On February 14, the Consumer Financial Protection Bureau (CFPB) released a report entitled Market Snapshot: An Update on Third-Party Debt Collections Tradelines Reporting. The report sought to examine trends in the reporting of debt in collections from 2018 to 2022. Based on the CFPB’s Consumer Credit Panel, a nationally representative sample of approximately five million de-identified records maintained by one of the national consumer reporting agencies, the total number of collections tradelines on consumer reports declined by 33% from 2018 to 2022 (from 261 million tradelines to 175 million tradelines). According to the CFPB, the decline was driven by fewer reports by contingency-fee-based debt collectors, who primarily collect on medical bills. Nonetheless, medical collections tradelines still constitute a majority (57%) of all collections showing on consumer reports.
Key findings from the report include:
- The decline in collections tradelines does not necessarily reflect a decline in debt collection activity, nor an improvement in consumers’ financial conditions, but a choice by debt collectors to report fewer collections tradelines while still conducting other collection activities.
- Contingency-fee-based debt collectors furnished 38% fewer tradelines from 2018 to 2022, while debt buyers increased the number of collections tradelines they furnished by 9% over the same period.
- According to the CFPB, this is consistent with its market monitoring indicating that contingency-fee-based debt collectors are moving away from furnishing.
- The number of contingency-fee-based debt collectors furnishing tradelines declined by 18% (from 815 to 672), while the number of debt buyers who furnish collections tradelines held constant at 33%.
- Based on the CFPB’s market monitoring, this decrease in the number of contingency-fee-based debt collectors may reflect both ongoing industry consolidation and a decline in furnishing as a result of higher dispute rates for collections tradelines.
- Upcoming changes to medical collections reporting from the national consumer reporting agencies will remove low-balance (less than $500) and paid medical collections tradelines from consumer reports.
- According to the CFPB, while this will reduce the total number of medical collections tradelines, an estimated half of all consumers with medical collections tradelines will still have them on their consumer reports.
- Rental and leasing collections constitute the smallest share of all tradelines, but they have the highest median dollar amount ($1,259).
This report updates a prior CFPB report released in July 2019. The 2019 report looked at data from 2004 to 2018 and found that: most collections tradelines are furnished by debt collectors; 58% of collections tradelines were medical; debt buyers primarily furnished banking and financial collections tradelines; furnishing by debt buyers had declined steadily from 2009 to 2016; and tradelines furnished by debt buyers were more likely to be disputed.