There’s a new sheriff in town. It’s the Consumer Financial Protection Bureau (CFPB). And it was created about a year ago to ensure that financial products such as credit cards and loans work better for consumers who need debt relief.
According to the 2012 report “Consumer Financial Protection Bureau 101: Why We Need a Consumer Watchdog,” nearly 20 million Americans use payday lenders. Additionally, there is about $1.2 trillion in delinquent consumer debt. Here’s what else the CFPB cites:
- One in five Americans over the age of 65 has been victim of a financial scam
- 50% of claims against debt collectors cite harassment
- The default rate on subprime mortgages issued in 2006 exceeds 50%
What does the federal government hope the Bureau will be able to do? The CFPB offers three things:
- Education. To provide consumers with the ability to compare the “costs, benefits, and risks of different products effectively—and to use that information to choose the product that is best for them. Fine print and overly long agreements can make it difficult for consumers to understand and compare products.”
- Enforcement. Specifically, the Bureau offers federal consumer financial protection laws that restrict unfair, deceptive or abusive acts or practices against consumers.
- Research. The Bureau takes consumer complaints, researches consumer behavior and monitors financial markets for new risks.
Because many consumers are confused about the Bureau’s work, the government put together answers to some of the more frequently asked questions.