The Growing Voice of the Customer: The CFPB Complaints Database

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John Telford

John Telford

One of the interesting side effects from the social media revolution of the past three years is the power that social media has given to the consumer and the challenges that this has caused for business. Poor treatment of customers can no longer be swept under the carpet by large corporations claiming it as a small error impacting only a handful of customers.

A great example of this would be the challenges faced by Blackberry last year. The organization initially tried to down-play the scale of the issues being faced but the consumer uprising across social media networks quickly highlighted the size of the problem. This just highlights how customer voices in aggregate can now be much louder than the brand itself.

We’ve seen the same trend recently across the debt collection industry where the customer’s voice is now being heard, loud and clear. The CFPB’s latest innovation, their consumer complaints database, has recently released details on the debt collection complaints that have been made since July; this database now contains in excess of 10,000 complaints and is growing at over 200 complaints per week. These directly identify the creditor, debt buyer or collection agency involved and the cause of the complaint; furthermore, this information is now publicly available for all, including the regulators themselves, to see.

It is becoming ever- easier for customers to raise complaints direct to regulators, through the existing consumer complaints portal and the upcoming ‘hotline’. As such, we anticipate the volume of high level complaints to grow significantly through 2014, indeed since the release of the database the number of complaints being sent to creditors per week has steadily grown by 5% each week, so doubling every 15 weeks. So, what does the industry need to do in response to this to slow this trend?

We believe that there are two broad strategies that the industry needs to focus on; mitigation and harvesting:

  • Mitigating complaints at source can be achieved by putting the customer experience at the forefront of the agenda. This means not only “ensuring adherence to regulation” but analyzing and improving the customer experience at all touch-points within the collections lifecycle.
  • Harvesting complaints internally will prevent the escalation of disputes and issues into high level complaints. This means ensuring all disputes are responded to in a timely fashion and even encouraging customers to complain directly to you to enable any challenges to be resolved directly.

One major learning from large corporations’ reaction to the social media explosion is that listening is crucial and can provide far reaching benefits. Given this emerging voice in our industry, we now need to ensure that we are not only listening to regulators, but also listening hard to our customers.

TDX Group is hosting a free webinar next week discussing new regulatory requirements in the ARM industry.

Continuing the Discussion

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  • avatar aaron-deacon says:

    I have worked on both sides of the debt collection industry, and there is much of the social media coming out recently that is disingenuous at best. The recent reports do not give any weight to the recent reforms and revisits of the debt collection practices and the effects that it has had on debt collector behavior. The new fangs given to debt collection laws have driven most of the more egregious offenders out of business and have hamstrung most of the debt buyers to the point that the entire debt buying industry is reconsidering its viability.

    Also, the reports describing the debt collection complaints leave out one vital statistic that certainly would reduce the impact of the report but would also create an accurate picture of the industry instead of the fantasy that is being crafted in social media. What is the percentage of those complaints that actually have merit. For example many of the complaints for suing for the wrong amount are without merit because the consumer does count the acceptable court costs, disbursements and statutory interest that is allowable by law. When a debtor blocks calls from a debt collector for 4 years, a 3,000 maxed credit card default becomes over a $5,000 balance which is completely legitimate.

    The fact is that the debt collection industry is an easy target because they don’t spread the kind of money that other facets of Wall Street does to protect its reputation. Granted that bad reputation is earned from years of bad behavior. But give credit for the recent effective reforms that are actually working to fix the problems instead of driving the industry into the ground. Debt collection is a necessary facet of our economy, unless the consumer advocates want the banks to stop issuing credit cards to everyone except people with pristine credit ratings like they did back in the 1980′s and prior.

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