Credit reporting and debt collection continue to be some of the most-complained about consumer finance products-and both have seen steep increases in complaints in recent years.
The 2020 Consumer Complaints Report took a deep dive into these industries to explore these complaint trends, the possible reasons behind the increased complaint counts, and what that means for organizations operating in these industries.
There has been a sharp increase in credit reporting-related complaints, up 208% since 2016 in the CFPB's database.
This big jump comes after Equifax's major data breach in 2017, meaning that consumers have likely become more sensitive to credit reporting companies and are more likely to submit complaints against even the smaller credit reporting companies.
86.1% of complaints related to credit reporting in the CFPB's database are for either incorrect information on a report (63.9%) or a problem with a company's investigation into a problem (22.2%).
According to PIRG, since consumers are not their direct customers, credit reporting companies could be less responsive to solving mistakes on credit reports and investigating existing problems. And, since this incorrect information can negatively impact a consumer's credit score, consumers are more prompt to submit these complaints.
Even the smallest credit reporting companies are under scrutiny by the regulators and are at an increased risk of enforcement actions than in years past.
Debt Collection: Operation Corrupt Collector
There's been a steep increase in debt collection-related complaints in recent years, up 415% in 2019 from 2016 in the FTC's Sentinel Network.
The FTC, in conjunction with the CFPB and state and federal law enforcement partners, announced that they will be cracking down on abusive debt collection practices in a new initiative called Operation Debt Collector.
This crackdown encompasses more than 50 enforcement actions against debt collectors engaged in these illegal practices brought by the FTC, three federal partners, and partners from 16 states.
Companies engaged in debt collection services should be vigilant about their practices to avoid facing scrutiny from the regulators.
A Risk Signal For Credit Reporting and Debt Collection Companies
Credit reporting and debt collection are under heightened scrutiny by the regulators, especially during the pandemic. Regulators are paying special attention to the Fair Debt Collection Practices Act (FDCPA), which says that debt collectors are not allowed to use unfair practices in collecting debt. And, specifically, the CFPB is actively educating consumers on their rights.
For more insights on consumer complaints, download the full report here. If you'd like to learn more about how PerformLine can help your organization ensure compliance with the FDCPA, the FTC Act, and UDAAP, speak to one of our experts today.