CFPB Debuts Slightly Clunky Portal for Debt Settlement Complaints

The Consumer Financial Protection Bureau announced Monday that it will accept consumer complaints about additional non-bank products such as debt settlement services. The CFPB has been receiving consumer complaints about debt collection since November 2013.

It’s not as easy to submit a complaint about a debt settlement service, or any other non-bank service, as it is to submit a complaint about a debt collector. On the CFPB’s complaints website, “debt collection” is a clearly visible category. But in order to submit a complaint about one of these newly categorized non-bank products, consumers have to select the generic “other financial service” tab. Once the consumer selects debt settlement from a new menu of choices, (s)he receives a prompt making sure that the complaint isn’t actually about a debt collector. This type of step-by-step confirmation doesn’t exist when a consumer files a complaint against a debt collector.

Once consumers confirm that their complaint is about a debt settlement service, they can submit a specific complaint about:

• Advertising and marketing
• Customer service/Customer relations
• Disclosures
• Excessive Fees
• Unexpected/Other fees
• Fraud or scam

Consumers receive a tracking number after submitting a complaint, and they can check the status of their complaint by logging on to the CFPB website. The CFPB requests that companies respond to complaints within 15 days, describing the steps they have taken or plan to take to address the issue.  Ultimately, the Bureau expects companies to close all but the most complicated complaints within 60 days.

“By accepting consumer complaints about prepaid products and certain other services we will be giving people a greater voice in these markets and a place to turn to when they encounter problems,” CFPB Director Richard Cordray said in a press release announcing the expansion of the complaint database.

Debt settlement services are typically marketed to consumers as a way to renegotiate, settle or change the terms of a person’s delinquent debt owed to a creditor or debt collector. Debt settlement companies may promise to reduce the outstanding balance, interest rates or fees a person owes. But these companies often charge consumers incredibly high fees for their services. And in some worst-case-scenarios, they can actually put consumers even deeper into debt.

Meanwhile, in the debt collection industry, consumers have filed 17114 complaints against collectors in 2014 alone. As of May 2014, that meant the CFPB was receiving more than 100 consumer complaints about debt collection every day. And data shows that this trend is unlikely to change. Learn what to do with complaint data to make your agency more consumer-friendly, and compliant, at our August webinar insideCompliance: Decoding Litigation Data in 2014. insideARM.com also provides targeted advice on on what the CFPB’s complaint data means, how they may use it against the debt collection industry in the future and how companies can strengthen their complaint management systems in To the Point: CFPB Collection Complaints.