cfpb - Credit and Collection News Whitepaper_cfpb-co… · II. Overview The purpose of the Report – Analyzing CFPB Consumer Complaint Data In 2010, the U.S. Congress passed the

www.acainternational.org Consumer

Complaints

www.acainternational.org

March 6, 2014

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Research

© 2014 ACA International. All Rights Reserved.

TAKING A CLOSER LOOK: Analysis of the Consumer Financial Protection Bureau´s Debt Collection Complaints

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Table of Contents:

I. Executive Summary ....................................................................................................... 2 Introduction ............................................................................................................................ 2 Key Findings........................................................................................................................... 2 Concerns with CFPB’s Complaint Database ........................................................................... 3 Recommendations to the CFPB and Others Regarding Complaints ....................................... 3

II. Overview ........................................................................................................................ 4

The purpose of the Report – Analyzing CFPB Consumer Complaint Data .............................. 4 ACA Members and Complaints............................................................................................... 4 ACA and the CFPB................................................................................................................. 4 The Recovery of Consumer Debt is Vital to Federal, State and Local Economies .................. 4

III. Data Analysis ............................................................................................................. 5

Proportion of Consumers with Collection and Average Collection Amount per Person ........... 5 Amount of Consumer Complaints Received by Month ............................................................ 5 Number of Complaints by Sub-Products ................................................................................. 6 Percentage of Complaints Coming from Third-Party and Creditors ......................................... 6 Number of Complaints by Key Issues ..................................................................................... 7 Breakdown of Issues by Sub-Group ....................................................................................... 7 Allocation of Issues by Sub-Group .......................................................................................... 8 Complaints Received in a Timely Fashion .............................................................................. 8 Outcome of the Progress Status of Companies Complaints ................................................... 9 Complaints by Submitted Channel .......................................................................................... 9 Number of Complaints by State in Comparison to the Total Debt Collected in 2010 ..............10 Top 50 Companies Receiving Complaints .............................................................................11

IV. ACA Recommendations/ Conclusion ......................................................................11

About ACA International (www.acainternational.org) With offices in Washington, D.C. and Minneapolis, ACA International is the largest trade association

representing the consumer credit and debt collection industry. Our nearly 5,000 member organizations

employ more than 300,000 men and women as third-party debt collectors, debt buyers, collection attorneys,

creditors and industry service providers. ACA has 41 state-level units representing the 50 states and one unit

representing more than 60 countries abroad. The recovery of consumer debt is very important to America´s

credit-based economy and, according to an economic impact study by Ernst & Young, third-party collection

agencies recovered $55 billion on behalf of creditor clients in 2010.


http://www.acainternational.org/

http://www.acainternational.org/impact


2

I. Executive Summary

Introduction

ACA International’s Research Department created the following analysis of the Consumer Financial

Protection Bureau’s (CFPB) complaint database for debt collection. We undertook this study to gain

insight into consumer complaint issues and, in particular, to learn more about the information and to

use it for the collection of debts. Our goals with this analysis are to improve communication between

debt collectors and customers, and to mitigate the number of complaints made by customers.

This report is based on a sample of 14,328 complaints received by the CFPB between July 2013 and

February 2014. In addition, this report uses data from the Quarterly Report on Household Debt and

Credit from the Federal Reserve Bank of New York to show the average balance of accounts in third-

party debt collections (Q1 2003-Q4 2013).

Since the 1980s, the use of consumer credit rose steadily reaching its peak in 2008, when the

United States economy entered into the biggest economic downturn since the Great Depression.

Consumer spending habits created massive growth in the level of delinquent/defaulted debts owed

to businesses and government. This includes both discretionary and non-discretionary spending.

America’s credit-based economy relies on the recovery of rightfully owed consumer debt. As the

nation’s economy faltered, it triggered wide-spread efforts by public and private sector creditors,

third-party debt collectors working on behalf of creditor clients, and companies that have purchased

written-off consumer debts to seek to recoup what was possible. Without these efforts, companies

can’t pay their bills and keep people employed; the price for goods and services increases; the

availability of affordable credit decreases; and governments are forced to cut services and/or raise

taxes to cover shortfalls.

A heavier reliance on credit coupled with economic turmoil has resulted in more than one billion

consumer contacts per year. Conversely, complaints by consumers contacted about a delinquent or

defaulted debt also increased. Consumers don’t want to be told they owe money and it often

produces an emotionally charged response when contacted.

ACA International members take complaints against debt collectors very seriously and have pledged

to work with key stakeholders including the CFPB, Federal Trade Commission (FTC), Better Business

Bureau, state lawmakers, state regulators and state attorneys general to best balance consumer

protections and the ability to recovery a rightfully owed debt.

Key Findings

The CFPB makes publicly available data that includes company name, consumer ZIP code, product,

sub–product, issue, complaint submission date, and response timeliness. Comparison of key

findings from ACA’s previous report on CFPB complaints in November 2013 finds little to no changes

among general trends in February 2014.

In addition, ACA supplemented analysis of the CFPB’s data with the Quarterly Report on Household

Debt and Credit of the Federal Reserve Bank of New York to provide a snapshot of the average

balance of accounts in third-party debt collection:

The average balance of accounts in third-party debt collection increased from $1,458 in the third

quarter of 2013 to $1,520 in the fourth quarter of 2013, representing a 4.29% increase.

The highest number of identifiable complaints was for credit card and medical debts. However,

taking into account the category “others” and “not specified” together, 50.41% of the complaints

were not associated with a particular debt collection product.



3

The most reported consumer concern was being contacted about “a debt they did not believe

they owed.” In second place was “communication tactics” followed by “disclosure verification of

a debt.” However, there is no subsequent follow-up on whether these consumer concerns were

resolved after communications with creditors or debt collectors. Further, a closer look at the

“communications tactics” sub-section identifies the most frequent concern was the frequency of

calls. It should be noted that a “catch-22” under the Fair Debt Collections Practices Act (FDCPA)

is prompting an increasing number of debt collectors to not leave voicemail and instead make

more calls to consumers in the hope of reaching a live person.

Almost all the complaints received by the CFPB were responded to in a timely fashion. Based on

the data, 96% of the complaints were responded to with a timely response.

Of the 14,328 complaints analyzed, 94% were “closed,” “closed with non-monetary relief” or

“closed with explanation.”

Concerns with CFPB’s Complaint Database

There is a lack of clarity in the data as to whether complaints are against first-party creditors,

payday lenders, third-party debt collection companies or others. Aggregating these creates

uncertainty about complaints possibly reported more than once, painting an inaccurate portrait

of third-party debt collectors.

The limited amount of information provided about consumers to debt collectors in the CFPB

complaint process makes accurate identification and timely response difficult.

The CFPB’s description of a complaint, coupled with the fact that it does not investigate whether

any real wrongdoing has occurred or whether it is an inquiry/request for additional information,

enables the data to create an inaccurate perception of the extent of wrongful conduct.

Due to the 60-day lag time from company response to consumer dispute of the company

response, coupled with a lack of completeness in the database, an accurate assessment on the

number of disputes cannot be made at this time.

Recommendations to the CFPB and Others Regarding Complaints

Clearly identify first-party collections from third-party collections to ensure accuracy in complaint

reporting and avoid the potential for double counting.

Maintain context by resisting the temptation to use a broad-brush to paint debt collectors

negatively or make assumptions about the behavior of an entire industry solely on top line

volume data.

Provide more consumer detail to debt collectors who are the subject of a complaint to increase

the likelihood of more easily identifying the information needed to resolve the consumer’s

complaint.

Adopt definition of a complaint that is limited to consumer allegations of wrongful conduct and

does not include the amorphous concept of general consumer dissatisfaction outside of wrongful

conduct.



4

II. Overview

The purpose of the Report – Analyzing CFPB Consumer Complaint Data

In 2010, the U.S. Congress passed the Dodd-Frank Act that created the CFPB. Among its many

responsibilities, the CFPB supervises the third-party debt collection industry and maintains a

database of complaints against debt collectors.

In July 2013, the CFPB officially began accepting consumer complaints pertaining to debt collection

whereby consumers may register a complaint and have it reviewed/resolved through

communications with a debt collector.

ACA International’s Research Department has analyzed a total of 14,328 debt collection complaints

released by the CFPB, dating from July 2013 to February 2014. Comparison of key findings from

ACA’s previous report on CFPB complaints in November 2013 finds little to no changes in February

2014. The purpose of this analysis is to better understand the data beyond simply reviewing the total

number of complaints.

ACA Members and Complaints

Third-party consumer debt collectors make approximately one billion contacts to consumers per year.

ACA members are aware of consumer complaints and want to work seriously with the consumers to

resolve their concerns. ACA’s Code of Ethics requires each ACA member company to identify a

specific contact designated to work with consumers to address complaints against a third-party debt

collector. ACA is committed to helping members better understand and comply with federal, state

and local laws governing the collection of consumer debt. Moreover, we provide exceptional training

to help members prevent complaints from occurring and to meaningfully resolve them if they do.

ACA members realize that consumers most often prefer to share complaints with intermediaries

such as the CFPB. However, we welcome the opportunity to work directly with consumers to resolve

complaints. Communication is the cornerstone for effective consumer debt collection and, when

given the opportunity, ACA members continue to show they can be successful in appropriately

resolving consumer complaints. According to the Better Business Bureau, in 2012, collection

agencies resolved 86% of the consumer complaints received compared to the national average of

77% for all other industries combined.

ACA and the CFPB

ACA has sought a mutually respectful and collaborative relationship with the CFPB. ACA efforts have

included, but are not limited to, the following:

Educating CFPB leaders on the complexity of the debt collection industry.

Monitoring the CFPB’s actions and responding as appropriate on behalf of ACA members.

Inviting CFPB leaders to speak at our conferences and interact with industry members.

Participating in industry relevant hearings, work groups and panels.

Preparing ACA Members for supervision, rulemaking, enforcement and complaint resolution.



5

The Recovery of Consumer Debt is Vital to Federal, State and Local Economies

America’s credit-based economy relies on the recovery of rightfully owed consumer debt. As the

nation’s economy faltered, it triggered wide-spread efforts by public and private sector creditors,

third-party debt collectors working on behalf of creditor clients, and companies that have purchased

written-off consumer debts to seek to recoup what was possible. Without these efforts, companies

can’t pay their bills and keep people employed; the price for goods and services increases; the

availability of affordable credit decreases; and governments are forced to cut services and/or raise

taxes to cover shortfalls.

ACA regularly conducts research to assess the actual impact third-party debt collection has on the

national and state economies. Our most recent data, conducted by Ernst & Young in 2011, can be

found at www.acainternational.org/impact.

III. Data Analysis This section provides an analysis of the data gleaned from the 14,328 consumer complaints

pertaining to debt collection that have been submitted to the CFPB between July 2013 and February

2014. Additionally, we have used the available data from the Quarterly Report on Household Debt

and Credit provided by the Federal Reserve Bank of New York.

Proportion of Consumers with Collection and Average Collection Amount per Person

The graph below shows the proportion of consumers with collection at a national level between 2003

and 2013, represented in the blue line and read from the left axis. The purple line is read from the

right axis and represents the Average Collection Amount per Person.

The proportion of consumers in collection has increased over the past 10 years, remaining at a

relatively constant rate of 14% over the past four years. The average collection amount per person

increased 4.29% from $ 1,458 in the third quarter of 2013 to $ 1,520 in the fourth quarter of 2013.

1,520.29

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

8%

9%

10%

11%

12%

13%

14%

15%

03

:Q1

03

:Q3

04

:Q1

04

:Q3

05

:Q1

05

:Q3

06

:Q1

06

:Q3

07

:Q1

07

:Q3

08

:Q1

08

:Q3

09

:Q1

09

:Q3

10

:Q1

10

:Q3

11

:Q1

11

:Q3

12

:Q1

12

:Q3

13

:Q1

13

:Q3

Proportion of Consumers with Collection (left axis)

Average Collection Amount per Person(right axis)

Data Source: Federal Reserve Bank New York


http://www.acainternational.org/impact


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Amount of Consumer Complaints Received by Month Based on the data below, consumer complaints per month are trending upward. The increase from

September 2013 of 2,010 complaints to December 2013 of 2,415 complaints represents an

increase of 20.15%. The number of complaints in January 2014 did increase to 2,886. Data for

February only reflects complaints through 17 days of the month.

Number of Complaints by Sub-Products Taking a closer look at the sub-products, the highest number of identifiable complaints was for credit

cards with 3,313, followed by medical products with 1,381 complaints. A total of 4,191 complaints

were not directly associated with a certain debt collection product (e.g., phone, health club, etc.) and

3,032 complaints were not specified.

Percentage of Complaints Coming from Third-Party and Creditors ACA reviewed the list of companies and was able to identify the number of companies that were not

third party-debt collectors, including a number of financial institutions and banks. Of the total of

14,328 complaints, approximately 2,822 or 20% were made against companies conducting first-

party collections (credit card companies, pay day lenders, or other direct creditors).

861

1466

2010 1790

2436 2415

2886

464

0

500

1000

1500

2000

2500

3000

3500

Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14

4191

3313 3032

1381

625 558 457 410 361

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Other(phone,

health club,etc.)

Credit card Notspecified

Medical Mortgage Payday loan Auto Non-federalstudent loan

Federalstudent loan

20%

80%

First Party/ Others Third Party



7

Number of Complaints by Key Issues A total of 5,764 complaints pertained to “a debt the consumers believe they did not owe.”

“Communications tactics” followed at 2,911. The third most reported complaint is “disclosure

verifications” of a debt totaling 2,497. However, there is no follow-up data on how many of these

complaints were eventually proven to be accurate by the debt collectors in question.

Breakdown of Issues by Sub-Group Analysis of the key sub-groups provides a deeper look at complaints.

5764

2911 2497

1168 1083 905

0

1000

2000

3000

4000

5000

6000

7000

Cont'd attemptscollect debt not

owed

Communicationtactics

Disclosureverification of debt

Improper contactor sharing of info

False statementsor representation

Taking/threateningan illegal action

264

353

1572

3575

0 500 1000 1500 2000 2500 3000 3500 4000

Debt was discharged in bankruptcy

Debt resulted from identity theft

Debt was paid

Debt is not mine

Cont'd attempts collect debt not owed

121

196

242

482

1870

0 500 1000 1500 2000

Called outside of 8am-9pm

Used obscene/profane/abusivelanguage

Called after sent written cease ofcomm

Threatened to take legal action

Frequent or repeated calls

Communications tactics

148

573

1776

0 500 1000 1500 2000

Not disclosed as an attempt to collect

Right to dispute notice not received

Not given enough info to verify debt

Disclosure verification of debt

32

259

321

556

0 100 200 300 400 500 600

Contacted me instead of my attorney

Contacted employer after asked notto

Contacted me after I asked not to

Talked to a third party about my debt

Improper contact or sharing of info

24

79

120

860

0 200 400 600 800 1000

Indicated shouldn't respond to lawsuit

Indicated committed crime not paying

Impersonated an attorney or official

Attempted to collect wrong amount

False statements or representation

26

106

121

144

230

278

0 50 100 150 200 250 300

Sued where didn't live/sign for debt

Attempted to/Collected exempt funds

Seized/Attempted to seize property

Sued w/o proper notification of suit

Threatened to sue on too old debt

Threatened arrest/jail if do not pay

Taking/threatening an illegal action



8

Allocation of Issues by Sub-Group

The graph below shows the allocation of issues by sub-group, demonstrating the percentage of each

sub-group to its main issue. It is interesting to observe that 47% of the complaints belonging to

medical issues are related to debts that consumers believe they do not owe. In the same way,

medical debt has a relatively high rate of complaints related to “disclosure/verification of debt.”

Student loans have one of the highest rates of complaints related to “communications tactics” and

“false statement or representation.”

Complaints Received in a Timely Fashion

The vast majority of the complaints were responded to in a timely manner, 96% respond on time,

whereas 4% did not respond on time. This shows the commitment of the debt collection industry to

comply with the CFPB’s established timeline for responding to complaints.

25% 21%

30%

15% 21%

31%

15%

33%

23%

33%

33%

24% 47% 33%

26%

48% 16%

46%

12% 17%

11%

23%

22% 15%

18%

5%

17%

6% 10%

12%

8%

9%

8%

8%

9%

4%

15% 9% 17%

5%

8% 15%

6%

15%

7% 9% 10%

6% 2%

6% 5% 5%

22%

3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Auto Credit card Federalstudent

loan

Medical Mortgage Non-federalstudent

loan

Other(phone,

health club,etc.)

Paydayloan

Notspecified

Taking/threatening an illegal action

Improper contact or sharing of info

False statements or representation

Disclosure/ verification of debt

Cont'd attempts collect debt not owed

Communication tactics

4%

96%

No Yes



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Outcome of the Progress Status of Companies Complaints

In all, 93.71% of complaints were “closed,” “closed with non-monetary relief “or “closed with

explanation.” Of the 14,328 complaints, 10,209 (71%) were closed with an explanation. A total of

2,693 complaints were registered as “closed with non-monetary relief.” A total of 349 complaints

were listed as “closed with monetary relief.”

Complaints by Submitted Channel

It is essential to find out through which channels the consumer complaints were made. Without any

doubt the CFPB website, with 10,439 complaints received, represents the most popular submission

method by a significant margin. E-mail represents the platform of lowest submission with 3

complaints.

10209

2693

525 412 349 140 0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

11000

Closed withexplanation

Closed withnon-monetary

relief

Closed In progress Closed withmonetary

relief

Untimelyresponse

10439

1797 1231

741 117 3

0

2000

4000

6000

8000

10000

12000

Web Phone Referral Postal mail Fax Email



10

Number of Complaints by State in Comparison to the Total Debt Collected in 2010 Column two shows the number of complaints for each state. Column three shows the percentage of

complaints each state represents to the total number of complaints received by the CFPB. Column

four shows the amount of total debt collected in 2010, followed in column five by percentage of the

total amount of debt collected. Column six shows the difference between the percentage of

complaints and the percentage of debt collected in 2010.

AL 160 1.1% 753.8 1.4% -0.2%

AK 24 0.2% 74.2 0.1% 0.0%

AR 92 0.7% 2274.2 4.1% -3.5%

AZ 337 2.4% 435.4 0.8% 1.6%

CA 1910 13.6% 4400.6 8.0% 5.6%

CO 242 1.7% 1160.4 2.1% -0.4%

CT 111 0.8% 258.3 0.5% 0.3%

DE 59 0.4% 387.7 0.7% -0.3%

DC 88 0.6% 1.6 0.0% 0.6%

FL 1228 8.8% 2836.3 5.2% 3.6%

GA 580 4.1% 2277.8 4.2% 0.0%

HI 49 0.3% 36.2 0.1% 0.3%

ID 62 0.4% 128.7 0.2% 0.2%

IL 425 3.0% 2658.4 4.8% -1.8%

IN 204 1.5% 787.5 1.4% 0.0%

IA 68 0.5% 491.7 0.9% -0.4%

KS 104 0.7% 748.9 1.4% -0.6%

KY 148 1.1% 668.9 1.2% -0.2%

LA 178 1.3% 641.9 1.2% 0.1%

ME 31 0.2% 93.2 0.2% 0.1%

MD 360 2.6% 711.9 1.3% 1.3%

MA 223 1.6% 1324.8 2.4% -0.8%

MI 364 2.6% 736.4 1.3% 1.3%

MN 140 1.0% 1833.8 3.3% -2.3%

MS 71 0.5% 289.1 0.5% 0.0%

MO 231 1.6% 1300.9 2.4% -0.7%

MT 39 0.3% 209.5 0.4% -0.1%

NE 37 0.3% 447.3 0.8% -0.6%

NV 181 1.3% 643.3 1.2% 0.1%

NH 40 0.3% 402.1 0.7% -0.4%

NJ 495 3.5% 1219.9 2.2% 1.3%

NM 87 0.6% 65.6 0.1% 0.5%

NY 952 6.8% 5310.4 9.7% -2.9%

NC 311 2.2% 808.6 1.5% 0.7%

ND 13 0.1% 106.6 0.2% -0.1%

OH 478 3.4% 2597.9 4.7% -1.3%

OK 141 1.0% 777.8 1.4% -0.4%

OR 187 1.3% 486.3 0.9% 0.4%

PA 523 3.7% 2407.8 4.4% -0.7%

RI 50 0.4% 27.4 0.0% 0.3%

SC 238 1.7% 597.3 1.1% 0.6%

SD 26 0.2% 205.5 0.4% -0.2%

TN 245 1.7% 1999.9 3.6% -1.9%

TX 1349 9.6% 5329.2 9.7% -0.1%

UT 105 0.7% 381.1 0.7% 0.1%

VT 11 0.1% 28 0.1% 0.0%

VA 471 3.4% 1057.4 1.9% 1.4%

WA 310 2.2% 1311.3 2.4% -0.2%

WV 39 0.3% 355.4 0.6% -0.4%

WI 176 1.3% 647.1 1.2% 0.1%

WY 27 0.2% 146.5 0.3% -0.1%

DifferenceState Complaints % of Complaints Total Debt Collected 2010

(in million)¹

% Debt

Collected 2010²



11

Top 50 Companies Receiving Complaints

According to the data, the top 50 companies by complaint volume, as identified by the CFPB, total

7,900 complaints. Of the top 50, a total of 37 companies are identified as third-party collectors

(5,645). Thirteen companies (totaling 2,255 complaints) are considered something other than a

traditional debt collector (e.g., credit card, student loan servicers, creditors and pay day lenders).

Their inclusion creates confusion in comparing third-party debt collectors, who are subject to the

FDCPA and a myriad of state laws and regulations that creditors do not have to follow. Moreover, it

also raises concerns about duplicative listings for complaints on a debt filed with both the creditor

and the debt collector seeking to recover the debt on behalf of a client.

IV. ACA Recommendations/Conclusion ACA International undertook this study to gain insight into consumer complaint issues and, in

particular, to learn more about the information and to use it for the collection of debts. The main goal

of this analysis is to improve the communication between debt collectors and customers, to mitigate

the number of complaints made by customers.

It is important to ensure all possible options to get efficient resolutions that need to be considered

for every consumer. Informing consumers about all their options in the debt collection process and

the consequences of non-payment should be essential. Third-party debt collectors would benefit

from future study and examination of these and other issues relating to debt collection.

Understanding the data and doing a thoughtful analysis of consumer complaints can be a useful tool

in determining trends and areas for concern as well as areas for improvement by the industry. ACA

pledges to continue working with our members to improve compliance, preventing complaints and

resolving them if they occur. ACA desires to help the CFPB improve its complaint database so that

collectors, consumers, policymakers, regulators and others have an accurate snapshot.

We offer the following suggestions to the CFPB:

Clearly identify first-party collections from third-party collections in complaint reporting and avoid

the potential for double counting complaints that stem from the same underlying issue.

Maintain context by resisting the temptation to use a broad-brush to paint debt collectors and

make assumptions about the behavior of an entire industry solely on the volume of complaints.

Provide more detail to debt collectors who are the subject of a complaint to increase the

likelihood of more easily identifying the information needed to resolve the consumer’s complaint.

Adopt a definition of complaint that is limited to consumer allegations of wrongful conduct and

does not include the concept of general consumer dissatisfaction outside of wrongful conduct.


Documents

cfpb - Credit and Collection News Whitepaper_cfpb-co… · II. Overview The purpose of the Report – Analyzing CFPB Consumer Complaint Data In 2010, the U.S. Congress passed the