Now in the CFPB’s Sights: Collectors Hired by State & Local Government Agencies

The unfair treatment of consumers is a primary driving force behind the creation and the ongoing activity of the CFPB.  Since its inception the agency has made significant progress in protecting the rights of consumers.  However, there are still loopholes in the oversight originally permitted by the CFPB which appear to be creating an environment of potential abuse and high risk activity by some private debt collectors.

One of these loopholes was closed last week with the announcement of the CFPB rule allowing the supervision of larger nonbank auto finance companies.  insideARM took a look at this development in an article published on June 11, 2015.

However, currently the protections given to consumers under federal law and by the CFPB are not provided to consumers dealing with debt collectors hired by state and local government agencies.  These collectors operate outside the purview of the CFPB and with the full authority of those government agencies.  These collectors frequently charge exorbitant fees and often hold the ability to effect wage garnishments, arrest, and even foreclosure against consumers.  The consumers most vulnerable economically, are often caught in this cycle compounding the possibility of mistreatment.

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