The Federal Trade Commission (FTC) received more than 3 million consumer complaints in 2015 with debt collection topping the list, according to its newly released Consumer Sentinel Network Data Book. The annual report, which does not include do-not-call complaints, provides national and state-by-state data on consumer complaints received by the FTC.

Debt collection complaints moved from the second-most reported complaint category in 2014 to the top in 2015. The FTC stated that this change was largely due to a substantial increase in the number of complaints contributed by PrivacyStar, a non-governmental source that collects complaints through a mobile application. According to the FTC, this development also caused a spike in complaints related to debt collection calls to mobile phones. Of the total 897,655 debt collection complaints received by the FTC in 2015, 895,158 involved third-party debt collection and 2,511 involved creditor debt collection. (Fourteen complaints were coded for both types of collection.)

Identity theft complaints, which occupied the top spot for the previous 15 years, were the second-most reported category in 2015. Nevertheless, identity theft complaints still increased more than 47 percent from 2014 and the FTC reported a large jump in the number of such complaints involving tax identity theft. Imposter scam complaints, which the FTC describes as complaints about scammers impersonating someone else to commit fraud, continued to be the third-most common complaint in 2015.

The other two "top-five" complaint categories were telephone and mobile services (fourth) and prizes, sweepstakes, and lotteries (fifth). It is noteworthy that bank and lender complaints dropped from fifth in 2014 to sixth in 2015, representing 5 percent of all complaints in 2014 and 4 percent in 2015.

For military consumers, identity theft continued to be the top complaint category in 2015 and education complaints rose from seventh in 2014 to sixth in 2015. In contrast, education complaints ranked 24th for consumers overall in 2015.

The Consumer Sentinel Network is an online database of consumer complaints maintained by the FTC. Other federal and state law enforcement agencies contribute to the database, including the Consumer Financial Protection Bureau (CFPB) and the offices of 20 state attorneys general. Private-sector organizations contributing data include the Council of Better Business Bureaus, which consists of all North American Better Business Bureaus.

Any federal, state, or local law enforcement agency can obtain access to the database by entering into a confidentiality and data security agreement with the FTC. Certain international law enforcement authorities are allowed access as well.

While the data only reflect ''unverified complaints reported by consumers," regardless of merit, the report nevertheless could significantly affect the industries targeted by the complaints. The FTC and state attorneys general have long used consumer complaints to identify victims and potential targets for investigations, and the CFPB similarly considers complaints in prioritizing which entities to investigate.

Because industries receiving a large number of complaints are more likely to draw a regulator's attention, minimizing the number of consumers who complain to the FTC, CFPB, or other consumer watchdogs is an essential first step to reducing potential exposure. To accomplish this, it is important for companies to establish their own systems to track and resolve complaints. In its examination procedures, the CFPB specifically instructs its examiners to assess the quality of a company's complaints system.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance. For more information, please contact the authors of this alert.


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