The CFPB’s 5th Anniversary: 5 Ways The Consumer Financial Protection Bureau Helps Consumers
By Danielle Blustein on Thursday, July 21st, 2016
On July 21st, The Consumer Financial Protection Bureau (CFPB) is celebrating its five year anniversary! The CFPB was created by Congress during the financial crisis to ensure that consumers are treated fairly in the financial marketplace. Over the years, the CFPB has expanded its role to protect consumers in all financial sectors. Consumers Union advocated for the creation of this critical consumer protection agency and has spoken out to defend CFPB against Wall Street attacks.In honor of the CFPB’s fifth birthday we have highlighted five areas where the CFPB’s efforts to protect consumers shine.
All consumers should be treated fairly in the marketplace; and when they’re not, the CFPB fights on consumers’ behalf to make things right. Over the past five years, the CFPB’s actions have resulted in $11.7 billion in relief for more than 27 million wronged consumers. So far, the CFPB has taken legal action against:
- Credit card companies for engaging in unfair, deceptive, and abusive practices related to marketing billing, and enrollment for credit add-on products and services;
- Banks for charging overdraft fees without consumer consent;
- Payday lenders for pressuring borrowers into debt traps;
- For-profit colleges for exploiting students and pushing them into unaffordable loans;
- Debt collectors for using illegal tactics to intimidate consumers into paying debts they may not owe; and
- Mortgage companies for wrongly foreclosing on consumer’s homes.
When consumers have a complaint against a financial product or service, they know they have a place to turn: the CFPB. Since its inception, the CFPB has handled nearly one million consumer complaints. In 2016, the CFPB has handled over 26,000 consumer calls and 18,000 consumer questions every month. The CFPB has also been able to get over 3,600 companies to issue hundreds of thousands of responses to consumer complaints. This makes the CFPB’s consumer complaint database the nation’s largest public collection of consumer financial complaints.
The CFPB offers tools and information to educate consumers before they take financial actions. The CFPB’s Know Before You Owe initiative focuses on preparing consumers to take out mortgages, student loans and auto loans. The initiative has had amazing success over the past five years. Over 28 million consumers have used the CFPB’s tools to shop for auto loans and over 3,400 colleges have voluntarily adopted the CFPB’s financial aid shopping sheet to help students understand what financial aid packages they qualify for. Additionally in the first quarter of 2016, almost 2 million consumers have used the CFPB’s Loan Estimate and Closing Disclosure Forms to better understand the terms of their mortgage.
The CFPB strives to create rules that protect consumers and prevent against another financial crisis. The CFPB’s “back to basics” mortgage rules put in place rules at every stage of the mortgage process to ensure that consumers are protected from risky lending and bad mortgage services.One such rule is the CFPB’s Ability-to-Repay rule which ensures that consumers are protected from dangerous lending practices by forcing lenders to verify that the consumer can afford the mortgage. So far, over 49 million households are benefiting from these new rules and over 16 million mortgages, and counting, are covered by the Ability-to-Repay rule.
The CFPB looks at various financial services to identify where consumer problems are, and propose consumer protections to fix them. The CFPB is currently working on developing consumer protections for:
- Payday lending: The CFPB has proposed a new rule to put an end to payday debt traps that plague a large percentage of the 12 million consumers who take out payday loans each year. The CFPB is also seeking comment on a proposal that would require lenders to assess a borrower’s ability to repay their debt before they offer a loan, similar to the CFPB’s Ability-to-Repay rule for mortgages.
- Arbitration: Millions of consumers have entered into contracts for financial products and services that contain an arbitration clause that denies them the ability to take companies to court. The CFPB is seeking comment on a proposed rule that would ban companies from using arbitration clauses to block groups of consumers from filing lawsuits to pursue justice and relief for wrongdoing.
- Debt collection: More than one-in-four adults in the U.S. have debt in collection. The CFPB is developing rules to strengthen protections for consumers against abusive debt collection practices.
For the past five years the CFPB has been an amazing partner in fighting for consumers’ rights and protections. From all of us at Consumers Union, we wish the CFPB a very happy 5th birthday and many more years of fighting for consumers.