A lot has been written about the number of complaints turning up at the CFPB regarding debt collection companies. It’s important to take the statistics with a grain of salt because the sheer number of complaints is not (in and of itself) an indicator of either good or bad debt collection behavior.
As it stands, the CFPB takes complaints from consumers about the behavior of particular debt collection companies. It then alerts the relevant debt collection agency who in turn answers or neglects to answer the complaint. The CFPB reports how many complaints were answered, however, there is little context surrounding the total complaint statistic. The vast majority of complaints are answered, meaning that the agency responded in some form or fashion to the complaint (not meaning that the issue was resolved and not indicating which party, the debtor or the agency, was ultimately correct). Here are a few possibilities:
The agency was acting improperly/illegally and the complaint was factually accurate. It is definitely possible that the complaint is factually accurate and that a debt collection agency acted aggressively. Although true debt horror stories are rare relative to the sheer number of debts collected, they do happen. You can read more about some here.
The agency was acting legally the entire time and the complaint was factually inaccurate. A debtor might be mistaken or could lie about the legality or the substance of what was or was not done during a debt collection effort. Or perhaps the debtor was angry about the collection efforts and exaggerated their claim. These cases occur frequently and unfortunately are some of the obstacles debt collection companies and creditors must deal with. Most agencies keep thorough written and audio records of their interactions with debtors to refute inaccurate complaints made against them.
The problem with the current CFPB statistics is that most reporters do not dig into the details. For example, of the 38,751 complaints filed in 2014, how many were legitimate grievances? How many were refuted by debt collector evidence and closed? What you find is that the gross number of complaints is a very poor indicator of bad behavior.
A few examples:
Of the 38,751 complaints filed in 2014, 32,787 (85%) had company response data available. Of the 32,787 complaints with data regarding collection agency responses, 98% percent were answered in a timely fashion (only 513 complaints were not answered in a timely fashion).
Of the 38,751 complaints, 1,759 (4.5%) were closed without an explanation and without relief, 28,778 (74%) were closed with an explanation and without relief, and 6,655 (17%) were closed with some type of non-monetary relief. Only 679 (1.8%) percent of the complaints were closed with monetary relief due to the debtor (the remainder, 2.3%, were in progress or waiting on a response from the company).
What you see when you dig into the statistics is that of the nearly 40,000 complaints filed in 2014, less than 1,000 justified a monetary payment in order to close. That is not to say that the CFPB is doing anything wrong or that debt collection companies do not overreach. It only means that useful data comes from digging into the numbers a little more and realizing that the gross number of complaints submitted is not an effective indicator of collection agency or debtor behavior.
So, how would you go about choosing a collection agency that is reputable and efficient?