Consumers buried in debt will often turn to debt relief and debt settlement services for assistance. The CFPB reports, though, that too often, consumers become victims of fraud, scams, and unfulfilled promises made by these companies.
In their November 2016 Monthly Complaint Report, the CFPB cited debt settlement as the most common product in the “Other Financial Services” category that consumers complain about. (“Other Financial Services” includes debt settlement, credit repair, check cashing, and money orders.) About 50% of complaints in this category, since July 2011, were about debt settlement programs.
A number of debt settlement complaints involved student loans. According to the complaints, some companies deceptively advertised themselves as being affiliated with the federal government or federal student loan servicers.
In addition, some consumers reported that good faith payments were not being forwarded to their creditors. Others reported not hearing back from debt settlers after paying them upfront fees to be accepted as clients.
Overall, according to the report, consumers have felt deceived by debt settlement companies, and the companies have failed to deliver on their promised services. This all was tracked by the CFPB in their Consumer Complaint Database.
Debt settlement companies should take heed to this recent report from the CFPB and make sure to know and understand the complaints about their company in the CFPB Consumer Complaint Database. The database is available for the public to browse and analyze. (Check out our recent analysis of the CFPB database to learn what puts companies at increased risk for a fine. Check out the report here.)
Being proactive with consumer complaints and staying on top of regulations is key to staying compliant. Resolving consumer issues before they result in complaints can save companies millions of dollars in legal and settlement fees.
To learn more about how PerformLine monitors consumer interaction channels for compliance, visit our website, performline.com.