Removing Barriers Blog

BCFP Report on Telecommunications Debt Collection
Posted August 23, 2018 by CUNA Advocacy

Yesterday, the Bureau released its fourth Quarterly Consumer Credit Trends Report.  These quarterly reports are based on analysis of about five million de-identified records from the three credit reporting agencies. 

The current report focuses on telecommunications debts – i.e. consumer debts for landline/cell phone, cable, and internet services – in consumer credit records.  According to the Bureau, these debts are “among the most common debts that creditors or debt collectors seeks from consumers.” 

The Bureau’s key findings include:

  • About 22 percent of consumer reports contained a telecom-related item at some point between mid-2013 and early 2018. Although consumers often pay for their telecom services on a monthly basis, most telecommunications providers do not report to credit reporting agencies unless an account is in collections.
  • Telecommunications providers often hire collection agencies or sell telecom debt to debt buyers. Collection agencies are typically contracted to collect a telecom debt for several months. After the collection contract ends, the debt is returned to the telecommunications provider and the collection item is removed from the credit record. The debt may be sold or sent again to a collector and reported as a new item in the credit file.
  • The presence of a telecom collections item on a consumer’s credit record is associated with having a lower credit score, but the change in score before and after the item appears on the credit record is often small and therefore unlikely to affect creditors’ decisions for many consumers.

The greatest number of complaints received by the Bureau through its consumer complaint database relate to debt collection practices.  As a result, BCFP Director Mick Mulvaney has previously stated the Bureau intends to prioritize the development of a rule governing third-party debt collection.  CUNA has encouraged the Bureau to focus any future debt collection rule on the practices of bad actors and avoid increasing regulatory burden on credit unions.