Financial Reform Legislation: A Few Highlights

The Restoring American Financial Stability Act of 2010 (S. 3217) is being debated in the Senate this week. A search this morning turned up 378 amendments proposed so far. Not all of these amendments will be voted on by the Senate, and even if they are passed, the House and Senate versions must be reconciled. But in the meantime, I thought I would highlight a few that I find of particular interest:

The Senate approved an amendment proposed by Assistant Senate Majority Leader Dick Durbin (D-IL) directing the Fed to issue rules to ensure that debit interchange fees, (or "swipe fees") are reasonable and proportional to the processing costs incurred has been passed by the Senate. Businesses that accept plastic have been pushing hard for legislation to regulate the “interchange” fee they pay when they accept debit and credit cards. This amendment would also allow merchants to impose minimum purchase floors when customers pay with debit or credit.

Yesterday, the Senate passed a compromise amendment sponsored by Sen. Thomas R. Carper (D-DE) that has left some consumer advocates concerned that state regulators will not be able to fully protect their citizens against financial abuses. It does, however, give state Attorney Generals the opportunity to play a role in enforcing rules developed by the Consumer Financial Protection Bureau.

Last week, the Debt Settlement Consumer Protection Act was introduced by Senator Charles Schumer (D-NY). It would crack down on abuses in the debt settlement/debt negotiation industry by requiring detailed disclosures and limiting fees. While we shared some concerns with Schumer’s staff over the specifics of the legislation, we agree that this industry has some serious problems that need to be addressed. This amendment, which I cover in more detail in another article, has not been considered yet so it may not end up in the final bill.

Some are predicting this legislation could be voted on as early as tomorrow. We'll be watching.

Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis.

It's Official: 2009 Sets Record for FDCPA Lawsuits

Early last year, I predicted a record number of consumer credit protection lawsuits would be filed in 2009. The basis for my opinion was the fact that the number of consumer protection lawsuits filed in 2007 was so much higher than in 2006. Well, the final numbers are in, and they are staggering.

According to Jack Gordon, CEO of Michigan-based WebRecon that tracks FDCPA lawsuits and other consumer rights litigation, 2009 has ended and the number of FDCPA lawsuits has shattered 2008's record number. There were 8,287 FDCPA lawsuits filed in 2009, which is up from 5,188 filed in 2008. The number of FCRA lawsuits filed in 2009 was 1,174 compared to 1,164 in 2008.

The FDCPA, or Fair Debt Collection Practices Act, protects consumers from abusive collection practices by debt collectors. And with 2008 and 2009 being record years for credit card defaults, it's not a surprise that more bad debt has been consigned or outright purchased by debt buyers for the purposes of collection. And while the law does do a good job protecting consumers from the bad apples within the collection industry, some would say that it goes too far and hamstrings collection efforts.

The FCRA, or Fair Credit Reporting Act, provides for the accuracy and fairness of credit reporting. It also mandates that the credit reporting agencies adopt reasonable procedures to ensure maximum possible accuracy of credit reports.

What does 2010 hold for consumer protection lawsuits? Many experts, including this one, predict more of the same.

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.