WASHINGTON—Perhaps not too surprisingly, a Consumer Financial Protection Bureau report has found that more than one-in-four consumers contacted by debt collectors felt “threatened.”
The report was drawn from the first-ever national survey of consumer experiences with debt collectors. Also not to surprisingly, the CFPB reported that more than 40% of consumers who said they were approached about a debt in collection requested that a creditor or collector stop contacting them. Of those consumers, three-in-four reported that debt collectors did not honor their request to cease contact.
The CFPB also released a study of potential risks in the online debt marketplace, where consumer debts and personal information are for sale for fractions of pennies on the dollar. Finally, the CFPB is unveiling an online series of consumers’ stories about their debt collection experiences.
“The Bureau today casts light on troubling problems in the debt collection industry,” said CFPB Director Rich Cordray. “More than one-in-four consumers report feeling threatened by a debt collector, and a majority of those contacted about debt say the calls persist even after requests to stop. The Bureau is working to clean up abuses in this industry, and to see that all consumers are treated with fairness, decency, and respect.”
Debt collection is a multi-billion dollar industry affecting 70 million consumers who have or are contacted about a debt in collection, the CFPB notes.
The CFPB survey, the first of its kind, provides an in-depth analysis of consumers’ encounters with the debt collection industry. The national survey is part of an ongoing CFPB effort to explore industry practices and consumer experiences with debt collectors. Consumers were asked about their 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.
According to the CFPB survey, about one-third of consumers – or more than 70-million Americans – were contacted by a creditor or debt collector about a debt in the previous 12 months. Consumers are most often contacted about medical and credit card debt. The CFPB survey also found that:
- Over one-in-four consumers report threatening contact: Twenty-seven percent of consumers approached about debt said they felt threatened by the conduct of the creditor or collector who most recently contacted them. Debt collectors are generally prohibited from tactics that tend to harass, abuse, or oppress consumers, the Bureau said.
- Three-in-four consumers report that debt collectors did not honor a request to cease contact: About 40% of consumers contacted about a debt in collection said they asked at least one debt collector or creditor to stop contacting them. Of these consumers, three-in-four said the debt collector did not honor the request to cease contact attempts.
- More than half of consumers report incorrect contact for at least one debt: Fifty-three percent of consumers contacted about a debt in the year prior said at least one collection effort was mistaken in some way. These consumers reported that the creditor or collector sought the incorrect amount, that the debt was not owed, or that the person owing the debt was a family member.
- Over one-third of consumers report being contacted at inconvenient times: Thirty six percent of consumers contacted about a debt in collection said that the creditor or collector who most recently contacted them called between 9 p.m. and 8 a.m. Debt collectors generally cannot call at times they know to be inconvenient unless the consumer specifically agrees to it, the CFPB said.
- Nearly 40% of consumers report that a debt collector attempted contact four or more times per week: Thirty seven percent of consumers contacted about a debt in collection report that the most recent creditor or collector to contact them usually did so four or more times in a week. About 20% of consumers approached by debt collectors reported contact attempts by debt collectors usually four to seven times per week. Another 17% said a creditor or debt collector tried contacting them eight or more times per week.
- One-in-seven consumers contacted about a debt report being sued: Fifteen percent of consumers contacted about a debt in collection over the prior year report being sued. The share ranges from 6% sued among those contacted about a single debt to 35% sued among consumers contacted about five or more debts. About 75% of those sued do not go to the court hearing, which generally makes them responsible for the debt, the Bureau said.
The Consumer Experiences with Debt Collectors report is available at: http://files.consumerfinance.gov/f/documents/201701_cfpb_Debt-Collection-Survey-Report.pdf