May Dip in Debt Collection Suits and Complaints Contrasts 2014 Data

From April to May 2014, complaints to the Consumer Financial Protection Bureau about debt collectors fell nearly 16 percent, according to the latest data from WebRecon. There were a total 3188 complaints filed against debt collectors in May 2014, but the data shows that 95 percent of complaints received a timely response, and 69 percent of complaints were closed with explanation. Consumers accepted 83 percent of the responses.

In addition, lawsuits claiming violations of the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA) also fell by 15.4 percent and 8.3 percent, respectively. In fact, the only area in the data where lawsuits increased over the course of the month was for the Fair Credit Reporting Act (FCRA); lawsuits increased 3.4 percent compared to April 2014.

While these trends seem like good news (and to an extent, they are), they haven’t proven to be the norm for 2014 as a whole. Compared to May 2013, TCPA lawsuits have increased by nearly 39 percent, and FCRA lawsuits have increased by nearly 26 percent. FCRA and TCPA litigation are both still up very significantly over this time last year (11 percent and 32.1 percent, respectively). FDCPA lawsuits, however, have decreased almost five percent compared to this time last year. For 2014 as a whole, FDCPA lawsuits have decreased 19.3 percent.

These statistics are part of some larger trends brewing in the debt industry. TCPA lawsuits are on the rise, and are poised to become the second most-litigated statute in debt collection after FDCPA. And while the CFPB consumer complaint portal has yet to celebrate its first birthday, the data will serve as a good barometer for how consumers are responding to the debt industry, and how collection agencies are responding to the complaints themselves.

But these statistics shouldn’t scare you. They should motivate you. This is an opportunity for collection agencies to be proactive in their response to the industry’s new legal landscape.

Get the most up-to-date data on courtroom and complaint trends in our new webinar, insideCompliance: Decoding Litigation Data in 2014, August 5 at 2 p.m. Eastern. Learn how to use data to fill any compliance gaps and protect your agency from potential lawsuits. Jack Gordon of WebRecon (the man who’s been collecting this industry data all along!) will provide in-depth data analysis and forecasts. John Bedard of Bedard Law Group will explain how the data impacts your compliance obligations. You’ll have the chance to ask Mr. Gordon and Mr. Bedard questions during the live Q&A portion of the webinar.

Want to know how the CFPB may use its new consumer complaint data in the future? To the Point: CFPB Collection Complaints can help. We’ve compiled the key points from our insideCompliance webinar series into one user-friendly report, including the top four things your company can do right now to perfect its complaint management system.

If you’re looking for specific tools to tackle the rise in TCPA lawsuits, call recording may be your saving grace. In these days of increased scrutiny from the CFPB, consumer groups and other legislators, call recording can quell the “he-said-she-said” argument with consumers. Join insideOperations: Call Recording on July 22 at 2 p.m. Eastern; Anita Tolani, Attorney at Weinberg, Jacobs & Tolani, LLP and Paul Maggioli, Chief Technology Officer at Castel Communications,  will discuss industry best practices in call recording.