By: Jeffrey Lapin

On February 16, 2012, the Consumer Financial Protection Bureau (CFPB) announced a proposed rule to identify the debt collectors and consumer reporting agencies will fall within its nonbank supervision program. Before it can began to monitor these entitieis, it has to define who is a “larger participant” within these areas. Currently, debt collectors and credit reporting agencies are not subject to direct federal supervision; the government only gets involved after a violation occurs.

THE CFPB’S ROLEConsumer Financial Protection Bureau

The Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, authorizes the CFPB to supervise “larger participants” for nonbank markets for consumer financial products or services, such as debt collection and credit reporting. The Act requires the CFPB to define “larger participants” by July 21, 2012.

When announcing the proposed rule, Richard Cordray, the CFPB Director stated:

Consumer financial products and services have become more complex over the years and they have expanded well beyond traditional banks. . . Our proposed rule would mean that those debt collectors and credit reporting agencies that qualify as larger participants are subject to the same supervision process that we apply to the banks. This oversight would help restore confidence that the federal government is standing beside the American consumer.

The actual proposal, Defining Larger Participants in Certain Consumer Financial Product and Service Markets, can be viewed here or on the CFPB’s website:


The CFPB approximates that 30 million Americans have debt held by a debt collector, with the average debt amount of $1,400.00.

Under the proposed rule, debt collectors with more than $10 million in annual receipts from debt collection activities would be subject to supervision. Based on available data, the CFPB estimates that the proposed rule would cover approximately 175 debt collection firms, which account for about 4 percent of debt collection firms. These firms account for 63 percent of annual receipts from the debt collection market.


As cited by the CFPB, according to the Consumer Data Industry Association, each year there are 36 billion updates to consumer credit reporting files and three billion reports are issued. The three largest consumer reporting agencies, Equifax Credit Information Services, Inc., (Equifax), Trans Union LLC (Trans Union), and Experian Information Solutions, Inc. (Experian), maintain information on 200 million Americans. A person’s credit report affects both whether they can get credit or borrow money and the interest rate in which it is lent. These reports also may prevent someone from obtaining a job. While a person is entitled to a free copy of their credit report from the three major agencies once a year, which everyone should do, it is difficult to obtain information from the so-called “Fourth Bureau” firms. These firms, which target approximately 30 million consumers, fall outside of the mainstream lending system. These “Fourth Bureau” firms get information from payday lenders, check cashers and prepaid cards, among others. The typical users of these “lenders” are low income consumers, students and immigrants.

Under the proposed CFPB monitoring rule, consumer reporting agencies with more than $7 million in annual receipts from consumer reporting activities would be subject to CFPB supervision. This would include approximately 7 percent of consumer reporting agencies based on available data and would cover about 30 consumer reporting agencies. The CFPB estimates that these 30 companies account for approximately 94 percent of the annual receipts from consumer reporting. This would include the 3 major agencies, Equifax, TransUnion, and Experian, as well as some of the “Fourth Bureau” firms.


Lapin Law Offices supports the proposed rules although we believe they should extend even farther. Debt collection abuse is extremely widespread and the annual receipt threshold should be lowered so more debt collectors are included. In addition, while the proposal would covers where most of the money goes for credit reporting, only 27 “Fourth Bureau” firms would be included. More of these firms should be monitored as it is extremely difficult for a consumer to even know who these firms are or how to fix incorrect information.

The comment period for the proposed CFPB Rule is 60 days, which began on February 16, 2012. If you support these proposed rules or want the CFPB to go even farther we urge you to post a comment, which you can do by clicking here and typing “CFPB-2012-0005-0003” in the Search box.



Lapin Law OfficesLapin Law Offices represents consumers harassed or abused by debt collectors and those whose righs have been violated under the Fair Credit Reporting Act (FCRA). You can learn more about your rights by calling us at 402-421-8033 or through our websites: Lapin Law Offices or for a free consultation.