You'd think a debt collector would be the least likely fan of the federal consumer watchdog. Not Bill Bartmann, a man in debt collection since 1986. He's surprisingly pro-Consumer Financial Protection Bureau, even as the agency gears up to issue final rules on supervising his industry this fall.
I spoke with Bartmann, CEO of debt collection company CFSII, on Wednesday to get his views on the latest action from the Consumer Financial Protection Bureau, namely its supervision of the consumer reporting market.
Me: What’s your take on the bureau's move to oversee the credit reporting agencies?
Bartmann: The credit reporting system has been self-regulated and self-policed. They really didn't have any regulators to answer to before this. And unfortunately, they have been wrong (on individuals' credit reports). We're talking 25 percent to 30 percent error rate from my debt collection experience. (For context, Bartmann's company has worked on millions of delinquent credit card accounts). It's unconscionable with what they were able to get away with.
Me: I've been harping on whether the final rule the CFPB issued last week also includes FICO, the maker of the most widely used credit report. The rules define analyzers of credit reports as part of the larger credit reporting market the CFPB seeks to regulate. I've yet to get a straight answer from FICO or the CFPB on this. What do you think?
Bartmann: I think FICO is included. I think it's a function of the CFPB realizing you can’t regulate the right hand without regulating the left hand. They're smart enough to know there is a shadow reporting market and it, too, is unregulated. This shadow group is relied upon by financial service companies because they realize the data is good information, although there has been no measure of accuracy.
Me: What do you think we'll see from the CFPB regarding debt collection agencies this fall?
Bartmann: I think a big issue will come up and that is robosigning in the credit card collection arena. There are collection agencies out there that buy a list of names and literally put them in a hopper where they generate petitions. They don't even make sure they are suing the right person, that the debt is valid or if the papers are served properly. If there are three people with the same name, they sue all three. It's wrong when innocent parties have to clear themselves, because it was an inconvenience to the debt collector. It's not only an abuse of the entire court system, but also an abuse of a person's rights.
That's all time would allow, but Mr. Bartmann brings up some interesting points about the CFPB's powers and the need for it to supervise these before-unregulated industries that affect consumers directly.
What do you think?
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