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CFPB set to begin oversight of debt collectors

Beginning in January, the Consumer Financial Protection Bureau will begin to ramp up oversight of large debt collection agencies.

Data from the CFPB revealed that almost one out of 10 Americans is, on average, in collections for approximately $1,500, the Detroit Free Press reports.

Consumer groups maintain that the new supervision by the CFPB could be helpful because it applies to firms with at least $10 million in annual receipts, which accounts for 63 percent of annual debt collection receipts. The new oversight will affect an estimated 175 debt collection agencies.

The CFPB will examine whether firms are using accurate data, if a debt collector is using abusive or inappropriate language, whether a consumer complaint resolution system is in place and whether firms properly identify themselves up front, according to the Detroit Free Press.

The new oversight will cover a number of institutions, including debt collectors that purchase defaulted debt and collect the profit for themselves, firms that collect defaulted debt owned by a different company in return for a fee and debt collection attorneys who collect via litigation.

Various types of debt would be covered, including both federal and private third-party student loans.

Following the economic collapse and ensuing recession, consumers reported an increased number of abusive calls from debt collectors. Data from the Federal Trade Commission revealed that, in 2011, consumers filed a record 180,000 complaints, Bloomberg reports.

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