Raw data from the Consumer Financial Protection Bureau’s complaint database paints an inaccurate portrait of the highly regulated accounts receivable management industry, which takes compliance and customer service extremely seriously.
Unfortunately, when the CFPB fails to contextualize and present fair, accurate data that appropriately frames the number of complaints compared with the volume of contacts, or to separate mere inquiries and complaints about other industries, inaccuracies multiply and the debt collection industry ends up facing unfair reputational harm. This is discouraging to the 2,500 accounts receivable management industry companies credited with recovering $67.6 billion in unpaid debt in 2016.
While CFPB Director Kathy Kraninger has not suggested that she intends to reassess the methodological problems related to the database, ACA encourages her to consider such actions before more harm is done.
The industry’s chief concern centers on the CFPB’s methodology for collecting and categorizing complaints submitted to its consumer complaints database. While ACA applauds the bureau for establishing a platform to engage with consumers, the association urges it to address the shortcomings in its data collection processes to avoid unfairly harming businesses.
To begin with, the Association of Credit and Collection Professionals has consistently noted that the CFPB broadly defines a “complaint” as “submissions that express dissatisfaction with, or communicate suspicion of wrongful conduct by, an identifiable entity related to a consumer’s personal experience with a financial product or service.” As such, the complaint portal fails to differentiate between actual violations of law and any range of other issues from mundane business disputes to dissatisfaction with financial services to simple displeasure with being contacted by a debt collector.
The bureau’s nonexclusive reporting categories allow for overlap in the complaint submission process and inaccurate classification of complaints. Because of categorical constraints and lack of specific financial products, such as insurance, consumers submitting a complaint must choose the most closely related option. In the case of many billing disputes, whether with businesses, credit reporting agencies or insurance companies, consumers appear to select debt collection as a default. This inflates the total
These issues are compounded by the bureau’s failure to verify the accuracy of the complaints, not to mention that mere inquiries can be inadvertently counted as complaints. At ACA International’s annual fly-in last May, former acting CFPB Director Mick Mulvaney even acknowledged that the bureau does not do “as good a job as we could verifying the nature of complaints.”
Our group has long held that the bureau needs to develop and implement fair and transparent metrics to normalize the complaint data it makes publicly available on the database, narrow the definition of a “complaint” so that it covers only alleged conduct that would be unlawful if true and consistently use prominent disclaimers that appropriately describe the limitations of published complaint data.
As it stands now, the CFPB publicly boasts about its consumer complaint data and uses the raw number of debt collection complaints to imply evidence of widespread industry harm. These incomplete data are released in CFPB public reports, so it’s no surprise that it ends up in news articles.
It is imperative for stakeholders to understand that in reporting raw data, the CFPB fails to contextualize the number of complaints as compared with the number of contacts the debt collection industry makes with consumers over a given year, which the Philadelphia Fed
ACA remains concerned that inherent flaws in the complaint database, such as vague and overlapping complaint categories and an imprecise categorization of complaints by industry, severely limit the usefulness of the data and fail to accurately represent the industry.
It's crucial for the CFPB to apply common sense when talking about the information collected from its controversial complaint database, and to base policymaking on solid facts and rigorously tested data. Only then will the bureau truly understand consumer demands and the benefits of fostering communications between the debt collection industry and those who need the information it is providing.
