Rethinking Complaints Against the ARM Industry: What the Data Does and Does Not Show

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Dave Rudd

If you haven’t yet read The DBA Magazine Fall 2012 issue, do it!

I’m impressed with DBA International’s efforts the past couple of years to promote their members and become involved with “healthy industry” discussions. Just read Mike Bendickson’s President Message in the Fall issue and you too will see what this fine association has been doing recently to improve.

I was particularly intrigued with another article, “FTC Complaint Data Accuracy – Can We Expect More from the CFPB?” written by David Rubinger. He articulates a few of the problems associated with the FTC Complaint stats and then provides several possible solutions.

Rubinger points out two very basic pitfalls with the current database:

  • The complaint data is NOT verified for accuracy by the FTC.
  • There is no attempt to resolve any consumer complaints by the FTC.

If there is no attempt to resolve or even verify the accuracy of reported complaints, then what good is the data? However, this unverified data is used by consumer advocacy groups to attack the ARM industry and also by many politicians as a reason to promote more legislation.

This year, DBA International obtained and analyzed 2010 and 2011 data from the FTC complaint database. Their analysis revealed

  • 178,640 complaints were filed with the FTC in 2011.
  • 133,710 or 74.8 percent of these complaints could not be associated to a known company.

You may be aware that, too, conducted its own investigation into the FTC’s debt collection complaints data for the first quarter of 2012. Their conclusions underscore the issues many of us in this industry have long felt about this data. Data for 2012 is available from’s FTC Debt Collection Complaints Compendium Q1 2012.

As Rubinger noted, the FTC recently closed down two entities that used a call center in India to make an estimated 8 million fraudulent debt collection calls to the U.S. Since these two companies used numerous assumed names, they certainly could have contributed to the complaints filed about unknown companies.

DBA’s analysis also separated the 25.2 percent of complaints about verified companies into their probable debt type categories and then calculated each category’s percentage of the total complaints:

  • Collection Agencies: 20,100 complaints (11.3 percent)
  • Issuers: 13,675 complaints (7.7 percent)
  • Debt Buyers: 11,150 complaints (6.2 percent)
  • Pay careful attention to this next observation:

“DBA concluded that if every complaint in 2011 was from a unique consumer and every complaint was truly legitimate, debt collection service level was 99.4 percent complaint-free. This is based on the percentage of unique complaints (178,640, according to the FTC) divided by the 29.8 million adults with a debt in collection in 2011.” This is truly an AMAZING statistic considering the FTC doesn’t even attempt to clean-up the database.

Now the responsibility for debt collection complaints has shifted from the FTC to the CFPB. The CFPB has stated they will implement a complaint system that “will provide public access to an electronic database containing certain fields for each unique…complaint.” However, the CFPB has also stated that they will “specifically disclaim the accuracy of the complaints when the data are made available to consumers and allow the marketplace of ideas to determine the value of the disclosed complaint data.” I believe an electronic system to collect and report complaint data will help in the reporting, BUT if no attempt is made to verify the data, we might not be much better off.

I second DBA’s recommendation to the CFPB “to make the complaint database a useful tool, not only to demonstrate the complaints against bad actors in the industry but also to allow the ethical actors in the industry to appropriately respond to consumer complaints without unnecessary stigma.”

The CFPB has the opportunity to truly revamp the system and provide accurate and valuable complaint data. Accurate and trusted data can lead to positive changes.

While there is always room for improvement, 99.4% complaint free is a very high standard of excellence.  Congratulations ARM Industry for doing such a great job!

Continuing the Discussion

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  • avatar Dave Newman says:

    If the number of disputes to credit bureaus can be compared statistically to the number of complaints made to the FTC then the number of complaints that can be verified is very small indeed.

    Last month we processed over 2000 direct CB disputes. There were 11 of those disputes that we were able to verify to a reasonable degree of satisfaction had merit. This means that the 99.4% complaint free number that Dave quotes equates to 99.9997% legitimate complaint free.

    The constant barrage of cynical nuisance lawsuits and over regulation that our industry is forced us to endure has made us extremely sensitive to any and every possible interpretation of a law that could possibly be used against us. We go to outrageous lengths to ensure that we comply with the law. Are there a handful of bad actors out there? Of course. But the attacks on this industry in general are unjustified and grossly unfair.

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