WASHINGTON—As part of its multi-pronged effort to inform public understanding of the debt collection industry, the CFPB has released a Report On Risks in the Online Debt Sales Market, which highlights potential risks to consumers’ personal information posed by debt sales online.
The Bureau has also released its first-ever national survey of consumer experiences with debt collectors, as well an online series of consumers’ stories about their debt collection experiences.
Many debts sold in online marketplaces come with sensitive personal information attached, and are easily available at extremely low prices, the CFPB said. The report raises questions about protections for that information and the dangers of it falling into the wrong hands.
“When original creditors fail to collect debts on their own, they may sell the debt, sometimes for fractions of a penny on the dollar, to realize some return. The new debt owner has legal rights to seek to collect the full amount of the original debt or to resell debts that are uncollected. Some of these debts are sold online, through small internet marketplaces. This marketplace is made up of websites and, in at least one instance, through social media, where written-off bundles, or portfolios, of consumer debt are put up for sale,” the Bureau said.
Typically, these debt portfolios contain the sensitive personal and financial information of consumers. This information can include names, social security numbers, account numbers, and dates of birth. In some instances, unencrypted, identified personal information has been available to any visitor to a debt marketplace website, the CFPB explained.
The report is based on a Bureau review of 298 portfolios of debt that surfaced among three online marketplaces the Bureau monitored between January and August 2015. All told, these portfolios were advertised as containing information on more than 1.2 million consumers, with a combined face value of almost $2 billion. The asking price for these debts was only about $18 million, or less than a penny on the dollar on average. Almost half of the accounts offered were payday loan debts and another 25% were credit card debts. These online marketplaces list debts that the sellers claim were originated by at least three of the largest credit card lenders.
Most of the debt for sale in these online marketplaces, along with the attached personal information, cost very little, the CFPB said.
“Of the 214 portfolios that listed both the asking price and the number of accounts for sale, 25 cost less than $1 per consumer account. Another 37 portfolios were priced between $1 and $2. More than half of these debt portfolios were priced less than $5 per consumer account. Some portfolios, including one with a face value of $156 million on sale for $125,000, had asking prices lower than one-tenth of a penny per dollar. Most of the debt sold is at least five years old and 75% had been previously pursued by at least two other collectors,” the Bureau stated.
The Online Debt Sales report is available at: http://files.consumerfinance.gov/f/documents/201701_cfpb_Online-Debt-Sales-Report.pdf