These are bullet points from John Tonetti’s presentation at the CFPB’s “Life of a Debt” roundtable.

  • Name, address, credit history are all obtained by the original creditor.
  • Creditors may report to consumer reporting agencies; those agencies may share information back to the original creditor.
  • When it works right, those first two bullets are sort of a continual loop.
  • However: when a debt falls past due…
  • Some, but not all, of a consumer’s info is shared with an external/third-party collector.
  • Information that a consumer may have shared with the original creditor may not make it to the collection agency.
  • So, a consumer is being contacted by an entity with whom she has no relationship — until now.
  • Any updates from the collector to the creditor — or the creditor to the collector — is often severely hampered by lag.
  • Most companies have a mechanism to correct errors.
  • The FTC found limits to the types of documents a debt buyer can receive — and how much it would cost for the buyer to get the full complement.
  • No federal requirement that the original creditor be disclosed in a G-notice.
  • A collector the consumer has never heard of for a creditor the consumer has never heard of on a balance the consumer does not recognize — all from a lack of shared data.
  • Banks want audited financials, processes for document handling, resale restrictions.
  • Agencies are feeling pressure from reductions in market share, increased scrutiny, eroding margins, and loss of autonomy.
  • Consolidation to improve economies of scale.