CFPB releases debt collection survey results

Some consumers “feel threatened” by debt collectors who contact them, according to a survey from the Consumer Financial Protection Bureau.

Some consumers “feel threatened” by debt collectors who contact them, according to a survey from the Consumer Financial Protection Bureau.

Originally proposed in March 2014, the survey asked about consumers’ encounters with debt collectors for loans and unpaid bills. Questions included whether consumers had been contacted by debt collectors in the past year, how frequently and the nature of the debt. The sample for the survey, conducted from 2014-2015, was drawn from the CFPB’s Consumer Credit Panel, a random and de-identified sample of records maintained by one of the large national credit repositories.

About one-third of consumers – more than 70 million Americans – were contacted by a creditor or debt collector about a debt in the previous 12 months. Consumers were most often contacted about medical and credit card debt.

Twenty-seven percent of respondents said they felt threatened by the conduct of the creditor or collector who contacted them.

More than 40 percent of consumers who said they were approached about a debt in collection requested that a creditor or collector stop contacting them. Of these consumers, three quarters report that debt collectors did not honor their request to cease contact.

More than half reported incorrect contact for at least one debt; more than one third said they were contacted at inconvenient times; about 40 percent said they were contacted four or more times per week; and about 15 percent said they had been sued over the debt.

Some in the industry expressed concern with the survey’s methodology and design when it was proposed, including the American Bankers Association.

Despite the bureau’s emphasis on the negative results reported in the survey, CFPB Director Richard Cordray acknowledged that debt collectors have a legitimate role and that many survey respondents reported no negative issues with debt collectors.

“We recognize that debt collection is part of the proper functioning of consumer credit markets. If people owe money…, they are obligated to pay the money back, and they should do so. Responsible debt collectors that do their work with care and treat consumers with respect are a natural and even an essential part of the financial marketplace,” Cordray said at the CFPB Debt Collection Event, held Jan. 12 in Washington, D.C. “It is important to note that…many debt collectors and creditors respect the laws governing their industry and have good practices in place.”

The bureau also released a report on risks in the online debt sales market and launched a collection of consumer stories about their debt collection experiences.

Fredrikson & Byron Law