United States governmental agency the Consumer Financial Protection Bureau (CFPB) has released a new report – ‘Market Snapshot: Online Debt Sales’ – outlining the findings from its review of 298 portfolios that entered at least one of the three online marketplaces observed by the CFPB between January and August of 2015.
The Office of Consumer Lending, Reporting, and Collections Markets of U.S. governmental agency the Consumer Financial Protection Bureau (CFPB) has published a new report called ‘Market Snapshot: Online Debt Sales‘. The report offers an introduction to the online marketplace for charged-off debt – a market that consists of websites, and, in at least one case, a Facebook page where portfolios of charged-off consumer debt are listed for sale. According to the report, these portfolios, once purchased, likely provide sensitive personal and financial information about consumers.
Currently, online marketplaces appear to be a very small part of the broader debt collection industry. If designed properly, online marketplaces may have the potential to help responsible debt collectors acquire charged-off debts from responsible sellers more efficiently. However, the ease with which debts can be bought and sold online may increase the risk that debts – and the sensitive consumer information associated with them – will fall into the wrong hands. The report reveals troubling signs that some online marketplaces may not have adequate practices in place to prevent consumer data from being sold or distributed to outside parties. Early indications suggest that many online marketplaces may not be fully protective of consumer privacy.
This CFPB report describes the types of accounts available through online debt marketplaces that may contain sensitive information for hundreds of thousands of consumers or allow buyers to acquire debts at very low costs. Findings are based on a review conducted by the CFPB of 98 portfolios that entered at least one of three online marketplaces that the CFPB observed between January and August of 2015. In total, these portfolios were advertised as containing the information of more than 1.2 million consumer accounts.
The study reviewed only the debt listings, including advertised asking price, number of accounts, face value, age, and number of prior placements, and did not review other characteristics of these specific websites (such as operating practices or safeguards). The motivation for this decision was the belief that these marketplaces represent what is typically expected of online debt vendor websites. The CFPB views these debt characteristics and price trends as generalizable to the online debt market as a whole.
The characteristics and trends covered in the report may lead to a situation where private personal information – including names, social security numbers, dates of birth, addresses, and account numbers – can be cheaply and easily acquired by anyone online, including for illegitimate purposes. In the second part of the report, characteristics of the debt found in online marketplaces are described, followed by an analysis of the debts, including information on source, number of prior placements, and asking prices. In the report appendix, the CFPB describes the methodology it used to carry out its research.
To read or download the full CFPB report – Market Snapshot: Online Debt Sales, click here.