Consumers Getting Relief through the Consumer Financial Protection Bureau’s Public Consumer Complaints Database
Thursday, February 27, 2014
WASHINGTON –Debt collectors trying to collect debt from the wrong person were the top source of complaints to the Consumer Financial Protection Bureau (CFPB), according to a report released today by the U.S. PIRG Education Fund. The report also found that debt collection, the newest category in the database, is already a top source of complaints to the CFPB, outpacing common consumer products such as credit cards and bank accounts.
“The CFPB is helping consumers get relief from shoddy debt collector practices,” said Laura Murray, Consumer Associate with the U.S. PIRG Education Fund. “Many consumers who don’t owe debts are being harassed by lazy debt collectors who don’t verify consumer identities.”
For example, Amrit Singh, an adjunct professor at a community college, is dealing with a case of mistaken identity. In February 2014, the thirty-five year-old father of two received a notice of garnishment in the mail based on a 2008 judgment for over $10,000 obtained by a debt buyer he had never heard of. The notice stated that unless he voluntarily turned over 10% of his gross wages until the debt is paid off, the marshal would send the income execution to his employer. Mr. Singh called the New York City Marshal’s office and learned that the original creditor of this alleged debt was a bank with whom he had never done business. Mr. Singh then quickly checked his credit reports and found no evidence of either the original creditor or the judgment appearing on his credit report. Now, because of a debt collector’s sloppy work, Mr. Singh must take several days off work and seek legal counsel to avoid garnishments that could push his family into poverty.
The report, “Debt Collectors, Debt Complaints: The CFPB's Consumer Complaint Database Gets Real Results for Consumers,” [http://www.uspirgedfund.org/reports/usf/debt-collectors-debt-complaints] is the fifth in a series of reports by the U.S. PIRG Education Fund that analyze the complaints in the CFPB’s public Consumer Complaints Database. The CFPB began accepting complaints in July 2011 and now accepts complaints about most financial products and services. Although the CFPB only opened its doors to complaints about debt collection last July, complaints about debt collection have piled up quickly, accounting for the second largest portion of recorded complaints, after mortgages, between July and January.
Some key findings:
The CFPB has helped enable more than 2,700 consumers – 22 percent of complainants - to receive relief as a result of their debt collection complaints. The majority of these consumers received non-monetary relief, such as halting harassing phone calls.
The most common problem was debt collectors trying to collect debt from the wrong person (25 percent), followed by repeated phone calls (13 percent). State and federal laws protect consumers from harassing phone calls from debt collectors.
Encore Capital Group received the most complaints nationwide.
The District of Columbia ranks #1 in complaints per 100,000 residents, followed by Nevada, Florida, and Delaware.
About 16 percent of responses received from debt collectors to complaints filed with the CFPB were deemed unsatisfactory by consumers and were subjected to further dispute.
Companies varied widely in how frequently they offered relief to complainants. Allied Interstate LLC granted relief to over 97 percent of complainants, while several companies never provided relief.
The report comes as the CFPB finishes collecting comments about debt collection in preparation for a debt collection rulemaking. The report recommended that the CFPB make a number of improvements to debt collection rules, including the following:
Require debt collectors to stringently verify that they are collecting accurately-owed debts from the correct consumers, before they start;
Clarify that the debt collection laws give consumers the right to sue to stop unfair practices and to collect multiple penalties for multiple violations;
Protect service-members by strictly limiting contact with their commanders to verifications of employment and address;
Protect all consumers by mandating additional disclosures concerning the effect of paying debts on their credit reports, such as a disclosure that “Paying this debt will not remove it from your credit report.”
The report also recommends that the CFPB move to make the database more user-friendly, analyze the data they receive regularly, and use the information and analysis to implement strong consumer protections.
“The CFPB has only been taking debt collection complaints for a short time but is already swamped with them,” concluded Murray. “Consumers need a strong CFPB that reins in reckless debt collectors who ignore the rules.”
Download the report, “Debt Collectors, Debt Complaints: The CFPB's Consumer Complaint Database Gets Real Results for Consumers” here.
This is the final in a series of five reports by the U.S. PIRG Education Fund that analyze the complaints in the CFPB’s public Consumer Complaints Database. Previous reports have analyzed bank account, private student loan, credit reporting, and credit card complaints.
U.S. PIRG Education Fund works to protect consumers and promote good government. We investigate problems, craft solutions, educate the public, and offer meaningful opportunities for civic participation. www.uspirgedfund.org