In late 2012 the Consumer Protection Bureau, the leading authority and website on consumer complaints in the United States, began accepting complaints about credit reporting, giving consumers individual-level complaint assistance for the first time at the federal level. It also began collecting important data on the debt collection and reporting industry as a whole. Overall, the industry has taken notice of the new regulatory agencies and the need to respond to consumer complaints. The CFPB’s Director at the time, Richard Cordray has said,
“Credit reporting companies exert great influence over the lives of consumers. They help determine eligibility for loans, housing, and sometimes jobs. Consumers need an avenue of recourse when they feel they have been wronged.”
The Federal Trade Commission (FTC) reports that as of January 2016, the total number of lawsuits filed in 2016 for Fair Credit Reporting Act violations, the law that protects the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies, has increased more than 31% compared to the same period in 2015. These lawsuits are typically against the reporting agencies like Equifax, Transunion, Experian, and the D&B. This is possibly due to the total increase in consumer debt in the United States as a whole, of which student loan debt being one of the “consumer loan” areas hit people the hardest. Debt to disposable income ratios have began to level off after the 2008 mortgage and housing bubble collapse as banks continue to merge as smaller local community banks have been suffocated with new regulations. Subsequently, the Monopolistic competition of the consumer banking industry, combined with near zero interest banking coming to an end, has made things difficult for consumers with household debt.
As a percentage of household income consumer debt is beginning to increase once again.
Consumers are vigilante in maintaining creditworthiness as lawsuits against credit reporting agencies are on the rise. Consumers are also fighting back against telephone solicitors and automatic dialing systems, increasing the number of lawsuits filed for violations of the Telephone Consumer Protection Act (TCPA) by almost 40% since 2015.
Meanwhile, the debt collection industry continues to do much better.
The total number of complaints and lawsuits filed for violations of the Fair Debt Collection Practices Act, the law that protects consumers from bad collection agencies and debt collectors, has decreased over the same period last year. Consumers filed 20% less lawsuits against debt collection companies in 2016.
One of the challenges with complaints to credit report agencies is that many of the complaints are unfounded, simply because the consumer is complaining to attempt at getting out of paying legitimate debts or remove negative information for not paying the debt from their credit reports. Southwest Recovery has not had a lawsuit for FDCPA violations or received a legitimate complaint in years, despite having a C+ rating with the local Dallas Texas Better Business Bureau. At Southwest Recovery our staff is trained to follow FDCPA rules and regulations to a T. We take the need to address consumer complaints very seriously. In fact, We have been working with the local BBB to improve the company’s image and raise the overall BBB grade of our company. Our main focus has been to educate the BBB on how consumers are using the complaint process to try and get out of paying legitimate debts. In a three page letter written to John Fife, Vice President & Director of Dispute Resolution at BBB in February 2016 I outlined how our company has a contractual obligation not to bend to the pressures brought by the consumer through the BBB . The BBB responded that it did not matter and that if SRS wanted the false and misleading information taken off of the BBB’s website and if the BBB was to consider doing so it must develop a policy that would deal with the complaints being filed. Our letter to the BBB clearing explained that it was unreasonable to expect that we could write a policy to change the mindset of a consumer that was using the BBB’s complaint process to try and get out of paying a debt to our client. They didn’t care. Meanwhile, potential clients of ours go to the BBB website without knowing the complete truth. The BBB says that debt collection complaints has declined by double digits, according to ACA International, the Association of Credit and Collections Professionals.
What has the BBB done to address complaints?
It is clear that despite our efforts to work with the BBB on this matter, the only way we are going to get them to take down the misleading information is to seek legal council. This is unfortunate due the overwhelming cost associated with this type of legal case. In fact companies all over the United States have been suing the BBB to try and level the playing field. The last thing we want to do is file a lawsuit. The BBB has lawyers on hand waiting to go to court, they are about as non-profit as the NFL. One day with our Government’s desire to regulate and report on every aspect of our lives will lead to the creation of a “Business Financial Protection Bureau” and keep track of the total number of lawsuits filed against the BBB for not reporting accurate information. The BBB has always had a problem with collections companies like ours. Meanwhile, we will continue to operate our business with integrity and follow the law.
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