Banks supervised by the Consumer Financial Protection Bureau (CFPB) now face penalties if they mistreat consumers while collecting debts on loans they extended, Bloomberg News reported today. The new policy, implemented as part of the agency’s bank supervision, will plug a gap in federal anti-harassment law that generally excluded creditors who collected debt themselves. The consumer bureau will effectively extend the fair debt collection law to include creditor banks by issuing supervisory bulletins that outline practices bank examiners may consider illegal, CFPB Director Richard Cordray said. Improper collection practices include threatening a consumer with actions a collector cannot take, such as arrest, or lying about who owns the debt or the amount, Cordray said. A second bulletin warns companies to be cautious in making statements about how paying a debt affects a person’s creditworthiness.
