"Double-Dipping" CFPB Shakes Debt Collection Complaints Landscape

The Consumer Financial Protection Bureau’s consumer complaints portal has already caused some headaches in the debt collection industry. We’ve already reported that the Bureau added 5,329 debt collection complaints to its overall Consumer Complaints Database. But at our most recent Ask the Attorney webinar, John Bedard, managing attorney of Bedard Law Group, pointed out a painful problem with the CFPB’s site.

Consumers may be “double-dipping” when submitting collection complaints.

When a consumer fills out the online complaint form, the CFPB asks if the consumer knows where the debt originated. (S)he can say that it comes from the same company, a different company or select “I don’t know.” If the consumer says the debt comes from a different company, the form auto-selects for the consumer to “Submit a separate complaint about this company.”

“They are duplicating complaints against creditors,” Bedard said. “And I think that’s going to have a dramatic increase in how they tally the number of complaints against the industry next year.”

But there is some good news. It turns out that the CFPB isn’t throwing its full force behind acting on every single consumer complaint that happens to come in under “debt collection.” The CFPB has form letters they send out to consumers telling them they will not act on a complaint if it “involves federal consumer protection law that is not within [their] authority.”

In light of this, nothing prevents collectors from reaching out to the consumer as part of an investigation, to request more information.

“Document what you do to perform your reasonable investigation,” Bedard said. “Document the fact that you have reviewed everything you have with respect to that account and that dispute. I think that’s going to be important, and that’s going to go a long way toward defending your reasonable investigation complaint.”

Learn what else our expert attorneys have to say about the changing landscape for debt collection complaints in our new report, To the Point: Complaints and Dispute Resolution. This is the the next hot-button issue that federal regulators are looking to solve. This focused report gives you a head start on strengthening compliance and best practices. If you’re not taking advantage of this resource, you’re putting your agency at risk!

Also, be sure to check out John Bedard at our next insideComplaince webinar, Navigating UDAAP Compliance – What’s Fair, What’s Not and Why it Matters. Unfair Deceptive or Abusive Acts or Practices (UDAAP) has become a catchall for the Consumer Financial Protection Bureau as it attempts to supervise the debt collection industry. It’s crucial that the debt collection industry is proactive in changing its policies and procedures to avoid perceived violations

You’ll learn: