Consumer Relations Consortium Submits Response to CFPB’s RFI on Complaint Data Normalization

ROCKVILLE, MD – Yesterday the Consumer Relations Consortium (CRC) submitted comments in response to the Consumer Financial Protection Bureau’s (CFPB) request for information (RFI) on complaint data normalization.

The CRC is a group of more than 20 Larger Market Participants (LMP) in the debt collection industry who proactively engage with regulators and consumer advocacy groups to bridge the gap of understanding and expectations often present between consumers and collectors.

Our mission is to collaborate with regulatory agencies to affect change resulting in industry reform that not only provides the best level of service to consumers but also ensures the critical role collections plays in the economic cycle survives, and allows product and service providers to continue to make affordable credit available to the Consumer.

The CRC took this RFI to our membership.

It should be noted at the onset that the initial responses were not consistent — a fact which is not surprising. Although all members are LMPs, the group is made up of firms of various sizes and experience with a broad range of account types. Our position is that this industry does not operate in a “one-size-fits-all” scenario and that normalization of the data, though difficult to do, is absolutely necessary for all parties who desire to have meaningful data on the industry.

Tim Heber, CRC member and Compliance Officer at Complete Payment Recovery Services said, “The CRC believes it will ultimately be beneficial to for consumers, creditors, and agencies to normalize the data in order to determine and analyze trends, and provide observations and recommendations for improvement. This will, in turn, prove beneficial to the consumer experience with debt collectors.”

“Apples-to-Apples” comparison is the goal for any normalization project. Unfortunately, there are subtle nuances and differences at every turn. CRC members believe that two elements are most important for any attempted normalization; type of accounts worked and size of the organization. However, using just those two elements is insufficient. At least two additional elements, balance range and age of debt are best utilized as initial sub-categories. Thereafter there are numerous other types of sub-categories to the sub-categories.  CRC members welcome the opportunity to assist the CFPB in identifying all of the various elements.

Tracking Complaints by “Size” or “Market Share” of Debt Collector

Another normalization theory is to segment complaint reporting by the size of the debt collector organizations. This too is challenging.

The questions are: How will size be defined? How will size be measured? What data will be used to determine size?

There is very little public information regarding the finances of a typical debt collector company. Most companies are privately held. Financial information will need to be voluntarily provided by debt collectors.  CRC members are open to providing meaning financial data.

CRC members believe the most relevant “size” statistic is not necessarily number of employees, number of locations or annual revenue. Instead, the total number of consumer contacts and/or attempted contacts is the most relevant number for comparison. However, obtaining and ongoing tracking of contacts and attempted contacts is extremely problematic.

Definitional, system, and logistical challenges could impact this sizing component. How will contacts and attempted contacts be universally defined and tracked? How will such data be reported? Will reporting of such data be optional or mandatory? If such data is obtained, who would review the data and how will the data be analyzed?

The full CRC submission can be seen here.

The CRC appreciates this opportunity to offer our assistance. Management teams of our member companies have made a commitment to this effort, and we understand that this may require a time commitment from internal statisticians or retained outside consultants. But, we feel the end result will be positive for both industry and consumers.