Debt Collection Complaints Continue, But an Overwhelming Majority are Solved Amicably

A majority of consumers did not dispute companies’ responses to their debt collection complaints documented in the Consumer Financial Protection Bureau’s seventh semi-annual report to Congress.

The Consumer Financial Protection Bureau has received approximately 85,300 debt collection complaints since July 2013, according to its seventh semi-annual report to Congress, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, released this month.

Similar to its sixth semi-annual report released in December 2014, the CFPB notes, “As we continue to emerge from the continuing effects of the devastating financial crisis of 2008, we find that debt collection is central and cuts across virtually all credit products: credit cards, mortgages, student loans, payday loans and other consumer loans. Currently, about 30 million consumers – nearly one out of every ten Americans – are subject to debt collection, for amounts that average about $1,500 each.”

“Many companies in this industry play by the rules, but others cut corners and seek to gain an advantage by ignoring the rules,” according to the report. “These bad actors are a detriment to every company that is faithfully following the law, and their actions harm consumers.”

Of the total of consumer complaints received by the CFPB, 34 percent represent debt collection complaints, according to the report.

Overall, the report tracks complaints by consumers from April 1, 2014 through March 31, 2015.

The CFPB added debt collection complaints, dating back to July 2013, to its public-facing consumer complaint database in November 2013.

Types of Debt Collection Complaints

The most common type of debt collection complaint is about continued attempts to collect a debt that the consumer reports is not owed, according to the report. This represents 38 percent of the 85,300 debt collection complaints received by the Bureau.

In other cases, the consumer complains about the furnishing of information to credit reporting agencies. These complaints, which are often consistent with complaints consumers submit to the Bureau about credit reporting, suggest that consumers frequently only learn about debt collection accounts when they check their credit reports, according to the report.

Complaints about debt collectors’ communications tactics (19 percent of the debt collection complaints) including calls consumers say are too frequent or at inconvenient times of the day, as well as calls to third parties or a place of employment continue to be common, according to the report.

Responses to Debt Collection Complaints

As of June 1, 2015, the CFPB has handled more than 627,000 complaints since the launch of the Consumer Response operations, with mortgages and debt collection being the most frequent topics.

According to the report, debt collection companies responded to approximately 95 percent of complaints sent to them and report having closed 92 percent of the complaints.

Companies respond by providing descriptions of steps taken or that will be taken; communications received from the consumer; any follow-up actions or planned follow-up actions and a categorization of the response.

Following a company’s response, consumers have the option to review and dispute all company closure responses.

Companies sometimes report an amount of monetary relief, where applicable, according to the report. Through March 31, 2015, companies provided relief amounts in response to more than 8,800 complaints. For companies that reported monetary relief, the median amount of relief reported was $144; however, the amount varies by product.

For 540 debt collection complaints, the median amount of monetary relief was $357.

Non-monetary relief responses to complaints in the report include stopping harassment from debt collectors and correcting account information, including in credit reports.

Approximately 67 percent of consumers did not dispute the responses provided to their debt collection complaints, while 18 percent did dispute the response. Fifteen percent of the companies’ responses were still pending consumer review as of March 31, according to the report.