Debt collection is an enormous industry in the US, and it’s not always done correctly or ethically. As a result, there are hundreds of thousands of debt collection complaints made by US consumers every year. The Federal Trade Commission (FTC) collects and analyzes this data using the Consumer Sentinel Network, but very little of this information is actually published.
A few years ago, the National Consumer Law Center filed for the Freedom of Information Act to show exactly what was happening behind closed files. They confirmed that there were a total of 620,800 debt complaints from all over the United States of America in 2017.
The data revealed quite a few insights about debt collection complaints in the US. Seven out of the ten states with the highest per capita number of debt collection complaints in 2017 are in the South (Florida, Georgia, Texas, Alabama, South Carolina, Tennessee, and Louisiana), one is in the mid-Atlantic (District of Columbia), one is in the Midwest (Michigan), and the other in the West (Nevada). Another finding also showed that the number of debt collection complaints has been on the rise since 2015; from 2008 to 2014, it was the second most common type of complaint.
The report revealed the three debt collection companies that received the highest number of complaints in 2017. These were Enhanced Recovery Associates, Portfolio Recovery Associates, and Credit One Bank. Each one of them had more than 10,000 consumer complaints filed against them. The top three debt collection complaints reported, for these companies as well as others, were repeated calling (210,238 complaints), calls after "stop calling notice" (227,917 complaints), and false representation about debt (192,704 complaints).
The National Consumer Law Center made a few recommendations to the FTC after reviewing the data. First, the FTC should work to ensure that more data on debt collection complaints are made public via publications so that the root problems can be addressed. Second, the FTC should improve on their debt collection data by employing apps in the collection of data, standardizing data collection, taking into account users with limited English proficiency, and approaching communities that are not consistent with their reports.
April Kuehnhoff, attorney to the National Consumer Law Center and co-author of Consumer Complaints about Debt Collection: Analysis of Unpublished Data from the FTC, advised the FTC to start by doing things right this time around as they compile consumer complaints from 2018. She mentioned examples of data that should be made public, such as the number and amount of debt complaints, the companies receiving those complaints, and a detailed analysis showing the cities and regions that reported huge numbers of debt collection complaints.
Kuehnhoff further added that this information will be invaluable to regulators as they work to unravel the problems consumers are facing and find the unscrupulous debt collectors causing these problems. This data may help authorities find debt collectors who are violating the law and harassing consumers in each state and region.
“...the FTC’s complaint data offers another opportunity to learn about consumer experiences with debt collection and help inform regulation to rein in bad actors,” added Kuehnhoff.
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