If you missed the news at the beginning of summer, the CFPB is planning to do another round of consumer surveys related to debt collection. Titled, “Debt Collection Quantitative Disclosure Testing,” this time, to gather information regarding the effectiveness of disclosures.


The Bureau issued a comment request in early June; the period for comments closed on Friday. The materials posted describe the survey, its methodology, and its use. Some, but not all, of the proposed survey questions and supporting documents are included.

As of the end of the day, there were six comments posted…well, really four: from the American Financial Services Association (AFSA), from CUNA, from one professor who is against the survey, and one professor who is for the survey. A fifth appears to be a spam posting, and the sixth appears to be a comment for something else, mistakenly submitted within this topic. I suspect a few more may appear on the page in the coming days as they are processed.

Those who opposed the survey – including American Bankers Association, whose submission is not yet public on the Federal Register but was linked from the association’s website – did so primarily because the proposal itself did not contain enough information to provide meaningful comment.

The comments by AFSA, however, took me back a bit. The gist of their submission was that – just so long as the survey relates only to third party collectors -- they are pretty much fine with it.

“AFSA commends the CFPB for keeping research on third-party debt collectors and creditors separate.”

The association says the biggest problem they see with the CFPB’s approach to debt collection is that it treats collectors and creditors the same way. They suggest this is not appropriate because of the difference in motivation to treat customers with respect.

"Creditors are motivated to maintain the customer relationship. They originate, service, and collect a customer’s account. Creditors benefit from a strong relationship with customers built on transparency and trust which helps to maintain a loyal customer base, as well as attract new customers. A free flow of information between creditors and customers keeps the customers informed and out of default.  

On the other hand, debt collectors have not cultivated a relationship with a customer. They collect accounts that are usually in default at the time they receive them, and from customers with whom they have no prior or ongoing relationship because debt collectors collect on behalf of others or they buy customers’ debts from others. Debt collectors have little incentive to maintain or improve customer satisfaction since their customers cannot “vote with their feet” and choose different debt collectors to collect their accounts. Indeed, Congress passed the Fair Debt Collection Practices Act (FDCPA) in 1977 to protect customers from debt collectors: 'Unlike creditors, who generally are restrained by the desire to protect their goodwill when collecting past due accounts, independent collectors are likely to have no future contact with the consumer and often are unconcerned with the consumer’s opinion of them.'"

I’d like to comment on these comments.

While the first paragraph is true, there are some creditors (scammers) who create business models based on deceit – or that push the envelope of what is fair to consumers – in the same way that there are some collectors (scammers) who behave badly.

The first three sentences of the second paragraph are also factually accurate. Yes, by definition, (third party) debt collectors have not cultivated a relationship with a customer when they first receive a consumer’s account. However, the statement that “debt collectors have little incentive to maintain or improve customer satisfaction…” is not only inaccurate today, but ironically has evolved largely along with the attitude of the creditors. In today’s world, “customer experience” is as front and center for reputable debt collectors as it is for creditors.

Yes, as it has been well established by many, including regulators and consumer groups, there are criminal posing as collectors who set up shop with the intent to profit by deceiving consumers. But the majority of debt collectors, who are in business to stay in business, be a part of their community, maintain a good reputation, provide jobs, etc., have every incentive to maintain or improve customer satisfaction. If they don’t their clients – the creditors -- will fire them.

Remember – in the case of third party collectors -- collectors work for creditors. Creditors select their vendors, and they can (and do) change them with little notice. They dictate what offers can be made to consumers. They dictate whether a consumer may be sued on an account. They determine whether accounts are pulled back from one collector and sent to another… or another. They also decide whether to sell the accounts to a debt buyer. And if the creditor indeed cares so much about their relationship with a consumer, it is on them to select a buyer carefully.

The way I see it, this is a partnership. Effective and respectful debt collection depends on creditors and collectors sharing information efficiently and working together to resolve issues. The largest group of complaints to the CFPB is about “attempts to collect a debt not owed.” So, outside of an all-out scam (by a scammer), where would this information come from? The creditor. The one who wants to protect their relationship with the customer.

Everyone should want rules that protect consumers, and are practical and workable for all parties. If they aren’t, legitimate operators will be forced out of business under the weight of compliance costs, and more accounts will end up in the hands of those who don’t care so much about breaking the rules.

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