Study Details Extent, Cost of Managing Generic Disputes

Collection agencies are receiving an “extraordinarily high” number of indirect disputes with “little evidence” that the disputes are originating with an actual individual, according to a report issued by ACA International.

The average number of disputes an agency receives annually is 60,408, according to the report, which included data from 170 different agencies, which are members of ACA International. The median amount was 4,100 disputes.

Based on the responses from 152 different agencies, 77% of the disputes received are invalid, meaning they were not generated by an individual.

The average cost of responding to invalid disputes for the 108 agencies that provided the information was $35,651, according to ACA International. Of that, $24,481 is how much agencies spend on employees managing invalid disputes. Agencies spend, on average, $10,683 paying fees to use the e-OSCAR platform, which is used to direct credit reporting disputes to the proper entity.

Agencies are receiving, on average, 31,982 indirect disputes every year, and 15,030 form letters.

Disputes that are sent by someone other than the actual individual — such as credit repair organizations — do not need to be investigated by a collection agency. Only disputes that are sent by the actual individual require an investigation, under the Fair Credit Reporting Act. For the past few years, collection agencies have been forced to deal with a massive influx in the number of disputes they are receiving.

From the study:

This data suggests that there are an extraordinarily high number of indirect disputes received by ACA members, with little evidence that these disputes are originating from an actual consumer. Indeed, the total numbers of indirect disputes received far exceed direct disputes, suggesting that a majority of these disputes are being generated by a third-party. Furthermore, there are significant operational costs associated with responding to invalid disputes