As you know, numerous consumer protection agencies were created over the years in this country. They are agencies designed to protect you and every other consumer from unfair business practices and to protect your money from failing or failed financial institutions.
Before attending college, Julia had taken out a $150,000 student loan, to be paid back within 25 years of graduating. About 10 years after graduation, the regulated financial institution from which she received the loan has failed and, after being resolved, a new regulated financial institution has taken over Julia's student loan. However, this new institution has increased the interest rate on her student loan and is requiring her to pay additional fees resulting from the former bank's failure and closure. However, the failure of the former bank was in no way Julia's fault; and the new financial institution should not be allowed to charge her higher interest and additional fees. What can be done to prevent the new financial institution from doing this to Julia?
The Consumer Financial Protection Bureau (CFPB), which was created as part of the 2010 Dodd-Frank Act, protects consumers from unlawful and unfair business practices—mostly associated with mortgages, credit bills, and student loans. They ensure that all regulated financial institutions treat all their customers fairly. This means that Julia can contact this government consumer protection agency and file a report against the new regulated financial institution that has taken over her student loan.
Meanwhile, some other functions of the CFPB are:
- writing rules and supervising companies to root out unfair, abusive, and deceptive businesses and financial practices
- enforcing laws that deal with unfair/unlawful business and financial practices, including enforcing laws that outlaw discrimination within consumer finance
- listening and responding to consumer complaints
- researching financial products and determining what sort of consumer experience a customer would have with them
- providing a list of risks to consumers by monitoring the financial markets
Nearly a century prior to the establishment of the CFPB, another agency was created: The Federal Trade Commission (FTC). Its main purpose, even after 100 years, has always been to protect every consumer in the United States from unfair business practices while also ensuring a strong and competitive open market. The functions of the FTC include:
- enforcing consumer protection laws that prohibit entities from using anticompetitive, deceptive, and/or unfair practices
- investigating fraud and false advertising, as well as congressional inquiries
- handling of scams and unfair/predatory business practices
- eliminating any anticompetitive business practice, like a monopoly and/or coercive monopoly, in which a company positions itself as a monopoly by using extraordinary power to prevent any risks to the company as it attempts to expand
- promoting informed consumer choices and public understanding of the competitive process
Level Up!
Now, use your knowledge of the CFPB and the FTC to determine which agency is responsible for each of the situations below. When ready, click each card to flip it and reveal if the situation is handled by the CFPB or the FTC.
