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Deirdre Cummings,
MASSPIRG Education Fund

Mistaken Identity Tops Debt Collection Complaints

For Immediate Release

Boston –Debt collectors trying to collect debt from the wrong person were the top source of complaints to the Consumer Financial Protection Bureau (CFPB), according to a report released today by the MASSPIRG Education Fund.

“The CFPB is helping consumers get relief from shoddy debt collector practices,” said Deirdre Cummings, Consumer Program Director for MASSPIRG Education Fund. “Many consumers who don’t owe debts are being harassed by lazy debt collectors who don’t verify consumer identities.”

The report, “Debt Collectors, Debt Complaints: The CFPB's Consumer Complaint Database Gets Real Results for Consumers”, is the final in a series of reports by the MASSPIRG Education Fund that analyze the complaints in the CFPB’s public Consumer Complaints Database. The CFPB began accepting complaints in July 2011 and now accepts complaints about most financial products and services. Although the CFPB only opened its doors to complaints about debt collection last July, complaints about debt collection have already outpaced those for common products such as credit cards and bank accounts, accounting for the second largest portion of complaints after mortgages between July and January.

Some key findings:

  • The CFPB has helped enable more than 2,700 consumers – 22 percent of complainants - to receive relief as a result of their debt collection complaints. The majority of these are non-monetary relief, such as halting harassing phone calls.
  • The most common problems were debt collectors trying to collect debt from the wrong person (25 percent) or repeated phone calls (13 percent). State and federal laws protect consumers from harassing phone calls from debt collectors.
  • The most complained-about debt collection company in Massachusetts is Encore Capital Group. Encore Capital Group, based in California, received the most complaints nationwide.
  • Massachusetts ranks 30 out of 50 states plus the District of Columbia (DC) in complaints per 100,000 residents.
  • About 16 percent of responses received from debt collectors to complaints filed with the CFPB were deemed unsatisfactory by consumers and were subjected to further dispute.
  • Companies varied widely in how frequently they offered relief to complainants. Allied Interstate LLC granted relief to over 97 percent of complainants, while several companies never provided relief.

“It’s so important for consumers, service providers, and public officials to see the trends here, and the CFPB and this report confirms what we see regular people on Main Street are experiencing” says Margaret Miley, executive director of The Midas Collaborative, a statewide non-profit organization that works with low and moderate income residents to increase incomes, personal savings, and assets in Massachusetts.

The report comes as the CFPB finishes collecting comments about debt collection in preparation for rulemaking in the industry. The report recommended that the CFPB make the following improvements to debt collection rules, including the following:

  • Require debt collectors to stringently verify that they are collecting accurately-owed debts from the correct consumers, before they start;
  • Clarify that the debt collection laws give consumers the right to sue to stop unfair practices and to collect multiple penalties for multiple violations;
  • Protect service-members by strictly limiting contact with their commanders to verifications of employment and address;
  • Protect all consumers by mandating additional disclosures concerning the effect of paying debts on their credit reports, such as a disclosure that “Paying this debt will not remove it from your credit report.”

"MASSPIRG's new report provides great insights into the most significant consumer complaints to the CFPB about debt collectors, how the debt collectors are responding to the complaints, and offers very constructive recommendations about how the CFPB could improve its complaint system and reports," according to Robert Hobbs, deputy director of the National Consumer Law Center and author of Fair Debt Collection.

The report also recommends that the CFPB move to make the database more user-friendly, analyze the data they receive regularly, and use the information and analysis to implement strong consumer protections.

“The CFPB has only been taking debt collection complaints for a short time but is already swamped with them,” concluded Cummings. “Consumers need a strong CFPB that reins in reckless debt collectors who ignore the rules.”

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Download the report, “Debt Collectors, Debt Complaints: The CFPB's Consumer Complaint Database Gets Real Results for Consumers” [Insert LINK].

This is the final in a series of five reports by the MASSPIRG Education Fund that analyze the complaints in the CFPB’s public Consumer Complaints Database. Previous reports have analyzed bank account, private student loan, credit reporting, and credit card complaints.

Consumers may submit complaints to the CFPB at www.consumerfinance.gov/complaint/.

Visit the CFPB’s public Consumer Complaints Database: www.consumerfinance.gov/complaintdatabase/

 

MASSPIRG Education Fund works to protect consumers and promote good government. We investigate problems, craft solutions, educate the public, and offer meaningful opportunities for civic participation. www.masspirgedfund.org

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