By Katalina M. Bianco, J.D.
Quoting Robert F. Kennedy, Consumer Financial Protection Bureau Director Richard Cordray spoke to the National Association of Attorneys General about “obstacles that interfere with justice and dignity for consumers.” These obstacles are the “four Ds,” he said. He was referring to deceptive marketing, debt traps, dead ends, and discrimination. In his prepared remarks, Cordray recapped the four Ds and addressed the steps the bureau has taken to address them.
Speaking about the first D, deceptive marketing, Cordray made special note of law firms “that purport to be helping people resolve their debts, but really are misusing their law license to defraud consumers. The bureau’s cases against these firms have provided some of our most protracted litigation, none of which has been a credit to the legal profession.”
The bureau director also said that issues surrounding the for-profit college industry are a “larger problem of deception in the marketplace.” He mentioned Corinthian Colleges, Inc., stating that the CFPB believes the company “lured in consumers with lies about their job prospects upon graduation, sold high-cost loans to pay for that false hope, and then harassed students for overdue debts while they were still in school.”
Cordray spoke about debt traps, saying that payday, installment, and auto title loans are examples of short-term, high-cost products that can trap people. He noted that the bureau is in the latter stages of considering how to best formulate rules to reform the market.
Targeting credit reporting and debt collection as industies that can lead to dead ends for consumers, Cordray said the CFPB is taking steps to to help consumers in areas over which they have little or no clout. As for debt collection, the CFPB Director made it clear that currently, the bureau is “hard at work analyzing and preparing the details of proposed policy measures, which could lead to the most significant changes in federal law in this area in almost forty years.”
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