(Reuters) - The U.S. consumer agency will begin closely supervising about 175 debt collectors for the first time starting in January, widening the new watchdog’s oversight of consumer lending.
The Consumer Financial Protection Bureau (CFPB) said on Wednesday it had finalized plans to oversee larger firms in the industry to make sure debt collectors treat Americans fairly.
The agency said it will determine whether debt collectors properly disclose the amount owed, maintain accurate data about consumer debt, and address consumer complaints quickly.
“We want all companies to realize that the better business choice is to follow the law — not break it,” CFPB Director Richard Cordray said in a statement.
The 2010 Dodd-Frank financial law created the bureau and directed it to oversee consumer financial products such as mortgages, student loans and credit cards.
It also allowed the CFPB to extend its oversight to larger non-bank companies participating in consumer financial markets.
The CFPB will supervise firms with more than $10 million in annual receipts from consumer debt collection. About 30 million Americans have outstanding debt that is subject to collection, the agency estimates.
Firms involved in debt collection try to get money from delinquent borrowers for a fee, buy up debt from lenders and recover what is owed, or collect money through litigation.
Encore Capital Group Inc and Asset Acceptance Capital Corp are among the biggest companies in the industry.
Debt collectors sometimes pass on consumers’ collection status to credit agencies, which issue the credit reports that banks and other lenders use to determine whether to lend money and what interest rates to charge, the CFPB said.
“If they get the information wrong, this can be the difference between getting approved or denied for such financial products as a mortgage or a car loan,” the agency said.
The CFPB in September began supervising credit reporting agencies that take in more than $7 million each year, including Equifax, Experian and TransUnion.
Cordray has said those industries were chosen partly due to the role they are playing in consumers’ lives after the 2007-2009 financial crisis.
When the bureau begins overseeing debt collectors, it will be able to keep an eye on every stage of the lending process, the CFPB said.
The CFPB said on Wednesday it also released the field guide that examiners will use to supervise debt collectors.
Reporting By Emily Stephenson; Editing by Steve Orlofsky