The CFPB issued its Semi-Annual Report of the Bureau of Consumer Financial Protection (Report) on February 12, 2019. This 42-page report provides a comprehensive summary of the Bureau’s activities between April 1, 2018 and September 30, 2018, including rulemaking completed, plans for upcoming rules, complaint analysis, summaries of enforcement actions taken during the period, reporting on its Fair Lending initiatives, and its efforts to increase workforce diversity at the CFPB. In depth analysis of a consent agreement described briefly in the report should speak volumes to the collection industry.
Compliance and Operations
Operations folks should be most interested in practices that resulted in enforcement actions, and in particular, the action filed on July 13, 2018 in the matter of National Credit Adjusters, which concluded in a consent order. Collection agencies working on NCA’s behalf to collect purchased debt inflated the amount actually owed on accounts, threatened consumers and family members with legal actions including lawsuits and arrest when there was no intent nor legal authority to do so, among other things. Members of NCA’s compliance team recommended terminating the agencies because of the illegal acts and practices they observed in audits, but NCA continued to place accounts with the agencies and refused to implement corrective recommendations made by NCA compliance personnel.
This action demonstrates the true partnership that needs to exist between any collection agency’s compliance team, the operations team and executive management. The compliance team identified problems and communicated those to the appropriate parties, yet the recommendations went unheeded. This demonstrates to the regulator that the continued relationship with the agencies was deliberate and that their potentially illegal processes were sanctioned. In my experience with such investigations, it is assumed that industry members seek to subjugate the law for their own financial benefit. Ignoring the advice of one’s compliance team related to the collection practices of a vendor provides the evidence. I recommend a full reading of the action.
The Concentration of Complaints
The industry is always interested in the CFPB’s reporting on complaints it receives related to debt collection. In fiscal year 2017-2018 (October 1, 2017, through September 30, 2018), according to the report, “the Bureau received approximately 329,000 consumer complaints.” Not surprising to anyone who responds to consumer complaints, the CFPB reports that “consumers submitted approximately 82% of these complaints through the Bureau’s website.” Another 5% were submitted via telephone calls and referrals from other state and federal agencies accounted for 8% of complaints. Companies responded to approximately 93% of complaints that the CFPB sent to them for response during the period, and only 2% of responses were considered untimely, which means responses were submitted after the 15-day deadline, after the extended 60-day deadline if the complaint was placed “in progress” by the complaint recipient.
Debt collection complaints do not sit at the top of the complaint categories during the reporting time period, a fact that is at least notable, and even laudable. The CFPB reports that 25% of complaints during the period were related to debt collection, while the top spot on the list belongs to complaints related to credit or consumer reporting, at 37% of complaints. With 13 categories on the list, the remaining 38% of complaints are spread rather thinly.
My own latest analysis of the debt collection complaints in the public database showed that the debt collector with the most complaints had nearly 9,500 on record since the inception of the database in July 2011. On the other hand, 1,850 companies had 9 or fewer complaints, with a whopping 651 companies garnering a single complaint since 2011. 3,374 distinct companies with debt collection complaints are listed, and many of these are first party creditors collecting their own debts—names you would recognize. My purpose here is not to call anyone out, but merely to point out that the numbers tell a story.
The report mentions the work of the CFPB on the Debt Collection Rule. We have been awaiting the Rule since the inception of the CFPB. The Report affirms that “The Bureau will work towards releasing a proposed rule concerning FDCPA collectors’ communications practices and consumer disclosures.” (p. 16). No further specifics are provided, but this brief description confirms the narrow focus that CFPB-watchers have expected, based upon work previously published by the CFPB. Most recently, the CFPB has expressed its intention to reissue a consumer survey to provide more data about contacts by debt collectors, which some have thought would delay the publication of the Rule. No doubt we will all need to adjust our consumer contact schemes once the rule is published.
Debra Ciskey is the Chief Compliance Officer at Wakefield & Associates. Inc. She is a member of the board of directors and a certified instructor for ACA International.