Under a policy announced Wednesday, federal regulators will prohibit banks from mistreating debtors who are behind on their payments.
"It doesn't matter who is collecting the debt — unfair, deceptive or abusive practices are illegal," said Richard Cordray, director of the Consumer Financial Protection Bureau.
The bureau's announcement plugs a gap in the Fair Debt Collection Practices Act. Until now, anti-harassment laws did not apply to banks or other lenders who went after debtors themselves, as opposed to farming the debt out to a third-party collection agency. No more, says the CFPB. The agency says it has authority under the Dodd-Frank Act to regulate these entities.
We find out what changes consumers may see as a result of this announcement.