CFPB Monthly Report Reveals 39% of Complaints Concern Debt Collection

Last week, the Consumer Financial Protection Bureau (CFPB) released its Monthly Complaint Report for November, which highlights debt collection complaints. The most common category of complaint received is “attempts to collect on a debt that a consumer says is not owed.”

The product with the largest increase in complaints by far is student loans, with a 120% increase over the same period (September – November) in 2015. Much of this increase can be attributed to the fact that in February 2016 the CFPB updated its student loan intake form to accept complaints about Federal student loan servicing. They had previously only reported complaints about private student loans.

You can see the full Monthly Complaint Report here.

As of December 1, 2016, the CFPB reports that they have handled more than a million complaints nationally, with approximately 285,000 of those complaints being about debt collection.

Consumers complained most frequently about the following issues:

Consumers reported being contacted by collectors for debts that were no longer owed and not being provided documentation to verify the debt, even after some of these consumers submitted requests for verification of the purported debts.
Consumers complained that first-party collectors (creditors collecting on their own debts) forwarded their accounts to third-party collectors for debt that was not owed.
Upon dispute with the third-party collector, some consumers report that the debt is sent back to the first-party, only to be later sent to a new third-party collector. Some consumers report that the onus of disproving that the debt is not owed is placed on them throughout this cycle.
A number of consumers complained their accounts were forwarded to third-party collectors without any prior contact from the first-party collectors of an outstanding balance. Some complained that accounts had been negatively reported to credit reporting companies even after communicating with the first and third-parties. Some consumers also reported that their accounts were not in a delinquent status prior to contact by third-party collectors.
Where “Medical” was identified as the type of debt, consumers selected issues of debt was paid and debt was not mine for the majority of the complaints.
Frequently, consumers state that third-party debt collectors attempted to collect medical debt with incorrect balances. Some of these consumers reported they had secured a payment plan with the original party; however, the account was forwarded to collection agencies without regard to prior approved payment plans. Other complaints involved consumers’ insistence that the amount due was erroneous as they believed the amount pursued by collectors was for expenses covered by their medical insurance.
Consumers who submitted complaints about medical debts said that despite having already paid their balances in full, their accounts were turned over to collection agencies.
These consumers often reported that they did not receive a verification of debt from the collector.
Consumers report that frequent or repeated calls are a commonly used collection tactic.
Consumers describe collection calls to their place of employment even after having informed collectors that contact at work was prohibited by their employers. Some consumers said they received multiple calls daily or weekly from collectors and expressed feelings of harassment.

The CFPB reports that the three debt collection companies they receive the most average monthly complaints about are Portfolio Recovery Associates, Inc., Encore Capital Group, and ERC.

insideARM Perspective

The CFPB complaint portal has certainly been beneficial to consumers. Before the Bureau, the Federal Trade Commission was the only (Federal) place a consumer could lodge a complaint. However that agency did not have the mission of complaint resolution – only of gathering and aggregating. Companies definitely respond to CFPB complaints.

However, since the CFPB began collecting complaints, industry has noted the lack of context provided by the Bureau when reporting statistics, and has reported limitations with the complaint forms and process.

In his keynote address at the 2016 insideARM Larger Market Participant Summit, former CFPB Senior Advisor Jim McCarthy argued that the ARM industry should make regular, reasonable arguments to the CFPB that lumping data from responsive and unresponsive collections firms together skews the data in a way that can mislead readers about the ARM industry.

One change we could see in 2017, as reported by insideARM in November 2016, involves the potential addition of a “Consumer Response Customer Response Survey” to the CFPB’s complaint process.

Last month, insideARM published A Former CFPB Insider’s Guide: Things to Consider Before Responding to Your CFPB Complaints, written by Jim McCarthy, which details why collection firms should care about the proposed changes to the process.

insideARM has reported extensively on complaints, and on the CFPB Complaint Portal. Here is a representative group which follows the history: