CFPB Consumer Complaint Data Gives Compliance Clues to Debt Collectors

Now that the Consumer Financial Protection Bureau has added 5,329 complaints about debt collection to its Consumer Complaint Database, the total number of complaints has ballooned to more than 155,000. The CFPB released this new data to the public at the same time that it announced an Advanced Notice of Proposed Rulemaking that seeks to tighten governance of debt collectors.

It’s a lot for the debt collection industry to digest in one day. But upon further examination of the data, there is good news for collection agencies! First, debt collection complaints now only make up about three percent of all the CFPB’s consumer complaints. Also, of the 5,329 complaints submitted, 5071 consumers reported a timely response from the company; only 843 consumers disputed their resolution. And in 66.5 percent of cases, companies closed the consumer complaint with just an explanation.

Approximately 20 percent of all consumer complaints fell under “communication tactics.” Of those 1,055 complaints, 659 consumers cited frequent or repeated calls; 90 complained about continuing to get calls even after they had filed a written cease of communication with the company.

These complaints underscore huge potential violations of the Telephone Consumer Protection Act, which was originally designed to restrict telephone solicitations, but has since been interpreted more broadly to include some calls made by debt collectors. Collection agencies need to make sure their communications with consumers, especially as they move to exclusive use of cell phones, doesn’t land them in court; through September 2013, TCPA suits are up a whopping 70 percent compared to last year. Our very first inside Compliance webinar, Translating TCPA for Debt Collectors, can provide the “news you can use” to combat what has proven to be a popular consumer complaint and a huge legal headache.

Also be sure to check out our To the Point: Collection Call Compliance. We’ve honed answers from our popular Ask the Attorney to address specific questions for collection agencies that try to contact consumers over the phone: What are some the biggest dos and don’ts when calling debtors? What is the industry– particularly first-party collectors and lenders – doing to combat the challenges of contacting consumers on their cell phones? How often should you scrub your cell phone list to ensure that the cell phone number is still registered to that consumer before auto-dialing?

Furthermore, consumers submitted 1,272 complaints about their credit cards. Of those complaints, 232 had an issue with disclosure verification of debt, while 118 were about false statements or representation. Together, these issues make up more than 1/4 of all credit card complaints.

This goes to show how important communication – especially disclosure and error resolution – is when consumers rely on credit cards, and in turn increasingly rely on online pay portals to manage them. That’s why we recently released our Compliance Overview: Regulation E, to give the debt collection industry a first-of-its-kind report with real-world tools for regulatory compliance.

Wednesday’s news out of the CFPB won’t be a one-off ordeal. The public has until February 2014 to submit their comments to the ANPR. And you better believe that with increased scrutiny of the debt collection industry, the Bureau will be doing a lot more direct interaction with consumers. Even before releasing this data, the CFPB had been compiling its answers to top consumer questions about debt collection; this could provide the industry with a unique perspective in how the Bureau wants to shape the future of the industry to align with a questioning and critical public. We’ve compiled the CFPB’s latest answers to top debt collection questions in our CFPB’s Advice to the Consumer report; you can use it as a training tool to better understand what the Bureau expects when collection agencies interact with consumers.

What do you think the industry reaction to this new information, and potential regulation, should be? Are you surprised at all by the CFPB’s data? Let us know in the comments!