Home > Personal Finance > Consumer Watchdog Agency Off to a Running Start

Comments 0 Comments

Even though the government’s newest consumer watchdog agency doesn’t have much power yet, it already has put programs in place to protect people who buy homes, get credit cards and check their credit scores, according to a progress report the agency released Monday.

The new Consumer Financial Protection Bureau has created a series of programs to help consumers learn about financial products before they buy. The one with the catchiest name is “Know Before You Owe,” which is trying to simplify the complicated mortgage disclosure forms consumers receive when considering buying a home.

[Related article: Obama Taps New Consumer Watchdog]

For years, consumer advocates have complained the forms are too complex to do their job: Inform potential homebuyers about the possible pros and cons of different mortgages. Bankers have complained too, saying the two federally required forms are burdensome. Various federal agencies have worked for years to fix the problem, so far to no avail.

The CFPB plans to fix it by July 2012.

The goal is to create “a single, simpler form that makes the costs and risks of the loan clear and allows consumers to comparison shop for the best offer,” according to the report.

The bureau’s plans for bringing the same simplification to credit cards are much less specific. The CARD Act of 2009 did a lot to reduce late fees, interest rate hikes and overdraft fines, according to a survey conducted this year by the CFPB. But there’s still room for improvement, according to the report.

“The Bureau’s next challenge will be to further clarify price and risk and make it easier for consumers to make direct product comparisons,” the report says.

[Featured Product: Looking for your credit report?]

The bureau has other research projects underway, including one on how the different practices among the three major credit reporting agencies may harm consumers, and another on whether it might be possible for Americans sending money to family and friends abroad to use those payments to help improve their credit scores.

Credit doesn’t stop at the bank’s doorstep. Many non-bank institutions, including payday lenders, prepaid debit cards, check cashing and credit reporting companies also have a significant role to play in whether people can get credit. The Dodd-Frank financial reform act, which created the CFPB, gives the bureau power to regulate the biggest companies in these sectors.

Which companies? In which industries? The bureau has been asking companies and consumer advocates those questions for a few months now. It plans to issue its ruling on July 21 for which companies will have to comply with new rules regarding fair competition and transparency with consumers.

To do all this work, the bureau has hired nearly 500 people, according to the report. Some are new to government service, while many others were working as regulators in other federal agencies before their responsibilities were taken over by the bureau.

[Related: What the CFPB Should Do About Debt Collectors]

Correction: This article was revised July 20, 2011 to correct the date for which the CFPB plans to make the simpler mortgage disclosure form available to consumers.

Image: Stuart Grout, via Flickr.com

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team