As we previously reported, Mick Mulvaney, acting interim director of the Consumer Financial Protection Bureau, announced a change to the CFPB’s governing philosophy to focus on quantitative analysis to guide the Bureau’s future regulatory and enforcement actions. As an example of this new emphasis on hard data, Mulvaney pointed to the fact that almost one third of consumer complaints submitted to the CFPB concerned debt collection.

In reviewing Mulvaney’s announcement, ACA International published an article cautioning against absolute reliance on the number of debt collection complaints submitted to the CFPB as a measure of the performance of the debt collection industry. ACA stated it planned to publish a whitepaper that would provide some clarity as to what consumer complaints actually say about the actions of the debt collection industry. On January 30, ACA published the promised whitepaper.

According to ACA’s analysis of all 243,048 consumer complaints submitted to the CFPB in 2017, complaints relating to debt collection actually comprised 20% of the total and were second to complaints relating to credit reporting and credit repair services. Further, the 47,892 complaints related to debt collection “account for roughly .005% of all consumer contacts made by the debt collection industry . . . [and] .06% of Americans with a debt in collection.”

Complaints regarding certain misconduct by debt collectors, such as harassing or illegal practices, accounted for just 12% of debt collection complaints. When these complaints were examined more closely, the most egregious behavior purportedly constituted only small proportions of these complaints. ACA interpreted this to mean that a majority of debt collectors are following consumer protection laws and are engaging in ethical behavior; especially since these types of complaints decreased when compared to complaints lodged in 2016.

Indeed, most debt collection complaints concerned grievances about a debt collector’s attempt to collect a debt not owed or a debt collector’s failure to send written notification about the debt. Again, upon closer examination, a majority of these complaints alleged that the consumer did not own the debt, that the debt was already paid, or that the debt collector did not send enough information for the consumer to verify the debt. ACA attributed these complaints to a lack of effective communication and information sharing between lenders and debt collectors, the so-called “technical aspects” of credit and debt collection, rather than intentional misconduct by debt collectors.

ACA concluded its analysis with a suggestion that the CFPB “do a significantly better job of making clear the limitations of the data it collects and reports” rather than relying on the raw number of complaints. ACA also criticized the CFPB’s broad definition of the term “complaint” and its verification processes and procedures. ACA argued these two factors contribute to artificially inflated numbers.

Troutman Sanders will continue to monitor and report on emerging trends in consumer finance in all areas.