The Consumer Financial Protection Bureau (CFPB) is one of the newest agencies created by the Obama administration aimed at helping consumers navigate their way through the continuing financial crisis. This article introduces you to the CFPB, its mission, functions and structure. It also describes what you, as consumers and professionals, can do interactively through the bureau's website. Finally, we discuss recent initiatives by the CFPB to tackle lingering issues in mortgage servicing, debt collection and credit reporting.

SEE: Consumer Protection Laws You Need To Know

History and Mission of the CFPB
In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act officially created the CFPB. The bureau seeks to eliminate the deceptive, illegal practices that led the recent United States financial crisis, and create an environment where consumers understand financial risks, credit costs and product availability and where companies' business models are built on fairness, honesty, and transparency. Its mission is "to make markets for consumer financial products and services work for Americans."

Core Functions
The CFPB performs its mission through:

  • Education - Helps consumers understand laws and regulations that govern credit card, student loan and mortgage lenders.
  • Enforcement - Enforces laws and regulations, and supervises financial services companies to ensure compliance.
  • Research - Gathers information and issues reports that help consumers and businesses understand consumer behavior, how financial markets work and how they can work better.

The bureau is an independent arm of the Federal Reserve System, operating as an umbrella to enforce close to 20 rules and regulations previously spread over seven different agencies. Some existing laws it will now enforce include the Fair Debt Collection Practices Act, Fair Credit Reporting Act, Truth in Lending Act, Real Estate Settlement Procedures Act (RESPA), Electronic Funds Transfers Act and the Privacy of Consumer Financial Information Act, among others. It is working to create additional regulations covering international money transfers, more extensive supervision over non-bank financial service companies, extended requirements for lenders to consolidate mortgage disclosures and examine borrowers' ability to repay loans.

Structure and Leadership
Richard Cordray, former Ohio Treasurer and Attorney General, leads the CFPB. The leadership team includes former leaders and experts from the Federal Reserve, Fannie Mae, the White House, various state and federal regulatory agencies and private firms in the financial services industry. They bring expertise in technology, compliance management, consumer affairs and market analysis to the bureau.

Associate directors will oversee core-operating areas including:

  • Consumer education and engagement;
  • Research, markets and regulation;
  • Supervision, fair lending and equal opportunity enforcement and
  • External affairs - including consumer advisory boards, bank and credit union participation and coordination, legislative and government affairs.

While the bureau operates through its location in Washington D.C., a consumer help center in Iowa City and through field initiatives in key areas across the country, the website is the primary portal where consumers can interact and get help.

What You Can Do through the CFPB
On the interactive CFPB website, consumers can make inquiries and complaints, and industry professionals can work with the bureau to stop fraud and deceptive practices through the bureau's Whistleblower program.

Consumer Inquiries
Know Before You Owe is a program that helps consumers understand credit card disclosures and costs, how to read and understand your real estate settlement statement (HUD-1) and how to shop for student loans and financial aid before you sign the papers. Consumers who already have loans and credit cards can learn more about what disclosures and information they should get from their lenders.

Consumers can read and comment on the notices on proposed rules, forming advisory boards and provide additional information to support CFPB research and analysis.

You can tell about your experiences, good or bad, as a consumer. On the tell your story page, you can anonymously discuss details that will help the bureau research and understand what happens to consumers and how the bureau can help.

Consumer Complaints
You can make an official complaint against mortgage lenders and servicers, auto lenders, credit card companies, consumer loans (i.e., payday lenders), student loan lenders and servicers, banks and credit union account and loan services. You will need to create a login and password and then you can describe what happened, what products and services you used, identify the parties involved and discuss how you want your complaint or issue to be resolved.

Industry Whistleblowers
Current and former industry professionals can send information and tips directly to the bureau via email, whistleblower@cfpb.gov, or by calling the hotline at 855-695-7974. You can remain anonymous, but if you choose to identify yourself you are protected by the U.S. Department of Labor Whistleblower Protection Program.

Recent Initiatives for Consumers
The CFPB is focused on mortgage servicing settlements with consumer input as a primary source of information and ideas, and supervision of debt collection and credit reporting.

In light of the $25 billion settlement with the five big mortgage servicers, the bureau will bring greater transparency and accountability to the entire mortgage servicing market. The bureau's goal is to help consumers avoid unnecessary and unfair foreclosure practices. It will also monitor and enforce specific protections for military service members under the settlement. The bureau believes that a consistent format for monthly mortgage statements will help consumers understand and manage ongoing costs and fees incurred in their mortgages. To that end, it is proposing a prototype of monthly statements that all mortgage servicers should adopt. The bureau seeks consumer input on the statement to help them create a mortgage statement that better meets the consumers' needs.

It will supervise the largest debt collection companies whose annual earnings exceed $10 million and account for more than 60% of the total debt collection market. This includes companies that collect debts owned by other companies that buy accounts at discount from the original creditor and collect full balances later, and attorneys that use litigation as the main collection activity.

The bureau will supervise the largest operators in the credit reporting market to ensure that lenders get the right information to make credit granting decisions in the best interest of the consumer, and consumers get credit scores that match or more accurately reflect what lenders receive. The bureau will focus on 30 companies that account for 94% of annual earnings in the consumer reporting industry.

The Bottom Line
The CFPB is good for consumers. Because of the widespread authority granted to the bureau, using the consumer complaint portal can give you a greater opportunity to resolve conflicts when used along with your state attorney general and local Better Business Bureau. It is also good for business. Whistleblowers help the CFPB know where regulation and enforcement is needed most, and can help fuel the environment for legislative reform and set the stage for creating more powerful consumer and industry advisory boards or committees.

Can it improve conditions? Previously, debt collectors and consumer reporting agencies were not subject to federal oversight. Credit reporting agencies make 36 billion updates to consumers' credit reports each year. CFPB regulation and enforcement will bring greater consistency and accuracy in credit reporting and credit scoring

Will it survive? The Federal Reserve funds the CFPB. The budget for 2012 is 11% of the Federal Reserve System's expenses, and 12% for 2013. The ongoing budget is capped at 12%, which is adjusted for inflation beyond 2014.

You should get to know the Consumer Financial Protection Bureau. Log on to its website, read the regulations, browse the research reports, tell the agency about your experiences as a consumer and give your insights as an industry insider. You can help with the economic recovery.

Related Articles
  1. Home & Auto

    Protecting Your Financial Documents From Disaster

    Organizing and updating your records regularly can save you a lot of grief in a time of crisis.
  2. Retirement

    Protecting Your Retirement Assets

    Your golden years are meant to be stress free. Keep them that way by protecting your assets.
  3. Personal Finance

    4 Dishonest Broker Tactics And How To Avoid Them

    Protecting yourself from unscrupulous practices means knowing how to spot them.
  4. Investing Basics

    Knowing Your Rights As A Shareholder

    We delve into common stock owners' privileges and how to be vigilant in monitoring a company.
  5. Options & Futures

    Tips For Resolving Disputes With Your Financial Advisor

    Before you blame your advisor for your losses, be sure you know your rights and responsibilities.
  6. Credit & Loans

    The History Of Consumer Credit Rights

    The Fair Credit Billing Act of 1974 gave consumers the power to dispute credit card charges.
  7. Investing News

    Mexican Energy, Telecom Reforms Please Foreign Investors

    Two years into his first term, Mexican President Enrique Peña Nieto is following through on radical campaign promises he made to Mexican citizens for sweeping multi-industry reform.
  8. Investing

    Top Cities Where Airbnb Is Legal Or Illegal

    Thinking of subletting your apartment on Airbnb? Make sure that you meet your city's regulations first.
  9. Credit & Loans

    Can Corporate Credit Cards Affect Your Credit?

    Corporate cards have a hidden downside. If the company fails to pay its bills, you could be liable for the amount and end up with a damaged credit rating.
  10. Credit & Loans

    Your Credit Score: More Important Than You Know

    Credit scores affect key aspects of your personal and professional life. Knowing your score and managing your credit input can make a big difference.
RELATED TERMS
  1. Emergency Banking Act Of 1933

    A bill passed during the administration of former U.S. President ...
  2. Slander

    Slander is the act of harming one person’s reputation by telling ...
  3. Libel

    Libel is publishing a statement about someone in written form ...
  4. Defamation

    Defamation is any statement (written or spoken) that damages ...
  5. Fair Housing Act

    This law (Title VIII of the Civil Rights Act of 1968) forbids ...
  6. Jamming

    A scam perpetrated by bogus credit repair firms that involves ...
RELATED FAQS
  1. What do I do if I think an accountant is in violation of the Generally Accepted Accounting ...

    The Financial Accounting Standards Board (FASB) promulgates generally accepted accounting principles (GAAP) in the United ... Read Full Answer >>
  2. What protections are in place for a whistleblower?

    Whistleblowers can play a critical role in ensuring the compliance, safety, honesty and legal fairness of governments and ... Read Full Answer >>
  3. What are some of the major regulatory agencies responsible for overseeing financial ...

    There are a number of agencies assigned to regulate and oversee financial institutions and financial markets, including the ... Read Full Answer >>
  4. What are the major laws (acts) regulating financial institutions that were created ...

    Presidents George W. Bush and Barack Obama, in conjunction with Congress, signed into law several major legislative responses ... Read Full Answer >>
  5. How should a whistleblower report unlawful or unethical behavior?

    Whistleblowing takes many forms. A whistleblower could expose government corruption, expose unethical business behavior or ... Read Full Answer >>
  6. How did the Dodd-Frank Act change whistleblower protection and processes?

    In 2010, the Dodd-Frank Act strengthened and expanded the existing whistleblower program promulgated by the Sarbanes-Oxley ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!