On July 21, the Consumer Financial Protection Bureau will mark its fourth anniversary. The consumer financial watchdog, created by Congress in the during the financial crisis caused by shady mortgage lenders and Wall Street abuses, has done a lot for consumers in just a few years, having tackled important issues such as credit cards, mortgages, student loans, credit reports, and abusive payday lending.
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One of the CFPB’s first initiatives was the creation of a consumer complaint database to help consumers resolve complaints about unfair and abusive financial practices, products, and services. The bureau’s complaint system has received more than 330,000 complaints since its inception. Just this week, the CFPB made public a proposal to give consumers the option to share their account of what happened and publicly express their complaint through the database.
The bureau has cracked down on fraudulent credit card practices, including unnecessary and costly protection plans, and has returned $1.5 billion to consumers who were deceived by those types of add on products.
Debt collectors and credit reports
The financial watchdog is putting a leash on debt collectors and the industry’s anti-consumer practices that have largely gone unchecked. The bureau is also shedding light on how credit-reporting agencies operate to make sure that what they are reporting is accurate and mistakes are fixed quickly, while urging banks and credit card companies to offer free credit scores.
New safeguards have been put in place to help ensure that consumers shopping for a mortgage are treated fairly and don’t end up with a loan they can’t afford. The CFPB has prohibited lenders from offering mortgages that borrowers are unable to repay and limited high fees and abusive payment structures while putting new, pro-consumer restrictions on mortgage servicers.
A recent report by the bureau highlighted the dangers of payday lending and the cycle of debt that traps many borrowers. This month, the agency took action against Ace Cash Express, one the biggest payday lenders in the nation, saying the company used illegal tactics to push borrowers into debt traps. Consumers Union, the policy and advocacy arm of Consumer Reports, supports the CFPB’s efforts to find a solution that would make short-term loans more safe, transparent, and affordable.
The agency took a hard look at the pitfalls of student lending and has made efforts to ensure students and families aren’t getting buried by predatory loans they can’t afford. Last year the bureau announced new oversight of nonbank student loan servicers that handle at least one million borrower accounts, which will cover the seven largest student loan servicers who collectively handle tens of millions of private and federal loan accounts.
Sending money abroad
The CFPB has established new rules to help people who send money abroad. People in the U.S. send tens of billions of dollars to friends and family abroad every year. The new rules make it easier for people to compare prices and make sure all the money they send reaches its destination.
Even with all those wins for consumers, it hasn’t all been smooth sailing for the consumer-protection agency. Opponents have continually tried to weaken the bureau or delay it from being able to carry out its mission. In fact, a package of bills pending in Congress would make it harder for the CFPB to issue guidance on federal regulations and law, eliminate the bureau’s civil-penalty fund that provides refunds to defrauded consumers, and repeal the agency’s authority to regulate the use of arbitration provisions in contracts for consumer financial products and services.
After years fighting for the creation of a financial agency standing on the side of consumers, Consumers Union isn't stopping now. We're continuing our efforts to keep the CFPB strong and we need your help. And we're asking lawmakers to say no to Wall Street’s efforts to undermine important consumer protections (PDF).
Acknolwedge the CFPB's birthday and, most important, its accomplishments by taking our action today and tell Congress not to weaken the CFPB.
This feature is part of a regular series by Consumers Union, the policy and advocacy arm of Consumer Reports. The nonprofit organization advocates for product safety, financial reform, safer food, health reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.
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