Oh good! An article that’s going to lay out how CFPB exams will change the debt collection industry. You guys! We’ve been waiting for this!

“The debt collection industry is bracing for significant reform as collectors are scrutinizing their own practices ahead of the first set of examinations by the Consumer Financial Protection Bureau.”

Right right right. I mean, “significant reform” seems… I don’t know. Aspirational? The CFPB has really been focusing more on getting its own house in order. Supervision of large banks has already begun in earnest, and there hasn’t really been anything approaching “significant reform” in that realm. But let’s keep reading.

“The agency has begun targeting large nonbank debt collectors–”

Well, let’s wait a second. “Targeting” isn’t really the right term at all. Large, non-bank debt collection agencies know they’re under the purview of the CFPB. The CFPB, then, isn’t targeting anything. It’s fulfilling its mission.

“The exams have the potential to fundamentally reshape the debt collection industry, which banks and other lenders rely on for asset seizures.”

But– I thought the changes were a foregone conclusion? Because the headline said “How CFPB Exams Will Change the Debt Collection Industry.” What’s this “potential” business?

“The bureau is primarily looking at three key areas in their exams: integrity and accuracy of data, communication with consumers and following the stream of debt sales.”

Yes. Right.

“…said Bill Bartmann, chief executive of the debt advisory firm Bartmann Enterprises and the debt collector CFS II.”

Oh boy.

“Since the CFPB has not yet opened its complaint database to include debt collectors, it pulls from the complaint database at the FTC. The CFPB report shows that the two largest complaints on debt collectors in 2012 were for falsely representing character, amount or status of debt; and repeated or continuous calls to consumers — both of which violate fair-debt laws.”

This requires a little bit of unpacking. The first important thing to recognize is this: “[The CFPB] pulls from the complaint database at the FTC.” These would be those unverified, unexamined, raw-data complaints that the FTC keeps. And, by “unverified” and “unexamined” what we mean is: some of those complaints aren’t legitimate complaints at all. So, when this American Banker story goes on to say that “the two largest complaints on debt collectors in 2012 were for falsely representing character, amount or status of debt; and repeated or continuous calls to consumers” — that’s kind of a bunk sentence. And it’s bunk because it’s doing two things, but one incorrectly:

1) It is correctly saying that consumers complained a lot about “falsely representing character, amount or status of debt” and “repeated or continuous calls to consumers”

2) It is incorrectly trying to make the correlation that all of those complaints were correct, or legitimate.

Look: sometimes people get cranky about a phone call from a collection agency and they lodge a complaint — regardless of whether or not the debt we’re being called about is legitimate or not. The collection agency can be well within its legal rights to call the consumer. However, we all get cranky sometimes, and we feel our Feelings: I get it.

“‘Before this calendar year is up, there will be lawsuits filed against 10 million consumers [for debt collection, and] 30% are likely to be deficient, fraudulent or inadequate in how it’s being performed,’ said Bartmann.”

Thirty percent? Likely?

“The CFPB has taken a keen interest in looking at all parties of the debt cycle, no matter how many times the debt has been sold.”

We…’re not going to get to the “How CFPB Exams Will Change EVERYTHING” part, are we?

In summation: The CFPB exists. It oversees debt collectors. No one — not even Bill Bartmann — knows exactly what changes will happen, but some companies are making some changes preemptively.

Isn’t being informed great?

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