Global Debt Registry has signed a deal with credit bureau giant TransUnion to battle faulty collection practices within the $3.3 trillion market for unsecured consumer debt.
Historically there has not been a clearinghouse to securely manage supporting account information while minimizing risk from financial institutions transferring debt.
Debts can be pursued for years after they have been charged-off or sold, including after they have been extinguished. There are thousands of collection agencies in the U.S., from large agencies to mom-and-pop shops. Some - also classified as debt buyers - purchase past-due debts from creditors or other businesses for cents on the dollar and try to collect.
Data integrity has become a major issue in the collection industry as accounts move along the industry value chain. Global Debt Registry and TransUnion aim to increase transparency, reduce risk and improve ROI for debt buyers, collectors and financial institutions.
Most consumers do not know or understand their legal rights concerning the collection of time-barred debts, thus some are scared into paying up, often on the basis of shaky documentation.
Global Debt Registry assigns each debt a unique ID number, so that it and its customers can keep tabs on debts similar to the way that the Department of Motor Vehicles tracks car ownership. The debt registry offering allows debt owners to accelerate collections through streamlined access to account information, according to the company.
It also gives them the ability to securely validate account ownership information with supporting documentation and consumer access via Debt Lookup, an online consumer access service offering access to account-level data and documents supporting claims by legitimate debt collectors.
Mark Parsells, chief executive of Global Debt Registry, said broader adoption of the company's vast database along with supporting statements and loan applications should improve collection rates on legitimate debt while reassuring consumers, who can check claims via Debt Lookup, a free online tool.
Regulators have struggled to keep watch over collection practices. Outstanding consumer credit has tripled in the past 20 years and about 77 million Americans are in some form of non-mortgage collections, according to a 2014 survey.
Debt collection accounted for 11% of complaints to the Federal Trade Commission last year, the second biggest source of complaints after identity theft. A 2013 study by the FTC estimated that more than 30% of debts purchased by debt buyers were at least six years old, putting them beyond or near the end of statutes of limitations in many states.
According to the Consumer Financial Protection Bureau, consumers in February filed 3,380 complaints against 830 different debt collectors. Thats up 3.1% over January and the number likely will continue to edge up as more complaints become public.
The breakdown of those complaints includes:
- 1,522 Continued attempts collect debt not owed (45%)
- 590 Disclosure verification of debt (17%)
- 562 Communication tactics (17%)
- 278 False statements or representation (8%)
- 252 Improper contact or sharing of info (7%)
- 176 Taking/threatening an illegal action (5%)
Global Debt Registry's partnership with TransUnion is the most significant in the 10-year history of the Wilmington, Del.-based company, said Parsells.