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US unveils rules for debt collectors

WASHINGTON — The Consumer Financial Protection Bureau on Tuesday unveiled new rules for supervising large debt-collection firms, marking the first time that industry will be subject to federal oversight.

Starting Jan. 2, the government watchdog will regulate 175 debt-collection firms that each bring in more than $10 million in annual receipts — accounting for 63 percent of the market.

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Examiners at the bureau will begin assessing whether debt collectors are complying with requirements of federal consumer financial law, including providing consumers with disclosures and accurate information. They will also investigate whether debt collectors have harassed or deceived consumers in the pursuit of payment.

The bureau estimates that about 30 million Americans have an average of $1,500 in debt subject to collection. Debt collectors typically report consumers’ collection status to credit bureaus, meaning any inaccuracy could affect the ability to get a loan.

‘‘Millions of consumers are affected by debt collection, and we want to make sure they are treated fairly,’’ bureau director Richard Cordray said in a statement. ‘‘We want all companies to realize that the better business choice is to follow the law — not break it.’’

The $12.2 billion debt-collection industry has routinely come under fire for the tactics used to get consumers to settle their balances.

A report last year by Consumers Union found debt collectors filing an increasing number of lawsuits against borrowers without proper documentation.

In some cases, companies were suing consumers over debts that were already paid or winning court judgments without proof they owned the debt.

‘‘Larger companies tend to be the ones routinely filing mass cookie-cutter lawsuits, having huge databases of information that might be inaccurate, which is part of what causes all of these problems,’’ said Suzanne Martindale, a lawyer with Consumers Union.

The added layer of regulation may hurt collection companies, 85 percent of which have 50 or fewer employees, said Mark Schiffman, a spokesman for the Association of Credit and Collection Professionals, a trade group.

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