Consumers Union, the nonprofit publisher of Consumer Reports, outlined an agenda Thursday for the newly authorized Consumer Financial Protection Bureau (CFPB).
Starting in July 2011, the CFPB will be charged with identifying and stopping unfair, deceptive and abusive practices in the sale and delivery of financial services to consumers. It will have the responsibility to keep the rules governing financial service products up-to-date and to respond to consumer complaints.
The CFPB was established as part of the financial reform package signed by President Obama over the summer and will serve as a financial watchdog for consumers.
Consumers Union identified a number of priority issues that need the CFPB's attention, including:
Stopping Debt Collection Abuses: The CFPB was given the power to develop new rules to curb debt collection abuses, one of the top consumer complaints nationwide. The CFPB should require creditors collecting debts to meet the same standards that apply to third party debt collectors, impose an expiration date on very old debt, and stop debt buyers from trying to collect debt without evidence that the consumer owes money.\
Fixing the Credit Reporting System: Credit report mistakes are all too common and can have serious consequences for consumers trying to get a loan, rental housing or even jobs. The CFPB should audit the big credit reporting agencies to ensure their compliance with existing requirement to maintain accurate consumer credit files and require them to investigate and fix errors reported by consumers.
Ending Credit Card Rip-Offs: The CFPB needs to finish the job of protecting consumers from abuses by big banks and their credit card programs. The CFPB should reduce the amount banks can charge for penalty fees, limit the size of penalty interest rates, and require banks to enable consumers to more easily earn their way back to a better interest rate.
Policing the Mortgage Market: The CFPB should police the mortgage market to stop scams against consumers and prevent the return of the toxic loans and dangerous lender practices that helped trigger the recession.
Addressing Dangerous Short Term Small Loans: Auto title lenders and payday lenders make loans at annual percentage rates of 300-400 percent or more. The CFPB should institute a number of reforms to protect consumers from these high cost loans, including stopping the evasion of existing interest rate caps through junk fees and requiring that lenders allow borrowers to pay loans back in installments.
"Beginning next year, consumers will finally have a watchdog in Washington looking out for their financial interests," said Gail Hillebrand, director of Consumers Union's Defend Your Dollars campaign, in a prepared statement. "The Consumer Financial Protection Bureau should move aggressively to take action against unscrupulous lenders and unfair financial practices that drain family wallets and make it harder to make ends meet."
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