Looking Forward to the CFPB Complaint Resolution Process

Stephanie Eidelman

When there is bad press about a collection firm, so many of us have responded over the years with the argument, “yes, but there are bad apples in every industry and 99% of debt collectors are well intentioned, so those few shouldn’t spoil the bunch.”

Well, it seems that this argument isn’t having much of an impact. Why? Because in fact, it’s not exactly true! At least in as much as the way the FTC reports complaints against debt collectors in its report to Congress.

If you had analyzed FTC complaint data in the detail that I have, you’d start to see that one reason there are so many complaints is because in fact there are many, many bad apples lumped into the group. They may only appear on the report as one or two line items each, but together, as a percentage, they are quite significant and represent as many as 30-40% of all complaints.

So I think what people in the industry really mean is that 99% of the companies we know are good apples.

The problem for everyone is that the ones we don’t know are hard to find. Why? They don’t identify themselves truthfully. They use different names, they call themselves “department of crime and punishment,” they refuse to give any name, they have no website, they don’t publish a physical address, their phone numbers are disconnected within months of a complaint being filed. They in fact behave like illegitimate – or rogue – entities.

Here’s a crazy thought – companies whose names show up the most on the consumer complaint list should get an AWARD. Why? Because you can easily work with them to resolve the complaints! They give their legitimate name. The same name. Every time. They have websites – many even list their management team. There is a designated compliance person to whom you could forward consumer complaints for resolution. They will actually respond. They do not hide in the shadows. They behave like legitimate companies.

Of course it would be ideal if there were literally zero complaints. But because of the nature of what collectors do, and because of the laws of statistics given the sheer number of contacts made – it’s natural that there will be people who are moved to register their unhappiness.

So it behooves all of us to address the issue. Not just lament it, but re-frame the question, put our heads together, and address it. In my opinion, this problem is as big for regulators as it is for ARM firms. Regulators’ primary mission is to minimize harm to consumers. If they only focus on those complaints that can easily be verified, their mission will be far from complete.

Rogue/fake/unlicensed or whatever you want to call these folks, are literally in business to deceive consumers. Their behavior also serves to embarrass their clients. And their stench touches everyone; creditors and collectors, in the eyes of the public. Perhaps the time has even come to enroll creditors in efforts to define standards and defend the industry?

I think the fact that the CFPB is planning to facilitate the resolution of complaints is an excellent development. Legitimate collectors already have a great track record of responding to and resolving 85% of complaints through the Better Business Bureau – a better rate than most industries; I see expansion to the federal level as a great mechanism to help publicly separate legitimate companies from rogue ones.