A new consumer watchdog is gearing up in Washington, D.C., to take on elder financial abuse, retirement investment scams, in-your-face debt collection and other shady money practices. The goal is to protect Americans’ financial security as they work to recover from the damage of the recession.
Officials at the Consumer Financial Protection Bureau say their mission is to educate the public, enforce laws that protect consumers and monitor financial markets for new risks. The bureau’s Office of Older Americans is the first federal body with a focus of safeguarding the financial interests of that age group.
The CFPB was created last year with a goal of cracking down on industry practices blamed for helping trigger the subprime mortgage fiasco and the general financial meltdown that followed.
Like many Americans, older adults were hit hard by the crisis that began in 2007. Many saw their nest eggs shrink at the worst possible time — just as they approached retirement’s doorstep. Some fell victim to scams or exploitation at the hands of trusted financial advisers.
As the CFPB begins its work, here are six reasons why you should care:
1. Elder abuse. Skip Humphrey, who heads up the Office of Older Americans, says greater coordination between national agencies is needed to stem this growing problem. “There are many types of elder abuse, including financial exploitation, and it’s important to increase our understanding of how to spot and prevent it,” he writes in a blog on the bureau’s website, consumerfinance.gov.
2. Credit and debt. In a broad proposed regulation, the bureau is seeking to establish oversight of larger debt collectors and credit reporting agencies — the organizations that keep records of your financial trustworthiness.
The two industries warrant further scrutiny amid widespread complaints of unfair, deceptive or abusive practices, according to CFPB Director Richard Cordray. “This oversight would help restore confidence that the federal government is standing beside the American consumer,” he said in a statement.
3. Investment fraud. The CFPB will provide information to help older adults identify false and deceptive claims by financial advisers who solicit them for investment and retirement planning business. Officials will collect and publish research about bad practices in the financial services industry to help consumers avoid unfair or deceptive situations.
4. Reverse mortgages. The bureau’s website, consumerfinance.gov, offers information and resources to help homeowners understand the risks and benefits of reverse mortgages. A toll-free hotline is also provided for older adults who are having trouble paying their mortgages (1-855-411-2372). "We're very excited about the focus on reverse mortgages," says Pamela Banks, senior policy counsel for Consumer's Union. "They'll be taking a close look at reverse mortgages to determine the suitability of the borrower." Banks says the bureau will look to identify practices that are unfair, deceptive or abusive, and will work to develop ways to make the reverse mortgage transactions easier to understand.
5. Overdrafts. The agency recently began an investigation into whether banks are fair in how they charge overdraft fees.
6. Investigations and enforcement. On its website, the bureau is taking complaints about mortgage and credit card companies in order to probe suspected wrongdoing and enforce consumer protection laws.
Carole Fleck is a senior editor at AARP.org.
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