CFPB Complaint Snapshot Shows Slight Increase in Average Debt Collection Complaints


10/26/2016 9:23:00 AM

The report highlights complaints on prepaid products, the subject of a CFPB rule finalized this month, as well as updates on student loans and credit cards.

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The three-month average of debt collection complaints from July through September 2016 increased slightly over the average from those months in 2015, according to the Consumer Financial Protection Bureau’s latest monthly complaint snapshot released Oct. 25.

There were 7,464 complaints from July through September 2015 and 7,830 this year, a 5 percent increase, according to the report. The three-month average remained similar from June through August 2015 with 7,232 complaints and 7,726 in June through August 2016, ACA International previously reported.

As of Oct. 1, the CFPB has handled approximately 1,008,500 complaints, including 271,379 about debt collection, according to the report. The monthly average of debt collection complaints since the CFPB launched the Database is 6,881.

The CFPB focused on prepaid product complaints in its monthly report.

The three-month average for prepaid product complaints increased 18 percent from 182 in July through September 2015 to 215 during those months this year. The monthly average in prepaid loan complaints since the CFPB launched its Consumer Complaint Database is 215 and the total complaints reached 6,041 by Oct. 1, according to the report.

The CFPB finalized its rules on prepaid cards this month. The rule applies to traditional prepaid cards, general purpose reloadable cards, mobile wallets, person-to-person payment products and other electronic prepaid accounts that store funds, according to a news release from the CFPB. The CFPB’s final rule also applies to prepaid accounts including payroll cards, student financial aid disbursement cards, tax refund cards and some government benefit cards like unemployment insurance and child support, ACA International previously reported.

Consumers’ prepaid card complaints in the latest report from the CFPB include unauthorized transactions, difficulty with the process of registering prepaid cards and issues resolving problems related to stolen funds.

Student loan complaints continued to have the highest three-month average increase of all financial products and services in the report, from 638 in July through September 2015 to 1,248 in July through September 2016. There was a 37 percent increase in the three-month average for bank account complaints and a 27 percent increase in the three-month average for credit card complaints from 1,946 in 2015 to 2,717 in 2016, according to the report.

ACA on the CFPB Consumer Complaint Database and Monthly Complaint Reports

Given the tremendous potential for raw data to mislead consumers and paint an unfair portrait of the debt collection industry, ACA International opposes the CFPB’s decision to release reports about consumer complaints without any kind of normalization to put the complaint data in context. In reality, there is a positive correlation between the number of consumer contacts a business or industry makes and the number of consumer complaints it receives. By failing to provide critical context to raw complaint numbers, the CFPB deprives consumers and other stakeholders of important information that is necessary to properly understand various complaint data.

Despite ongoing and significant criticism surrounding the lack of context in the CFPB’s Consumer Complaint Database, in July 2015, the CFPB began releasing monthly complaint reports using this non-normalized, unverified data that not only examine a different service category and geographic region each month, but also include a list of the “most-complained-about companies” based on the raw number of complaints.

ACA will continue to urge the CFPB to modify the Consumer Complaint Database and its accompanying reports to more accurately reflect actual company performance, including by developing and implementing a well-reasoned data normalization process. Addressing fundamental flaws in the CFPB’s consumer complaint handling and publication process is necessary to decrease the potential that consumers will be harmed by misleading data and to mitigate unfair reputational damage to compliance-minded businesses.

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