Debt collectors say ‘Pay up,’ but won’t say why…and other consumer gripes

CFPB annual report chart. Click for more.
CFPB annual report chart. Click for more.

It’s no surprise that consumers don’t like debt collection companies very much. It is a surprise, however, that complaints against them keep mounting, even after federal regulators sue firms for the very things consumers complain about — trying to collect on debts that don’t exist, calling at odd hours, contacting workplaces, refusing to provide details on an alleged debt, and so on.

The Consumer Financial Protection Bureau regularly files reports about its complaint database — which has now logged 834,000 complaints overall. This month, the bureau highlighted debt collection complaints.

More than one-third (38%) of all debt collection complaints involved attempts to collect a debt consumers claim they don’t owe. In fact, when asked what type of account the debt collection firm called about, the most common entry after “other” was “I do not know,” at 24%. Credit cards were next at 14%. Consumers also said collectors frequently didn’t share enough information for consumers to verify the debt exists.

(This story first appeared on Credit.com. Read it there.)

The CFPB said consumers complain frequently about debt collector tactics, too.

“Consumers complained about receiving multiple calls weekly and sometimes daily from debt collectors,” it said. “Consumers often complained that the collector continued to call even after being repeatedly told that the alleged debtor could not be contacted at the dialed number. Consumers also complained about debt collectors calling their places of employment.”

Complaints grew fastest during the final three months of 2015, compared to that same period in 2014, among residents of Indiana (38%), Arizona (27%) and New Hampshire (26%). On the other hand, complaints dropped in Maine (-34%), Wyoming (-26%) and North Dakota (-23%). Among larger states, Illinois saw a drop in complaints (-4%) while California saw a large increase (10%).

The most-complained about debt collectors were Encore Capital Group and Portfolio Recovery Associates. Both companies averaged more than 100 complaints each month between October and December 2015. And both have been the subject of enforcement actions, now settled, in which the firms admitted no wrongdoing but agreed to refund millions to consumers.

Portfolio declined to comment on the report, but Encore’s Sheryl Wright, senior vice president for corporate and government affairs at Encore, said the following in an email:

“Like any business, complaint volumes tend to be proportional to a company’s size, so as we look at the CFPB’s statistics, it’s important to remember that Encore has millions of interactions with consumers each month,” Wright said. “Despite being the leading purchaser of consumer debt we are only 2% of CFPB’s debt collections complaints. We also have more than double the accounts of the next largest company, yet we have significantly fewer complaints in comparison. … It’s also important to note that some of what’s listed as ‘complaints’ are not actual complaints but questions or disputes from consumers about their accounts.”

Among collection firms attracting the most complaints, Transworld Systems Inc. showed the largest increase – 84% during the last three months of 2015, of compared to the end of 2014. The firm did not immediately respond to a request for comment.

“Today’s report shows that inaccurate information about debts continues to be a source of frustration for many consumers,” said CFPB Director Richard Cordray. “We will continue to hold debt collectors accountable for ensuring that they are collecting the right amount from the right person.”

How to Deal With Debt Collectors

If you’re receiving calls from debt collectors, especially if they’re about a debt you don’t believe you owe, it’s a good idea to check your credit report for any errors. You can get your free annual credit report from AnnualCreditReport.com. You can also see how any collection accounts – accurate or not – are impacting your credit scores by getting your two free credit scores every 30 days on Credit.com.

And remember, not all debt collection calls are legit. Two tip-offs that you’re likely talking to a fake debt collector are that they won’t mail written confirmation of the debt or that they threaten dire consequences (jail, arrest, imminent lawsuit) if payment isn’t made immediately. Before you pay a debt collector, ask for written verification of the debt. Collection agencies, by law, must send this within five days of initially contacting you. Insisting on this is just one way to stop a scammer.

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About Bob Sullivan 1054 Articles
BOB SULLIVAN is a veteran journalist and the author of four books, including the 2008 New York Times Best-Seller, Gotcha Capitalism, and the 2010 New York Times Best Seller, Stop Getting Ripped Off! His latest, The Plateau Effect, was published in 2013, and as a paperback, called Getting Unstuck in 2014. He has won the Society of Professional Journalists prestigious Public Service award, a Peabody award, and The Consumer Federation of America Betty Furness award, and been given Consumer Action’s Consumer Excellence Award.

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