CFPB Complaint Report Returns to Debt Collection

The CFPB recently issued its monthly report of consumer complaints and turned its focus back to debt collection.  The Report is a high level snapshot of trends in consumer complaints and provides a summary of the volume of complaints by product category, by company and by state.  Additionally, it highlights a product type and a geographic area. 

Here are the highlights:

• Debt collection, mortgage and credit reporting continue to be the leaders in complaint volume;
• Debt collections complaints comprise 27% of the total cumulative complaints received to date by the CFPB;
• Student loan complaints showed the greatest increase over the same period for 2015 with a 120% increase. The Bureau attributes a portion of this increase to the CFPB’s updated student loan intake form which now includes complaints about federal student loan servicing;
• Prepaid products showed the greatest percentage decrease for the September-November 2016 period with a 59% decrease;
• On a monthly basis, debt collection, credit reporting and mortgage complaints were all down in November with credit reporting showing the most significant decrease at 21%;
• While debt collection complaints were down in November, they still comprised 29% of all complaints submitted in the month;

DEBT COLLECTION SPOTLIGHTED

      This month’s report focused on debt collection complaints and revealed the CFPB’s concerns with first party collections and medical collections in particular.  As was the case when the CFPB last highlighted debt collection in March of 2016, the most common complaints involved continued attempts to collect debt the consumer claimed was not owed, as well as communication tactics. Specifically, the CFPB noted:

• Consumers complained they were contacted about debts that were no longer owed and were not being provided with documentation to verify the debt.  In keeping with this, first and third parties attempting to collect debt should note that validation of debts was one of the primary focuses of the CFPB’s third party debt collection proposal and compliance officers should be reviewing their policies and procedures to insure adequate measures are in place to verify debts are owed.
• Consistent with this observation, the CFPB reports that consumers complained that accounts were forwarded to third party debt collectors for debts that were not owed and that, upon dispute, the third party debt collector returned the account to the creditor who then forwarded it to another third party debt collector;
• Consumers also complained that accounts were forwarded to third parties prior to the first party making contact about an outstanding balance;
• Regarding communication tactics, the CFPB singled out excessive calls and calls to the consumer’s place of employment as the primary sources of complaints. 

What's New?

Medical debts are at the forefront of the Report.  The CFPB noted the following concerns with regard to collection of medical debt:

• Third party debt collectors attempting to collect incorrect balances;
• Third party debt collectors attempting to collect accounts where there was an existing payment plan in place with the service provider;
• Amounts being pursued that were covered by insurance; and
• Failure by the third party debt collectors to verify the debt;

There is also a notable addition to the debt collection spotlight.  While the report has typically singled out debt collection complaints by company, this month’s report additionally includes a table showing the companies with the highest and lowest rates of untimely responses to debt collection complaints.