Debt Relief Industry

CFPB Makes a Sad Decision When it Comes to Consumers and Debt

Written by Steve Rhode

The Consumer Financial Protection Bureau just made what I think is a poor decision when it comes to consumers and debt.

They announced the members of the new Consumer Advisory Board:

  • Chair of the CAB – Eric Kaplan, Director – Housing Finance Program, Milken Institute (Washington, DC)
  • Joaquin Altoro, CEO, Wisconsin Housing & Economic Development Authority (Madison, WI)
  • Nikitra Bailey, EVP, Center for Responsible Lending (Durham, NC)
  • Lorray Brown, Attorney/Consumer Law Attorney, Co-Director, Michigan Poverty Law Program (Ypsilanti, MI)
  • Nadine Cohen, Managing Attorney, Greater Boston Legal Services (Boston, MA)
  • Mae Watson Grote, Founder and CEO, The Financial Clinic (Brooklyn, NY)
  • Tim Lampkin, CEO, Higher Purpose Co. (Clarksdale, MS)
  • Leigh Phillips, President and CEO, EARN DBA SaverLife (San Francisco, CA)
  • Jean Setzfand, Senior Vice President, AARP (Washington, DC)
  • Rebecca Steele, President/CEO, National Foundation for Credit Counseling (Washington, DC)
  • Tim Welsh, Vice Chairman Consumer and Business Banking, U.S. Bank (Minneapolis, MN) – Source

For some unexplainable reason, from the debt relief space, only the National Foundation for Credit Counseling (NFCC) is named to the advisory board and not at least one more diverse point of view.

The NFCC certainly does not speak for the field of debt relief, and not even for the field of credit counseling.

In fact, the NFCC has played an active role in not providing consumers with equal access to information and options to deal with their debt.

Think about this, when was the last time the NFCC came out in defense of consumers against a specific bank because of bad acts? Take, for example, the massive credit card fraud perpetrated by Wells Fargo that the CFPB cracked down on in 2016. I can’t find any press releases or consumer advisories by NFCC to educate proactively consumers about those issues.

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NFCC is a trade association for credit counseling agencies, and while they operate under an educational non-profit status, nobody should get the impression they are fair or balanced in their advice and education when it comes to all debt relief topics.

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Other debt relief strategies are left by the wayside, and while there have been some problematic companies in those spaces, that does not mean that strategies like evaluating if a debt is collectible under the Statute of Limitations, settling private student loans, or considering bankruptcy as a smart financial strategy should be avoided.

I’m Not Picking on NFCC or CFPB Here

Dealing with debt is not about putting someone into a debt management plan. It should be about providing the best advice and solutions possible without having your hands tied behind your back like NFCC apparently is with creditors.

We expect medical professionals to provide us with the honest medical advice we need and we should demand it from all debt relief providers as well.

The CFPB did consumers a disservice by not making the debt relief member named, agnostic to the type of debt help they provide or at least adding other niche representatives to the board.

Many people have been critical of the debt settlement space for example, and their have been business practices that were unfair, but nobody seems to ask this important question – how effective is credit counseling alone at dealing with financial health and what really is the success rate of NFCC members?

My opinion and assumption is that advice provided to the board will be slanted to what the NFCC can talk about without pissing off the creditors and not putting consumers first.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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