Newsroom

July 19, 2019

Report: 1/4 of consumers have debt in collection with third-party

moneyA new report from the CFPB on third-party debt collection revealed that 28 percent of consumers with a credit report in 2018 had at least one debt in collection with a third-party. The CFPB is currently considering a rulemaking related to third-party debt collection.

NAFCU has urged the bureau to exempt credit unions from any rules related to first- and third-party debt collection, as credit unions are not the bad actors in this space. Member credit unions are encouraged to submit feedback on the bureau's proposed rule through NAFCU's Regulatory Alert until Aug. 5.

The report spans 2004 to 2018 and provides an overview of third-party debt collection tradelines. A tradeline is information about a consumer account that is sent to the credit reporting agencies; it contains data on account balance, payment history and account status.

Among the report's key findings:

  • more than three-fourths of third-party collection tradelines are for non-financial debt;
  • more than half of these non-financial debt tradelines are for medical debt, and another 20 percent are for telecommunications or utilities debt; and
  • tradelines from debt buyers, which are commonly for financial services debt, are more likely than tradelines from other debt collectors to show a new instance of consumer disagreement with a completed Fair Credit Reporting Act dispute investigation.

The data in the report is drawn from the bureau's Consumer Credit Panel (CCP), which is a national representative sample of roughly 5 million de-identified credit records maintained by one of the three nationwide credit reporting companies.

Access the full report here.