CFPB Releases 10th Semiannual Report to Congress


1/5/2017 9:37 AM

The CFPB’s report provides an overview of recent consumer financial complaints, including the number of debt collection complaints across financial products, as well as a summary of recent enforcement actions and rulemaking activity.

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The Consumer Financial Protection Bureau released its 10th Semiannual Report to Congress, once again highlighting  recent consumer complaints and company complaint handling, supervisory and enforcement activity, and current rulemaking efforts.  The report, which includes information specific to the debt collection industry, generally covers the period from April 1 to Sept. 30, 2016.

Consumer Complaints

A large part of the report focuses on the handling and analysis of consumer complaints received by the CFPB between Oct. 1, 2015 and Sept. 30, 2016, as required by the Dodd-Frank Act. During that time period, the CFPB’s Office of Consumer Response handled approximately 283,700 consumer complaints, including 85,900 about debt collection, according to the report.

Importantly, the CFPB acknowledges in the report that debt collection cuts across many product lines and that “bad actors” harm the industry and consumers.

“The bureau finds that debt collection is central and cuts across virtually all credit products: credit cards, mortgages, student loans, payday loans and other consumer loans,” according to the report. “Many companies in this industry play by the rules. But others cut corners and seek to gain an advantage by ignoring the rules. These bad actors are a detriment to every company that is faithfully following the law, and their actions harm consumers.”

The report notes that of the debt collection complaints, approximately 38,800 (45 percent) were sent by the CFPB’s Consumer Response team for evaluation and response. Twenty-five percent of the remaining complaints were submitted to other regulatory agencies; 7 percent were found to be incomplete, 2 percent are pending with the consumer and 21 percent are pending with the CFPB.

The CFPB has also processed an additional 8,300 complaints about debt collection from consumers with debt from a payday loan, 11,200 complaints from consumers with debt from a credit card and 2,300 from consumers with student loan debt.

However, according to the report, for 22 percent of complaints the consumer did not identify the source of the debt being collected.

As far as type of complaints, the report states that the most common type of complaint is about continued attempts to collect a debt that the consumer reports is not owed.  Consumers also filed complaints about frequent or repeated calls from debt collectors, failure to honor requests to cease communication, lack of evidence to verify debts and furnishing information to consumer reporting agencies.

Overall, companies responded to approximately 94 percent of complaints they receive and report closing 90 percent of the complaints. Consumers have the option to provide feedback on responses they receive from companies. Of 169,100 company responses, consumers disputed 19 percent and accepted approximately 66 percent of the responses, according to the report. The remainder were pending with consumers at the end of the reporting period.

ACA International continues to advocate against the CFPB using unverified, non-contextualized complaint data to inform the basis of reports like this.  In ACA’s white paper, Methodological and Analytical Limitations of the CFPB Consumer Complaint Database, ACA showed that the flaws in the CFPB’s complaint handling process and related database—namely bias in the data collection process and incorrect characterization of complaints in the 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.

Supervision and Enforcement Actions

Like other Semi-Annual Reports, this latest report describes the CFPB’s supervision work and lists summaries of various CFPB enforcement actions, highlighting the financial impact of the CFPB’s efforts.

“In the six months covered by this report, our supervisory actions resulted in financial institutions providing more than $14 million in redress to over 339,000 consumers,” CFPB Director Richard Cordray wrote in the report. “During that timeframe we also announced orders through enforcement actions for approximately $40 million in total relief for consumers who fell victim to various violations of consumer financial protection laws, along with over $13.7 million in civil money penalties.”

Debt Collection Rulemaking

In the report, the CFPB also provides brief summaries of various rulemakings, but did not provide any new information related to the debt collection rulemaking.  Instead, the CFPB noted the recent third-party debt collection panel process that took place this summer under the Small Business Regulatory Enforcement Fairness Act and reiterated its plan to release a report about the debt collection consumer survey that is being used to inform the rulemaking.

“The CFPB continues to analyze the results of a survey to obtain information about their experiences with debt collection and plans to publish a report in the coming months,” according to the report.

Although this report does not discuss timing for the debt collection rulemaking, the CFPB recently announced in the Fall 2016 Semi-Annual Regulatory Agenda that it expects to continue “prerule” activities related to the debt collection rulemaking through February 2017, ACA International previously reported.

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