One in five complaints to the CFPB related to credit card debt.
Each week, Consolidated Credit searches for unreported financial research that can help you deal with your debt and budget. This week…
The interesting study
The Consumer Financial Protection Bureau (CFPB) has issued its first annual report of debt collection complaints. Last year was the first full year the CFPB took consumer complaints, so they are now able to compile the data and offer some insight.
The big result
The CFPB received an average of 3,200 debt collection complaints from consumers per month last year, for a total of 39,130 complaints over the course of the year.
This number is actually fairly low when you compare it to the over 100,000 complaints the FTC usually receives each year. The difference could be due in part to the fact that the CFPB is still a relatively new organization, so many consumers still don’t know to go to the CFPB first instead of the FTC.
The numbers above only include complaints submitted to the bureau that companies had an opportunity to respond to, so referrals from other agencies such as the FTC are not included.
The fascinating details
The biggest category of collection complaints received by the CFPB (27.6%) was related to “other” types of debt – thing like past-due utilities or problems with health club memberships.
As for credit-based accounts:
- 21.1% of complaints received related to credit cards
- 11.5% related to medical debt
- Only 7.4% related to payday loans
- 4.1% were student loan related
- 3.7% were mortgage related and only 2.6% auto related
The remaining 22% were unclassified – meaning the consumer didn’t select a specific type of debt in the CFPB complaint wizard.
The most common complaint (about 1 in 4 of every complaint received) related to a debt that did not actually belong to the consumer. This happens when a collector is trying to find the borrower and identifies the wrong person to bother.
Here are the top 5 complaints:
- The debt was not mine
- The debt was paid
- The debt cannot be verified
- Frequent / repeated calls
- Collecting the wrong amount.
In most cases (74.4% of all cases received) the complaint was closed with explanation. This means the collector offered a written response as to what happened and to confirm no additional action will be taken. Another 17.2% of cases were closed with non-monetary relief, such as a commitment to re-age the information in the consumer’s credit report, while another 1.8% were closed with some monetary relief offered. Only 4.6% of cases were closed with no action.
What you can do
These numbers – especially the ones listed in the last paragraph above – seem to support the CFPB complaint system as a useful, viable tool that helps consumers get a positive outcome when it comes to dealing with a bad debt collector.
“People often wonder if complaint systems like these actually work,” says Gary Herman, President of Consolidated Credit. “As a result, some people just pay a collector to get rid of them. But this data shows consumers have a platform to actually voice complaints and get the action they need to stop unlawful collections.”
If you’re facing calls from a debt collector, consider the following:
- Make sure the debt is yours first. Before you answer the phone and verify the debt, look in your records and make sure it’s something you actually owe and that the collector isn’t really looking for someone else.
- Verify for yourself that all of the information is correct. Make sure that the collector has the right account number and amount owed, as well as any dates such as the initial date of delinquency.
- If anything is not correct, lodge a complaint immediately. Use the CFPB’s Complaint Wizard to make it easy on yourself.
Also keep in mind that even if the debt is yours and all of the information is correct, collectors still have to follow certain rules in how they deal with you. If a collector is calling constantly, harassing or using abusive language or making unlawful threats, you have a right to lodge a complaint and fight back. You can learn more about what violates your rights in Consolidated Credit’s Fair Debt Collection guide.