On Monday, March 22, the Consumer Financial Protection Bureau submitted its Congressional report on the Administration of the Fair Debt Collection Practices Act covering 2020. The CFPB focused its reporting on the impact of COVID-19 on collectors, and how practices during the pandemic affected consumers.
Below are three findings that caught our eye.
1. The total number of consumer complaints against collectors (both first and third party) grew considerably
From January 1, 2020, through December 31, 2020, the Bureau received approximately 82,700 debt collection complaints—an increase of approximately 10 percent compared to 2019. As a result, the Bureau sent approximately 54,700 (66 percent) of approximately 82,700 debt collection complaints it received to companies for their review and response, a 16 percent increase in the number of complaints sent from last year.
This increase is somewhat surprising, considering overall rates of delinquency did not grow as expected in 2020, and that some attempts to collect halted as a result of the CARES act. The CFPB does not provide an interpretation for this statistic, but a few things could be happening. Even with tightening regulation, debt collectors may have opted for more aggressive collections tactics during the pandemic. Consumers may have greater awareness of the complaint process, or of their rights if they fall into delinquency. Overall tolerance for collectors may have decreased with the pandemic’s effect on the economy.
The table below shows the most common reasons for complaints filed:
2. Consumer demand for collections education was high
Driven by the pandemic, the CFPB released throughout 2020 a series of tools including blogs, web pages and videos addressing consumer rights and advice for dealing with past-due accounts. Together, these resources were accessed 4.3 million times. Non-COVID specific advice, including the CFPB’s consumer education product “Ask CFPB” were viewed more than 32.9 million times during 2020. Debt collection is consistently one of the two most-viewed categories in Ask CFPB.
3. The CFBP tracked increased complaints from sub-categories like servicemembers, students, and the elderly
In 2020, the Bureau’s Office of Servicemember Affairs issued an update to their annual report about state-by-state financial complaints from military consumers. The report found that 25% of all servicemember complaints dealt with debt collection.
One of the areas of concern: the third most common complaint reported by service members is that debt collectors “took or threatened to take negative or legal action.” The Bureau received complaints about collector calls to chains of command. The problem is sufficiently pervasive that the Bureau has created servicemember-specific material explaining to how to respond to threats to contact chain of command or threats of UCMJ prosecution.
The CFPB continues to champion consumer education as a key strategy to mitigate predatory collections practices. With consumer complaints on the rise, it pays to collect with transparency and empathy.
Click here to find out how Scorenomics BackOnTrack® can help you build greater empathy into your collections practices, and even educate consumers while generating more payments
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