On May 6, 2014, the American Bankers Association (“ABA”) and Consumer Bankers Association (“CBA”) submitted comments to the CFPB’s “Debt Collection Survey from the Consumer Credit Panel” (the “Survey”). While the ABA and CBA applauded the CFPB’s collection of information regarding actual consumer experiences with the collection industry, both expressed concern that as currently formatted, the Survey will likely fall short of producing reliable and representative data that can be used to inform any related rulemakings or other agency actions.
For one, both the ABA and CBA are concerned that the Survey does not differentiate between consumer experiences with first-party creditors and third-party collectors. In adopting this generic approach, the ABA and CBA caution that the CFPB is missing a meaningful opportunity to investigate the extent to which consumer experiences differ with respect to creditors and collectors. For example, as the CBA remarked in its May 6, 2014 comments:
Unlike the relationship between third-party collectors and debtors, the creditor-borrower relationship is usually a long-standing one, covering the entire lifecycle of the loan. The creditor also has strong business incentives to foster this relationship as in many instances it has a multi-faceted relationship with the consumer.
The ABA and CBA suggest that drawing a clearer distinction in the Survey between first-party creditors and third-party collectors will likely show that consumers have materially different collection experiences with each. Moreover, this distinction will allow the Survey to provide meaningful data that is relevant to a number of the questions posed in the CFPB’s Advance Notice of Proposed Rulemaking. In addition, the ABA suggests that the Survey should allow consumers to identify not just the type of collector, but also the type of debt involved because that too could significantly impact the consumer’s collection experience.
Additionally, the ABA and CBA both question the CFPB’s decision to oversample data from consumers who are in collections or who have low credit scores. They fear this will skew the surveyed population to those who are more likely to have charged-off or past due debt. As the CBA remarked, this introduces confounding variables into the Survey results because these consumers are much more likely than the general population to hold unfavorable views about collectors. Further, this oversampling diminishes the experiences of consumers who may have different debt collection experiences where they were able to come current or otherwise resolve their account. To capture these consumer experiences, the ABA suggests that in addition to oversampling consumers in collections or with low credit scores, the CFPB also should oversample consumers whose credit reports show they were over 30 days late with a payment but do not show any further deliquency.
The ABA and CBA also both call on the CFPB to ensure transparency as to the Survey results by disclosing the underlying data and information collected. Moreover, the CBA asks the CFPB to make an effort to verify the validity of the experiences reported by consumers prior to drawing any conclusions from that information, in contrast to the CFPB’s current approach in publishing its consumer complaints. The ABA further suggests that the CFPB should pretest the Survey questions, evaluate any possible shortcomings, and make the results of that pretesting publicly available in order to maximize the Survey’s policymaking value.
Relatedly, the ABA also suggests that the Survey should be administered exclusively online to maximize response rates, include prescreening questions to identify potential response bias, and allow questions and answers to be randomized in order to minimize the potential for bias and other potential errors to impact the results. Moreover, the ABA believes that the online format will allow more formatting flexibility aimed at assisting consumers in understanding the Survey, as well as make the Survey collection and review process more efficient and streamlined by eliminating potential loading errors that can plague paper documents (i.e., keypunch errors).
Finally, both the ABA and CBA make specific suggests with regard to revising the various available responses in the Survey to more accurately reflect the options and situations that consumers confront during the collection process, including responses that cover situations where a consumer may not recall or know the specific answer. The ABA also suggests that the Survey should be shorter and more focused, again to minimize consumer response fatigue and confusion.
We share many of the same concerns about the Survey as those expressed by the ABA and CBA. As currently formatted, we too question whether the Survey will result in the collection of useful, verifiable data that is representative and accurate with regard to the overall consumer collection experience. Given that the Survey undoubtedly will play a major role in any future collection rulemaking or policy pronouncements by the CFPB, it is vital that the CFPB ensure the Survey is designed in a way to minimize the potential for producing skewed, biased data that may result in regulations and policies that do not reflect address actual collection issues in a meaningful and effective manner.
Moreover, we agree that public disclosure of the underlying data collected through the Survey is critical to ensuring the legitimacy of the Survey itself, as well as any resulting rulemaking or other regulatory action. As the ABA suggests, there is no reason such data cannot be scrubbed to protect personally identifiable information or other sensitive data, and then made available to the public for review and comment in connection with any findings and proposals born out of the Survey. The CFPB continues to state that it is a data-driven agency, but being data-driven is not enough – transparency also is required and should be something the CFPB welcomes since transparency serves to increase public understanding and acceptance of its actions. In contrast, closed door meetings and refusals to disclose information serves only to sow seeds of distrust, which is not a productive or efficient manner by which to effectuate lasting change. We hope the CFPB will give due regard to the legitimate concerns raised in these comments, as addressing the concerns raised therein will help to ensure that the Survey results in useful and statistically sound data.