WASHINGTON, D.C. – Starting July 21, consumers will get a new watchdog to help protect them from financial scams and rip-offs. That’s when the Consumer Financial Protection Bureau (CFPB) will officially open its doors.
The CFPB was created by the Wall Street reform law passed by Congress last year and will work to make sure financial companies provide consumers with the information they need to understand the true costs and risks of different financial products. It has been charged with identifying and stopping unfair, deceptive, and abusive financial practices and keeping the rules governing financial service products up-to-date.
“Consumers shopping for a mortgage or credit card or using other financial products now have a watchdog in Washington to help make sure they get a fair deal instead of a financial headache,” said Pamela Banks, senior policy counsel for Consumers Union, the nonprofit publisher of Consumer Reports. “The Consumer Financial Protection Bureau will help bring fairness to the financial marketplace and ensure families don’t get tripped up by tricks and traps buried deep in the fine print.”
The CFPB will have the power to protect consumers in a number of ways:
- Make sure financial companies are following the law: The CFPB will oversee the financial marketplace and enforce laws that outlaw discrimination and unfair treatment of consumers. It will have the power to impose fines on companies that violate the law.
- Collect and respond to consumer complaints: Consumers will be able to report complaints about financial practices through the CFPB’s web site (www.consumerfinance.gov) and a toll free number. Initially, the CFPB will collect consumer complaints on credit card abuses but it will eventually expand its complaint collection efforts to cover a full range of financial products.
- Enact new protections to ensure consumers are treated fairly: A key part of the CFPB’s job will be to keep an eye out for emerging harmful financial products and practices and to enact new protections for consumers as needed.
- Promote financial transparency: The CFPB will work to make sure that financial companies provide consumers with the information they need to make smart financial decisions. It is currently developing mortgage disclosure forms that aim to make it easier for consumers to understand the real cost of borrowing.
The CFPB is being launched at the same time that opponents of reform in Congress have made it clear that they will not confirm a director for the new watchdog unless it is weakened.
“The Consumer Financial Protection Bureau will have significant powers to protect consumers but opponents of reform in Congress are doing all they can to undermine it,” said Banks. “It’s time to break the deadlock in Congress over the CFPB’s director so this important new watchdog can fully protect consumers from unscrupulous lenders and shady financial practices.”
Consumers Union has called on the CFPB to tackle a number of important issues for consumers, including simplifying financial forms so consumers can understand them, strengthening credit card protections, and ensuring that the new agency has a robust public complaint database.