Since it opened its doors in 2011, the CFPB has accepted consumer complaints on a variety of consumer products. Beginning with credit card complaints in 2011, the CFPB has expanded its complaint portal to accept complaints on debt collection, credit reporting, mortgage, bank accounts and services, student loans, pay day loans, prepaid cards and other products. On April 1, the CFPB issued an Annual Report synthesizing consumer complaints in 2015 and the CFPB’s response. Here are the important takeaways for the debt collection industry:
The Good News. The good news for debt collectors is that while debt collection continues to create the highest volume of complaints, the complaint volume decreased in 2015 when compared to 2014. In 2014, debt collection comprised 35% of all complaints received by the CFPB. In 2015, that percentage decreased to 31%. Additionally, the overall volume of debt collection complaints also decreased.
Continued Attempts to Collect a Debt that is Not Owed. As we have indicated in prior posts based upon the monthly complaint reports, the leading complaint is regarding attempts to collect a debt that the consumer does not owe. Importantly, the issue is not in the attempt to collect itself, but rather that the calculation of the amount owed is inaccurate (usually pointing to a problem originating with the creditor). The volume of complaints in this category (40% of all debt collection complaints) provides some explanation for regulators’ continued emphasis and expectation that banks and other regulated entities provide and that collection entities (including law firms) demand supporting documentation prior to initiating collection efforts.
Communication Tactics. Complaints regarding communication tactics and particularly telephone collections comprise 18% of all debt collection complaints. Consumers indicate that the calls are too frequent, placed at inconvenient times of the day, placed to third parties or placed to the consumer’s place of employment. Debt collectors should review their policies and procedures to insure compliance with the FDCPA in this respect and also monitor their call volume. We anticipate that the FDCPA will address this issue with some specificity when it publishes its proposed rulemaking.
Lack of Debt Verification. The Report notes that consumers are frustrated with the information they are provided in compliance with section 1692g requests for validation. The Report notes further frustration when collectors simply choose to cease collection efforts in response to validation requests. Again, debt collectors and creditors alike should monitor this area as one likely to be addressed in the proposed rulemaking. Again, it will likely be tied to an expectation that creditors provide and collection entities require supporting documentation before commencing collection efforts.
Increase in Complaints about Medical Debt Collection. Complaints regarding the collection of medical debt increased in 2015. According to the Report, the complaints were focused around a concern that insurance should have already paid off the debt being collected.