ACA International Issues White Paper Response on Importance of Complaint Data Context

ACA’s response shows how a report from The Alliance for a Just Society on debt collection practices does not include context relative to practices of the credit and collection industry or the volume of data.

ACA International, the association of credit and collection professionals, is raising concerns in a new white paper about a recent report on the credit and collection industry that fails to properly contextualize the data it includes, leading to an incomplete picture of the industry and its practices.

The report  “Unfair, Deceptive, and Abusive: Debt Collectors Profit from Aggressive Tactics” from the Alliance for a Just Society analyzed 74,000 complaints submitted to the Consumer Financial Protection Bureau over the last two years.

ACA’s concerns with the findings in the report include the Alliance’s use of the often-repeated statistic that debt collection is the most complained about product in the CFPB complaint database.

“While this is on the surface true, this figure fails to contextualize that number of complaints within the full scope and volume of debt collection in the United States,” ACA Director of Research Josh Adams writes in thewhite paper.

There are more than one billion consumer contacts made by the debt collection industry annually, according to the most recent data available from 2010. “While the Alliance’s analysis reports the total debt collection complaints in the CFPB database through August of 2015 is 74,376, that number represents just 0.0074 percent of total consumer contacts through 2015.

ACA also found that some of Alliance’s findings regarding complaints for primary and sub-categories within the CFPB database appear to be misleading.

For example, the Alliance report asserts that 17 percent of all debt collection complaints relate to debt disclosure and verification. Of those, 69 percent of consumers report that debt collectors did not provide documentation believed by the consumer to be necessary for verification of the debt. Another 25 percent report they did not receive a “right to dispute” notice, which is required by the Fair Debt Collection Practices Act, one of many laws and regulations that regulate the collection industry.

However, those figures of 69 percent and 25 percent are both fractions of the original 17 percent; so when the report finds that “69 percent of those consumers report that debt collectors did not provide documentation believed by the consumer to be necessary for verification of the debt,” it looks like a significantly larger number of complaints than it actually represents.

“The report leaves debt collectors, consumers, and regulators with no real information on how to make an already highly-regulated industry more compliant and consumer-friendly, something ACA International and its 3500 member companies strive to do,” Adams writes.

Inlight of the scope of the debt collection industry in the U.S., it is important to contextualize the raw numbers reported by the CFPB within this broad framework. Without this practice, both consumers and policy makers are left with an incomplete understanding of how these industries operate and their approach to customer service.

“Although decontextualized complaint data about debt collection reported by the CFPB seems to only harm debt collectors, the practice can also harm consumers by generating a deep misunderstanding of the role of debt collection companies and depriving consumers of appropriate information to make adequately informed financial decisions,” Adams writes.

ACA International’s new research initiative aims to collect more original data about the credit and collection industry. The goal of this exclusive research and analysis is to quantify the ways that debt collectors help consumers and the overall economy.

For more information contact ACA Public Affairs or at (952) 928-8000