United States: Consumer Litigation Spikes In October, But Debt Collection Complaints To CFPB Plummet

Last Updated: November 18 2015
Article by Ethan G. Ostroff and Keith J. Barnett

According to the October debt collection litigation and complaint statistics report from WebRecon, consumer litigation in October under the FDCPA, TCPA, and FCRA marked the first time since September 2011 that an increase from both the prior month and year-to-date occurred.  "For the first time in several years, overall consumer litigation is up dramatically," with 12,223 filings, which represents over 2,200 more lawsuits filed so far this year over the highest prior year.  However, debt collection-related complaints lodged with the Consumer Financial Protection Bureau declined by almost 20%.

From September to October, the number of FDCPA lawsuits increased 5%, FCRA cases increased 15.1%, and TCPA cases surged 29.8%, according to the report.

FDCPA cases increased "unexpectedly" by more than 1,200 lawsuits (a 14.5% increase) over the number this time last year.  In fact, the number of FDCPA filings declined compared to the previous year at this point in 2014 by 5.5%, in 2013 by 7.6%, and in 2012 by 6.9%, WebRecon reports.  The last time year-to-date filings under the FDCPA increased – in 2011 – was a 12.2% jump over this time of year in 2010.

FCRA filings show a year-to-date case increase by 800 over this time last year (3%).  Filings also increased in the previous four years – by 7.5% in 2014, 0.5% in 2013, 13.8% in 2012, and 41.8% in 2011, according to the report.

There were 242 TCPA cases in September 2015 and 314 in October 2015.  As of this time last year, there were 2,208 TCPA cases through October 2014, compared with 2,400 through October 2015—an increase of 8.7%.

"One statute we cannot give much credit to for the big increase is TCPA," WebRecon CEO Jack Gordon wrote.  "In fact, for much of the year it looked like TCPA—after several years of strong growth—would actually decline.  TCPA's YTD numbers have recovered due to the combination of a strong October and a weak few months at the end of 2014."

Year-to-date results for the TCPA have been much higher in the past.  "TCPA was up compared to the previous year at this point in 2014 by +45.9%, in 2013 by +69.4%, in 2012 by +55.3%, in 2011 by +116.2% and in 2010—the first year we have comprehensive numbers—it grew by +618.9%.  So this year's +8.7% seems pretty anemic by comparison," Gordon wrote.

WebRecon also reports that of the consumer litigation cases filed in October 2015, there were about 1,313 unique plaintiffs (including multiple plaintiffs in one suit).  Of those plaintiffs, about 494 (or 36%) had sued under consumer statutes before.

Of the 918 FDCPA cases filed in October 2014, 175 (19.1%) were class-action lawsuits.  82 (26.1%) of the 314 TCPA cases were class-action lawsuits, followed by 66 (17.3%) of the 381 FCRA cases.

On the flip side, complaints to the CFPB about debt collection plummeted from September to October 2015 – down by 19.9%, or from 3,166 to 2,535, according to the WebRecon report.  Year-to-date, the complaints in October 2015 are only 1.7% higher than October 2014, or 33,512 to 34,088, respectively.

"As always, expect this number to go up a few points in the coming weeks as new complaints trickle into the public record, but even so this message seems clear: Barring significant changes in the process, CFPB complaints against debt collectors have leveled out," Gordon wrote.

Consumers filed complaints with the CFPB concerning 703 different debt collectors in October, with only 167 (7%) untimely responses, compared with 2,368 (93%) timely responses, according to the report.

The most reported consumer concern continues to be contact about a disputed debt (44%), followed by disclosure verification of a debt (19%) and communication tactics (16%).

The top five sub-issues in debt collection complaints were:

  • Debt is not mine (28%)
  • Not given enough information to verify debt (13%)
  • Debt was paid (12%)
  • Frequent or repeated calls (10%)
  • Attempted to collect wrong amount (6%)

The highest number of identifiable complaints is in the "other" category for expenses such as phone bills or health club memberships, with 761 complaints (30%) in that category last month, according to the report.  Credit card debt resulted in 519 complaints (20%), and 386 (15%) complaints were about medical debt.

To view Troutman Sanders' Consumer Financial Services Law Monitor please click here

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