2013 Outlook for Credit Counseling: A Legal and Regulatory Perspective

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Originally published in "The Independent Counselor" - January 2013.

As the start of 2013 is upon us, nonprofit credit counseling agencies will be trying to anticipate the needs of their communities, by knowing what to expect in the New Year. We don’t have a magic eight ball or special insight into the future, but by looking backward, we think it’s possible to help understand what’s on the legal and regulatory horizon, as you plan for your agency in 2013. We selected five areas that caught our attention in 2012; some focused on specific announcements, others on trends. Each demonstrates the ways in which the legal and regulatory landscape continues to change.

Joint CFPB and State Effort to Police the Debt-Relief Industry -

The Consumer Financial Protection Bureau (“CFPB”) is in the midst of a comprehensive effort to police the debt-relief industry. Even though aspects of the CFPB remain a work in progress, the CFPB has demonstrated that it will not wait until it has supervision authority in a particular market or specific examination guidance before holding debt relief providers accountable.

Just as 2012 was coming to a close, the CFPB announced that it brought its first joint enforcement action with state Attorneys General against a debt-relief service provider that allegedly failed to help consumers settle their payday-loan debts and charged fees in advance of providing services. The CFPB alleged that the company’s activities violated the Federal Trade Commission’s Telemarketing Sales Rule, the Consumer Financial Protection Act, and the laws of various states. The states of Hawaii, New Mexico, North Carolina, North Dakota, and Wisconsin all joined the CFPB’s investigation and lawsuit to enforce their own laws. The company was shut down and the company, along with its principal, was ordered to return fees to consumers and pay a penalty.

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