ACA International Urges CFPB to Contextualize Consumer Complaint Data in New White Paper

5/10/2016 1:00 AM

ACA International’s latest white paper argues the CFPB uses a flawed methodology to collect complaints and paint an unfair and misleading portrait of legitimate businesses.

The Consumer Financial Protection Bureau’s consumer complaint database contains methodological and analytical flaws that render the data near useless for policymaking or developing best practices, according to the new white paper Methodological and Analytical Limitations of the CFPB Consumer Complaint Database by ACA International, the association of credit and collection professionals.

The white paper examines “specific concerns with the measures used to elicit and organize complaints, bias introduced into the data collection process, and the means by which complaints are categorized by industry.” According to the white paper, problems with the database include non-exclusive reporting categories for complaints, self-selection and confirmation biases, and human error when a consumer misclassifies a complaint.

“The CFPB is able to paint an unfairly negative picture of the credit and collection industry, and other legitimate businesses, because it relies on flawed data that has no context to it,” said ACA International CEO Patrick J. Morris. “While the credit and collection industry continually seeks to strengthen its practices and reduce the number of complaints, the fact is compared to the billion calls debt collectors make each year, the complaint rate is very small.”

When a consumer first submits a complaint to the CFPB, he or she must choose one of 11 primary product categories to complain about – one of which is debt collection. However, six of the 11 primary categories also appear as sub-product categories under debt collection. This leads to consumer confusion and the potential for a consumer to complain about the wrong financial product.

CFPB Director Richard Cordray acknowledged this flaw during a hearing before the U.S. House Financial Services Committee. Cordray testified that “when we look at debt, some of these complaints are simply misclassified; people think they are complaining about debt collection” when they really should be complaining about another financial service. 

“For those submissions without attendant narratives, there is no context for determining whether or not the complaint is relevant to the product category,” writes ACA International Director of Research Josh Adams, PhD.

But the CFPB’s recent inclusion of consumer narratives in the consumer complaint database only makes the problem worse. When consumers explain their grievances in their own words, they often describe issues only tangentially related to debt collection, if at all. But if they select debt collection as the primary product, it gets categorized as such.

ACA has continuously urged the CFPB to takes steps to address its flawed consumer complaint handling process, including to ensure that the complaint information it shares in the consumer complaint database is based on meaningful, normalized data. In August 2015, ACA submitted comments to the CFPB in response to its Request for Information related to consumer complaint data normalization. In these comments, ACA highlighted the particular importance of context in the debt collection industry given the tremendously high number of annual consumer contacts, and consequently the critical need for complaint data to be normalized before being publicly shared by the CFPB. If the CFPB does not provide the appropriate context for complaints in its broad, public-facing database, the very consumers it claims to serve will lack important informationfor how to understand various complaints because of the near impossibility of interpreting data that has not been presented in context. 

ACA International’s new research initiative aims to collect more original data about the credit and collection industry. The goal of this exclusive research and analysis is to quantify the ways that debt collectors help consumers and the overall economy.

ACA International (ACA), the association of credit and collection professionals, is the largest membership organization in the credit and collection industry. Founded in 1939, ACA brings together third-party collection agencies, law firms, asset buying companies, creditors and vendor affiliates, representing tens of thousands of industry professionals. ACA produces a wide variety of products, services and publications, including educational and compliance-related information; and articulates the value of the credit and collection industry to businesses,policymakers and consumers.