In just one day, credit card holders will officially get a government champion.
The Consumer Financial Protection Bureau, or CFPB for short, opens its doors Thursday, one year to the day after President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law.
It's very exciting -- and I'll tell you why.
Overall, the agency is charged with looking after Joe Everyman (or Jill Everywoman) and overseeing companies that provide financial products.
"In the past, regulators have not always put consumer protection as the top priority. They had to balance systematic risk," says Nick Bourke, director of the small dollar loan research project at the Pew Charitable Trusts. "The CFPB is designed to place consumer protection first."
For those with credit cards, the bureau will insure that credit card issuers comply with the Credit CARD Act of 2009, which offered up sweeping changes and banned eyebrow-raising practices that had been commonplace before, such as double-cycling billing and universal default on existing balances.
The agency will modify rules that implement the act to make sure it keeps up with market changes, says Bourke. It also is pushing for even more transparent and simpler pricing disclosures. That way, consumers can easily compare credit cards and choose the best one for them.
The CFPB also will lend its ear. So, if you get spitting angry at your credit card company over a new fee, you have someone to call who will listen. The bureau will take consumer complaints through a toll-free hotline or online. And maybe, that will lead to change.
The bureau also is putting consumer education at the top of the priority list, calling it "the first line of defense against abusive practices" on its website. It has special departments that cater to education for older Americans, traditionally underserved consumers, students and service members.
Last, the agency will conduct research to get ahead of problems in the financial world. It said Tuesday it's embarking on a study to determine if there are major differences between credit scores provided to consumers and those lenders use and how that could affect consumers' view of their own creditworthiness.
"I think now banks and other financial service providers will be forced to think about consumer friendliness and protection in a more holistic way," says Bourke.
And that's a win for you and me.
What do you think about the new consumer agency?
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