Industry Downplays FTC Complaints, Plans Ombudsman Complaint Program

The collection industry responded to news that agents in 2007 led the list of consumer complaints filed with the Federal Trade Commission.

The general comment: Duly noted, we’re working on it, but the methodology doesn’t account for the vast majority of contacts with consumers that lead to a satisfactory debt resolution.

The FTC reported Friday that there were a total of 91,019 consumer complaints against third-party and in-house collectors in 2007, a small increase from 2006 when 90,706 consumer complaints against collectors were lodged ("Collection Agents Again Top FTC Complaint List," March 24).

Third-party debt collectors received 70,951 complaints, and in house collectors received 20,068.

Gary Wood, president of debt purchaser Collins Financial Services and past president and member of the Board of Directors of debt buying trade group DBA International, said, “This industry makes over 1 billion consumer contacts per year. The total number of complaints is a drop in that bucket.”

Wood also noted that the FTC does not look into the validity of complaints, a point the agency conceded in the report when it said that "not all of the debt collection practices about which consumers complain are law violations."

"We need better consumer education on the FDCPA," said Wood.

The FTC said Friday in its report to Congress that it is working on a report detailing discussions on the 30-year old FDCPA in October of last year at hearings which saw both consumer and collection advocates state their cases ("Collectors, Consumers Disconnect at FTC Workshop," Oct. 11, 2007). The FTC did not indicate when the report might be released.

Rozanne Andersen, ACA senior vice president and general counsel, told insideARM that the organization applauds the FTC’s study and its putting in context the number of consumer contacts that agencies make. Andersen acknowledged that the industry has work to do to address the complaints.

She said the ACA is close to completing negotiations with the National Council of Better Business Bureaus for it to administer an enhanced dispute resolution program and serve as an ‘ombudsman’ over the collection industry.

“I hope to have the proposal in hand today and take to the (ACA) board this July,” for approval during its annual convention, Andersen said.  “Then we become the driving force behind a third-party complaint resolution program.

A rise in the total number of complaints against collectors could be explained by the increase in volume coming to accounts receivable management firms, according to Brain Peek, CEO of collection agency American Coradius International. “It may be just a pure function of volume,” he said.

But Peek also noted that some agencies are not doing all they can to address complaints that come directly to them. If a consumer is frustrated in dealing with the agency on a disagreement, they could escalate the complaint to the FTC.