Three-Month Debt Collection Complaint Average Continues to Decline
7/27/2016 2:26:00 PM
The latest CFPB monthly complaint snapshot focused on credit card complaints, which increased from May to June 2016.
The three-month average for debt collection complaints declined for the second month in a row, according to the Consumer Financial Protection Bureau's latest monthly complaint snapshot released Wednesday.
The three-month average of debt collection complaints from April to June 2016 declined 3 percent to 7,063, compared to 7,265 in April to June 2015, according to the report. The average recorded in the May report also declined. The three-month average for debt collection complaints from March to May this year was 7,415, compared to 7,442 this time last year, ACA International previously reported.
According to the report, the CFPB received 7,032 debt collection complaints in June. Debt collection represented 29 percent of the approximately 24,500 complaints submitted in June–the same percentage as reported in May.
Overall, the CFPB has handled a total of approximately 930,700 complaints as of July 1, 2016, according to the report; the CFPB has received a total of 248,278 complaints on debt collection.
The three-month average and monthly total of credit card complaints, highlighted in the CFPB's June complaint snapshot, increased. There were 1,824 credit card complaints in April to June 2015 and 1,990 in April to June 2016, a 9 percent increase, according to the report.
More than half of adult consumers in the U.S. use credit cards and they collectively have more than $700 billion in credit card debt as of January 2015, according to the CFPB. As of July 1, 2016, the CFPB handled approximately 97,100 complaints related to credit cards.
The CFPB also highlighted complaints from Washington in the report. Consumers in Washington submitted 18,900 of the 930,700 complaints the CFPB has as of July 1, 2016. Debt collection complaints represent 28 percent of total complaints about financial products in Washington, close to the nationwide figure of 29 percent.
ACA on the CFPB Consumer Complaint Database
In June 2012, the CFPB began sharing individual-level complaint data on its website through the launch of the Consumer Complaint Database. In March 2015, the CFPB finalized a policy to provide consumers with the option to include complaint narratives for publication in the Consumer Complaint Database. Then, despite significant criticism surrounding the lack of context in the Database, in July 2015, the CFPB began releasing monthly complaint reports 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 raw number of complaints.
Given the tremendous potential for raw data to mislead consumers and paint an unfair portrait of the debt collection industry, ACA International remains extremely concerned that the CFPB continues to release reports 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.
ACA International has continuously urged the CFPB to takes steps to address its flawed consumer complaint handling process, including ensuring that the complaint information it shares in the consumer complaint database is based on meaningful, normalized data. In the white paper Methodological and Analytical Limitations of the CFPB Consumer Complaint Database, ACA showed that the flaws in the database – namely bias in the data collection process and incorrect characterization of complaints by industry – render the data near useless for policymaking or developing best practices.
ACA will continue to advocate that complaint information shared by the CFPB is based on normalized data so that it is fairer to businesses and more meaningful to consumers.
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