Debt collectors could leverage power through inclusion in CFPB
Jun 10, 2013 Philip Burgess
The Consumer Financial Protection Bureau (CFPB) was established in 2010 with the intention to protect consumer rights and interest regarding financial developments. Within the bureau are three separate advisory boards: the Consumer Advisory Board, the Community Bank Advisory Council and the Credit Union Advisory Council, according to insideARM.
However, as the source noted, an council representing America's debt collection industry was surprisingly not included. Although it is primarily a source for consumer advocacy, the fact that credit unions and local banks are represented within the agency may indicate that those enterprises are more likely to see regulations passed to their advantage. On the other hand, debt collectors have little say in CFPB dealings.
That's despite the community bank sector in the United States being a similar size to the debt collection industry. According to insideARM, debt collectors and small banks both employ between 20 and 30 workers per firm. Even so, debt collectors interests aren't represented within the CFPB.
Data from Ernst & Young showed that the industry was responsible for nearly $5 billion in payroll annually in 2012 in the United States, accounting for 148,300 jobs.
More over, an additional 153,300 workers were estimated to be employed by industries that provide services to debt collection agencies. Altogether, third-party debt collectors were found to be responsible for 302,000 jobs and $10.1 billion in annual wages.
The report said that 4,908 debt collection agencies were in operation across the country last year, providing a wide range of employment opportunities and an estimated $2 billion in state and federal tax impact.
The interests of the industry seem to be underrepresented in the CFPB. If debt collectors wish to promote themselves more effectively, lobbying for an advisory board within the CFPB could be a smart move.