Breaking Down Collection Complaints Data

Most commercial debt collection companies are lumped into one big group and given a bad reputation by the general public. However, this is often the case of a few bad apples spoiling the entire bunch. Most commercial debt collection companies are actually very polite and professional operations that treat debtors with respect and dignity.

ACA International is a trade association that is comprised of third-party debt collection companies. In order to illustrate the point that most bad debt collection agencies conduct their business according to regulations, they hired Ernst & Young to produce a white paper covering over 5,000 complaints that were made to the Consumer Financial Protection Bureau.

Who Are These Complaints Against?

bad debtOne of the most interesting numbers contained in the report that Ernst & Young produced was that 511 of the 597 third-party debt collection companies that had registered complaints had less than 10 complains. They further investigated to find that 430 of those companies had less than five complaints.

What this tells us is that there are about 80 commercial debt collection companies that are responsible for over 4,000 complaints. That’s over 50 complaints per company as opposed to five or 10 for the other companies on the list. We should also keep in mind that this list doesn’t include all of the commercial debt collection companies that have not had any complaints filed against them.

While there are plenty of companies that are attempting to collect outstanding debts in a respectable manner, these companies that are racking up the complaints are ruining the reputation of all debt collection firms.

What Are These Complaints About?

In addition to the fact that many of these complaints are focused on a relatively small number of firms, the white paper also revealed that the majority of the complaints were from customers who did not believe that they owed the debt that was being collected.

Many times, these situations with inaccurate information arise from debt collection companies that are in the business of buying bad debt in bulk. This type of bulk debt is known to contain incorrect and even false information. Once again, we see companies that are operating outside of normal legal and ethical boundaries garnering a bad reputation for the entire industry.

Other Problems With the Data

The white paper also found that the data did not distinguish between complaints about first-party and third-party debt collectors. The data also failed to contain any information about whether the complaint was valid or not.

This means that the data very likely included a large number of illegitimate complaints that skewed the total number of complaints to look worse than is actually the case. Here we see that once more, the negative attention that a few bad firms have generated has dirtied the reputation of an entire industry.

The bottom line is that there are some third-party debt collection companies that take advantage of consumers and disregard legal regulations and moral guidelines. However, the majority of debt collection companies are perfectly legitimate companies whose debt collection process follows all of the necessary rules and regulations. These upstanding firms are often owned and operated by good people who treat debtors with respect and dignity.

By |2017-02-12T14:41:08+00:00December 22nd, 2013|Blog|0 Comments

About the Author:

Graduated from University of Utah - business degree 1990. Served in US Army as an interrogator / linguist, then as a tactical intelligence officer - Military Intelligence 1986-1990. Managed Western US sales operations for NY based collection agency 1990-1992. Founded Direct Recovery Associates, Inc. 1992-present