Debt-Reduction Services
One of the fastest-growing areas of concern for state attorney generals and consumer watchdogs may be out of reach for the CFPB. Debt-reduction companies claim to be able to help people slash what they owe on their credit cards and other loans. But critics say the companies often worsen the situation for troubled borrowers by advising them to stop making loan payments, and then hitting them with fees for that advice.
Unfortunately, many of the professionals who offer debt-reduction services are lawyers. The financial-reform bill puts lawyers and, surprisingly enough, insurance agents outside the jurisdiction of the CFPB. Still, there are a number of firms claiming to cut consumer debt that are being run by former subprime mortgage brokers. Consumer advocates say what's clear is that, after years of neglect by other regulators, the CFPB has a lot of work ahead of the new agency.