Wednesday, April 1, 2015

CFPB Highlights Consumer Complaints in Annual Consumer Response Report

The CFPB issued its Consumer Response Annual Report this week, highlighting the volume and trends in complaints received by the CFPB in 2014.  73% of the complaints received in 2014 were focused on three products: debt collection (35% of all complaints), mortgage (20%) and credit reporting (18%).

 Debt Collection Complaints Lead the Way

The CFPB began receiving debt collection complaints in November of 2013. 2014, therefore, was the first full year of complaint concerning debt collection. The three most common complaints concerning debt collection in 2014 were:

§  Attempts to collect debts that were not owed. 37% of the debt collection complaints fell in this category and it was the most common debt collection complaint.  More specifically, the CFPB Report suggests that consumers frequently complained that the calculation of the amount owed was inaccurate.

§  Communication tactics. Complaints in this category included the frequency of calls, calls at inconvenient times and places and calls to third parties

§  Debt validation complaints.  Consumers are dissatisfied with the documentation they receive in response to debt validation requests.  Consumers also complained that debt collectors will close an account rather than send them documentation when they dispute the debt.

Additionally, the Report calls attention to a couple of trends in the debt collection complaints.  Specifically, the Report noted that consumers complained that debt collectors attempted to collect time barred debt and engaged in passive debt collection vis-à-vis credit reporting.  The Report also called attention to the high volume of complaints regarding medical debt collection. Don’t be surprised if these issues receive heightened CFPB attention in 2015 either through examination, enforcement or both.

Mortgage Complaints are Still a Big Issue

The majority of mortgage complaints fell into two rather broad categories. 

§  Problems faced by consumers who are in default on their mortgages.  Almost half of the mortgage complaints fell into this category.  Specifically, consumers complained about delays and issues with their modification applications, dissatisfaction with short sales, and confusion with fees assessed in connection with loan reinstatements.

§   Issues related to making payments.  The majority of the complaints in this category appeared to arise when mortgages were transitioned from one servicer to another.

Credit Reporting Rounds out the Top Three.

Complaints about credit reporting increased significantly in 2014.  According to the CFPB, the number of complaints involving credit reporting increased by 85% between 2013 and 2014.  The CFPB attributes the increased complaint volume to increased consumer awareness and access to credit reports, the availability of the Consumer Complaint Database and changes in consumer complaint handling by the credit reporting agencies.  The majority of the complaints were directed against the three major credit reporting agencies.   The overwhelming majority of these complaints involved incorrect information appearing on consumer’s credit reports.  According to the Report, “[a]mong consumers’ complaints about incorrect information appearing on their credit report, the most common concerns were about incorrect account status and information that does not belong to the consumer.”

The full report can be found here: Consumer Response Annual Report

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