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1.4.7.3 Account Information Available to Debt Buyers

Debt buyers may obtain very little information about the consumer debts that they buy. The FTC reviewed the types of information transferred in 3400 debt portfolios sales between 2006 and 2009, finding that important pieces of information were not transferred with the data file.304 For example, only thirty percent of accounts contained information about the interest rate, only eleven percent listed the principal amount, only thirty-seven percent contained information about finance charges and fees, and only thirty-five percent reported the date of first default.305 The FTC also found that debt buyers almost never received documentation at the time of sale, finding that account statements and terms and conditions were only transmitted with six percent of accounts.306 Moreover, debt buyers rarely received any dispute history or information about whether a prior dispute had been resolved.307

The FTC further found that, although sellers typically agreed to provide missing documents upon request for a certain percentage of accounts, debt buyers typically had to pay $5 to $10 per document after they exceeded that percent or after the time to request additional documentation ran out.308 If the first purchaser sells debts to a second debt buyer, the seller typically has no obligation to provide documents to the second debt buyer, who would have to submit any request for documents to the first debt buyer and ask them to transmit the request to the seller.309

In August 2014, the Office of the Comptroller of the Currency (OCC) issued guidance on debt sales to the banks and financial institutions that it regulates.310 The Bulletin instructs banks to provide debt buyers with a signed contract and the last twelve account statements for each account.311 It also requires banks to provide additional information such as details of any unresolved disputes and an itemization of the principle, interest and fees.312

The CFPB found that in mid-2015, about a year after the OCC’s guidance, credit card issuers were providing documentation of the following information to sellers:

[A]ccount statements, the account number, the account holder’s identifying information (such as their Social Security number), written applications, affidavits, cease and desist indicators, attorney representation indicators, and outstanding principal, interest, and fees at charge-off.313

Although the OCC’s Bulletin calls for production of the twelve most recent monthly statements, the CFPB found that some issuers only provided the last transaction statement and a “a ‘charge-off statement’ detailing the final payment made, the remaining balance, and the date of charge-off.”314 The CFPB reported that half of the credit card issuers charged a document retrieval fee for any document the debt buyer does not have, with fees ranging from $5 to $15 per document.315

At this time, there are no regulations similar to the OCC guidance that applies more broadly to other types of debt sales. Thus, any improvements in information and documentation transfers observed in debts sales from banks may not be reflected in the practices of other debt sellers.

The lack of reliable information contributes to collection problems like collecting from or suing the wrong person or for the wrong amount or attempting to collect accounts that have already been paid or settled.

Footnotes

  • 304 Fed. Trade Comm’n, The Structure and Practices of the Debt Buying Industry, at T-9 to T-10 (Jan. 2013).

  • 305 Id.

  • 306 Id. at T-11.

  • 307 Id. at 37.

  • 308 Id. at 39–40.

  • 309 Id. at 27–28.

  • 310 Office of the Comptroller of the Currency, Risk Management Guidance, Bulletin 2014-37 (Aug. 4, 2014).

  • 311 Id.

  • 312 Id.

  • 313 Consumer Fin. Protection Bur., The Consumer Credit Card Market 261 (Dec. 2015).

  • 314 Id.

  • 315 Id.