Thursday’s House Financial Services Committee hearing on the Consumer Financial Protection Bureau’s semi-annual report, released in March, kicked off with a conversation about the measures the Bureau has taken to regulate the debt collection industry and crack down on improper collections. CFPB Chairman Richard Cordray said that, in its supervisory role, the CFPB oversees about 60 percent of receipts in the debt collection industry, and that “bad actors in this market are a detriment to consumers and every debt collector that operates lawfully.”

“The CFPB has insured that, for the first time, someone is monitoring industries with a history of problematic interactions with consumers; this includes debt collectors,” Rep. Maxine Waters (D-Calif.) echoed in her opening statement.

But much of the committee’s line of questioning skipped the 114-page report and dealt with recent allegations that the CFPB has been working with the U.S. Trustee Program (USTP) to collect bankruptcy data that includes the private financial information of millions of Americans.

On April 13, 2012, CFPB requested internal business documents from Morgan Drexen,  an administrative support company for bankruptcy lawyers, as well as the document management database “in which Morgan Drexen has electronic records relating to Debt Settlement.” Then in May 2012, USTP used a few bankruptcy cases in Florida to request millions of other bankruptcy files nationwide that were in the possession of Morgan Drexen. Cordray had no comment on the issue.

While these links are still only speculative, Cordray said that the data CFPB does collect has nothing to do with consumer behavior patterns.

“We have to oversee the financial institutions,” Cordray said. “We have to understand the pattern of how they treat their customers to see if consumer protection laws are being followed or violated.”

According to Cordray’s testimony, the CFPB collects this information in three ways: market monitoring, supervision of financial institutions and by collecting and addressing consumer complaints submitted directly to the Bureau. (We’ve compiled the top consumer questions about debt collection, and the CFPB’s answers, in our newly updated report: CFPB’s Advice to the Consumer.)

During the hearing, Rep. Nydia Velázquez (D-NY) also addressed the issue of medical debt reporting. Cordray lamented that “many of us will go to the doctor’s office with a bill covered by insurance…but we may not know when we leave the office how its going to be handled.” He urged for legislative attention and action on the issue.

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