt collection practices are illegal. If you believe you are subject to unethical debt collection practices, you may want to talk to a consumer protection attorney.