Earlier this week, the Bureau of Consumer Financial Protection (BCFP) released a 50-State Complaint Snapshot. Credit reporting, debt collection, and mortgage continued to be the top three categories of complaints both nationwide and in most states. The percentage of consumer reporting complaints did increase by 11 percent from 2016 to 2017 and surpassed debt collection as the number one source of complaints, which suggest financial services companies, including debt collectors, should increase their focus on furnishing complete and accurate data to consumer reporting agencies. While the complaint snapshot was largely unremarkable, one significant trend emerged.
The highest percentage of debt collection complaints, both nationally and in every state, were categorized as “attempts to collect debts not owed.” Acting Director Mick Mulvaney has consistently emphasized the importance of complaint data in determining how to allocate the BCFP’s resources. The consistency with which consumers complain about “attempts to collect debts not owed,” and the importance of consumer complaints in the BCFP’s process may prompt the BCFP to include data integrity requirements in the upcoming debt collection rules, which are scheduled for release by March 2019.
The BCFP’s 2016 outline of proposed debt collection rules incorporated robust data integrity requirements for debt collectors and creditors supplying information to debt collectors, including pre-collection account reviews, ongoing monitoring for “red flags,” pre-litigation reviews, and requirements for ensuring the accuracy of transferred data. These requirements went well beyond the validation processes employed by many debt collection companies and would require debt collectors, creditors, and debt sellers to devote substantial resources towards validating information about the debt.
In June 2017, the BCFP, under Director Richard Cordray, announced that it would take a bifurcated approach to addressing the issues detailed in the outline of proposed debt collection rules. Specifically, the BCFP stated it would develop a separate rule regarding the “right consumer, right amount” aspect of the outline that would simultaneously address both third-party debt collectors and first-party creditors. In explaining the reason for the change of course, the BCFP noted it had received substantial feedback from the industry about the difficulties for debt collectors to comply with the “right consumer, right amount” without concurrent rulemaking to ensure first-party creditors and third-party debt collectors were working together to guarantee they were collecting the right amount from the right consumer.
Director Cordray’s announcement, however, came more than a year ago. Given the prevalence of consumer complaints categorized as “attempts to collect debts not owed,” the BCFP may opt to change course again and address the “right consumer, right amount” aspect of the proposed rule at the same time as the other components set forth in the 2016 outline. Debt collectors, debt sellers, and creditors will have an opportunity to impact the BCFP’s debt collection rules by commenting on the draft rules when they are released in 2019.