The Consumer Financial Protection Bureau (CFPB)
The Consumer Financial Protection Bureau (CFPB) is a regulatory agency that safeguards the interests of borrowers. By definition, the CFPB meaning and purpose is to make financial markets work for everyone, including responsible lenders and the economy.
The agency provides people with information and tips designed to help them make smart financial decisions. Also, it takes action against lenders and entities that promote deceptive activities to take advantage of borrowers. To protect the interests of borrowers, lenders must abide by consumer protection rules.
Keep reading to explore the Bureau’s functions along with the activities it undertakes.
What is the CFPB’s Core Functions
For consumers wondering about the CFPB’s role, the agency was started as a one-stop authority for implementing federal consumer financial laws designed to protect borrower interests. Many agencies had previously shared the responsibilities to safeguard the interests of consumers. However, the focus of the CFPB has changed over the years and today it primarily functions to:
- Eliminate unfair practices by introducing regulations, monitoring lenders, and enforcing the law
- Register consumer complaints
- End discrimination in consumer finance
- Provide financial literacy
- Analyze new threats for consumers in financial markets
- Understand the consumer experience through financial products
Payments To Harmed Consumers
When the CFPB enforces the law, the violator must compensate the consumers for the harm caused. When action is taken against a lender, this means compensating borrowers. Borrowers are normally compensated in two ways:
- Payments By Case - Violators need to compensate borrowers upon the direction of the agency or court. The victim receives the funds either from the violator, bureau or through an external administrator.
- Civil Penalty Fund - The agency has a Civil Penalty Fund that it uses when a lender cannot compensate borrowers completely. The fund is supported by the penalties collected for different enforcement actions. The agency uses the excess funds to invest in financial literacy and consumer education programs.
Areas Of Activity
This agency’s activities revolve around the entire personal finance domain. It offers information and guidance useful for borrowers to make financially sound decisions. Some of the different activities that can benefit you include the following.
Credit Reports And Scores
Credit scores and reports are important factors that determine the creditworthiness of borrowers. The CFPB provides extensive resources to help borrowers understand their importance, overcome problems, and improve their creditworthiness. Some essential information they provide includes:
- How to read credit reports
- What to look for in a credit report
- The differences between credit scores and reports
- Reasons for denial of a credit application
- How to build a good credit record
- Rights to dispute incorrect information on your reports
Bank Accounts And Services
US consumers must know their options when opting to open a bank or credit union account. The Consumer Financial Protection Bureau provides a lot of essential information that can help you manage your accounts with ease:
- Account opening checklist
- The time period for the deposit of funds
- What does opt-in to overdraft coverage means
- Unauthorized transactions on your account
- Help from family or friends for managing an account
- Options you have available if a bank or credit union has denied you a checking account
Auto Loans
When opting for an auto loan, beyond the cost of monthly payments, it’s important to focus on the overall cost of borrowing. The agency provides helpful tips that can assist you to borrow wisely.
- How to shop for an auto loan
- What are the different options
- How to compare the terms of the loan offers
- Why you need a cosigner
- What happens when your vehicle gets repossessed
- What impact does shopping for the loan have on your credit score
Frauds And Scams
It can be devastating when you lose money or property to a scam. The CFPB offers several resources that can help you avoid fraud and spot scams before they impact your finances by outlining:
- What the different scams are
- How to protect yourself and others from scams
- How to understand identity theft
- How to help someone who’s a victim of financial exploitation
- What to do when you notice unauthorized transactions in your bank account
- How to get your money back if someone conned you
Debt Collection
Debt collection issues can overwhelm you if you’ve fallen behind on payments. The CFPB offers several resources that can help you overcome this problem by addressing:
- Why debt collectors contact you
- What happens if you avoid a debt collector
- What the unfair practices followed by debt collectors are
- What to do when debt collectors harass you
- What laws limit the actions of debt collectors
- Should you use a credit counselor or debt settlement company
Conclusion
As one of the most important consumer-focused agencies, the CFPB provides comprehensive support to consumers through informative and actionable tips. Its detailed and broad resources are intended to help borrowers understand their rights.
For more information, browse the agency’s site further to gain additional wisdom on safe borrowing practices.
