Collection Complaints Rise in Early 2014

Mar 25, 2014
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The early months of 2014 have seen sporadic collection agency complaints. In January, the U.S. district courts seen a 19 percent increase in Fair Credit Reporting Act (FCRA) filings. There was also a 30 percent increase in Telephone Consumer Protection Act (TCPA) filings. However, filings for violations of the Fair Debt Collection Practices Act dropped 26 percent.  While these numbers seem harsh, they are not as bad as numbers from January 2013.

In January 2014, more FDCPA lawsuits were filed in U.S. district courts than FCRA and TCPA claims combined. 709 lawsuits were filed in U.S. district courts for alleged FDCPA violations, but that’s still down from the more than 950 suits filed in January 2013. By contrast, the number of FCRA filings jumped from 161 in January 2013 to 191 in January 2014. TCPA filings spiked from 160 in the same time last year to 208 in January 2014. In addition to these specific lawsuits, consumers have also seemingly gotten the hang of using the Consumer Financial Protection Bureau’s consumer complaint website to air their grievances about the debt collection industry. These complaints are obviously much more vague than formal filings, but that doesn’t mean they should be disregarded.

According to the CFPB, they received 2,975 consumer complaints about debt collectors in January 2014. When the CFPB launched its complaint portal in July 2013, it managed to rack up 10,000 consumer complaints about debt collection for the rest of 2013; that is nearly 60 consumer complaints a day. Now, that average has jumped to more than 95 consumer complaints a day.

Signing up for the CFPB portal is the only way a collection agency can see and respond to the complaints filed against it. Once a company signs up for the portal, it must appropriately respond to consumer complaints, take the necessary steps to reduce them and constantly be on the lookout for the CFPB to use this complaint data as guidance for future rulemaking.

While complaints are the norm for collection agencies, the rise in complaints could mean two things: either collection agencies ramp up their efforts at the end of the year, or consumers are learning that they can actually report complaints. In the months ahead, it will be clear which is the case, but with more media reports directing people to the CFPB portal, it seems natural that this is the case.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

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