The Consumer Financial Protection Bureau is an agency designed to protect consumers from the financial abuse of major companies. The agency, created as part of an overhaul of the financial industry in the last few years, acts as a consumer watchdog and keeps tabs on banks and other lending institutions.
Representatives of the bureau have stated they have big plans for the coming year. What can consumers expect?
Changing the Banking Overdraft System
Overdraft fees have long been a thorn in the sides of consumers. Banks received criticism for re-ordering charges and deposits to trigger additional fees, and some have even settled class action lawsuits regarding overdraft fees.
In 2014, the Consumer Financial Protection Bureau wants to see a significant overhaul of the overdraft fee system. They believe current restrictions are not properly enforced and they would also prefer fees be applied based on the amount of the overdraft. Some customers face $30 or more in fees for overdrafts of just a few dollars. Advocates of the changes believe a fee based on a percentage of the overdraft might be a better solution.
Ending Mandatory Arbitration
Many checking account and credit card agreements feature clauses that bar consumers suing the company. Instead, issues are handled through forced arbitration. The advocacy group hopes to ban these forced arbitration clauses, so consumers have the right to sue companies either individually or as part of a class action suit.
Improving Credit Reporting and Collection
In the two years since it began, the Consumer Financial Protection Bureau has received tens of thousands of consumer complaints related to debt collection. Despite laws against abuse, many consumers continue to be harassed by debt collectors. The bureau believes one improvement needed is oversight of how original lenders, buyers of debt, and collection companies communicate.
The bureau would also like to see improvements in the correction process of the three major credit reporting agencies. The current system is cumbersome and frustrating, and because the system is based on just a portion of a consumer’s social security number, reporting errors occur far more than they should.
In addition to changes to the credit and banking systems, the bureau is also hoping to affect changes in the student lending system and in the prepaid credit card market. They believe the latter lacks regulation and could quickly become a quagmire for consumers using prepaid cards.
Political opponents of the increased regulations will play a role in just how much the bureau accomplishes in the coming months, but consumers should pay attention to the changes that are approved.
If you have questions about any of the current systems listed or you would like information on how you can improve your standing as a consumer, contact us. We are the Law Offices of Robert M. Gellar and we are prepared to fight for your rights as a consumer.