Page 1 of 4 CONSUMER FINANCIAL PROTECTION BUREAU INFORMATION COLLECTION REQUEST

– DEBT COLLECTION SURVEY FROM THE CONSUMER CREDIT PANEL

(OMB CONTROL NUMBER: 3170

- XXXX))

Supporting Statement

– Part B

1. Respondent Universe and Selection Methods

The Bureau recently acquired a nationally representative sample of de

- identified consumer credit records (the “Consumer Credit Panel” or “CCP”) from one of the three national credit reporting agencies. This sample is comprised of a 1

- in

- 48 random sample of all credit records drawn from the credit reporting agency’s archive from December 2012. The resulting sample includes approximately 5 million de

- identified credit records, representing the universe of approximately 240 million credit records. At the end of each calendar quarter, the CFPB receives updated credit records for these sampled consumers (if available) and a 1

- in

- 48 sample of credit records that were newly created since the previous quarter. This sampling process was designed to provi de an on

- going panel of credit records that remains representative of the universe of credit records at each point in time. The contract with the credit reporting agency also allows for testing to verify that the panel remains representative.

The de

- ident ified credit records that the CFPB receives carefully exclude any direct identifying information in order to maintain the anonymity and protect the privacy of sampled consumers. The records include information about the credit accounts, such as mortgages and credit cards, that are included in each consumer’s credit record (though the identity of the creditor is excluded from the information the CFPB receives). Also
included is information about non

- credit

- related debts that have been reported by third

par ty collection agencies, monetary

- related public records (like tax liens and bankruptcy filings), and details of any credit record inquiries made by lenders in response to an application for credit. The credit information in the CCP is used to monitor cond itions in
consumer credit markets , to study consumer behavior regarding credit , to evaluate thePage 2 of 4

effects of consumer regulations, or to address other issues in support of the Bureau’s research, monitoring, and supervis ory missions. 1
We plan to randomly sele ct borrowers from the most recent quarter of the CCP to receive a survey. This process will oversample credit records with recent third

- party collections for non

- credit

- related debts. The sample will also include credit records with
no evidence of such co llection activity; among this group, we are considering oversampling credit records with loan payments that are past due or other indicators that may indicate a greater likelihood of having debt collections that are not reported to the credit reporting age ncies. Sample weights for analyzing the survey data will account for the sample design.
To the best of our knowledge, no survey like this of debt collections has previously been attempted. The closest effort in approach is likely the pilot of the “continuation survey” of the National Survey of Mortgage Borrowers conducted by Freddie Mac. The continuation survey was sent to mortgage borrowers with an oversampling of consumers who were delinquent on their mortgages. Like the survey the
CFPB seeks P RA approval to conduct, Freddie Mac’s survey was a mail survey sent to consumers who were randomly selected from a sample of credit records. The continuation survey oversampled mortgage borrowers who were delinquent on a mortgage. While this survey remai ns in the field, the response rate to date has been about 33 percent. Since we are also surveying consumers who do not have mortgages and who therefore may be more mobile and harder to contact, we expect a lower rate of response to our survey.

2. Inform ation Collection Procedures

As described in the question above, we plan to randomly select approximately 10,000 credit records from the CCP. Unique record locators assigned to these credit

1 Similar datasets are used by the Federal Reserve Board and the Office of the Comptroller of the Currency , so the CFPB is not unique among regulatory agencies in collecting this type of information in order to inform its policymaking.Page 3 of 4

records will be sent to the credit reporting agency along with a survey instrument that has been designed by CFPB staff. The credit reporting agency will identify the consumers associated with each sampled credit record, and mail the survey instrument. The credit reporting agency’s subcontractor will receive the resp onses that come in either by mail or online, strip off any direct identifying PII that may have been included in the consumer’s response, and send the de

- identified information to the CFPB. This process, which has been successfully pilot tested for the Na tional Survey of Mortgage Borrowers, allows the CFPB to survey consumers without revealing direct identifying PII directly to the
Bureau.

3. Methods to Maximize Response Rates and Address Issues of Non

- Response

Obtaining sufficiently high response rates i s a challenge for any survey. The CFPB intends to include a cash incentive with each survey to boost response rates. Additionally, the Bureau will incorporate lessons learned by the National Mortgage Database (NMDB) 2 pilot team, comprised of staff from t he CFPB, Freddie Mac, and the Federal Housing Finance Agency, which has pilot

- tested a similar methodology for new or delinquent mortgage borrowers. Further, because we will have the de

- identified credit records of both respondents and non

- respondents to the survey, we anticipate using this information to model survey nonresponse and to adjust sample weights to ensure the survey is representative of American consumers. Finally, as noted below, the CFPB is considering examining the effects of alternative versions of the required Privacy Act Statement on survey nonresponse.

4. Testing of Procedures or Methods

The CFPB plans to test experimental instrument s on a small scale prio r to their use in

2 The National Mortga ge Database ( OMB No. 2590

- 0012 ) is a joint effort of FHFA and the CFPB and is a uniquely comprehensive database of information on the residential mortgage origination market. A key purpose of the NMDB is to make accessible accurate, comprehensive informati on for monitoring the residential mortgage market. The need for the NMDB grew out of the subprime mortgage crisis that began in the United States in 2007

. The subprime crisis, and the financial crisis that followed, revealed the extent to which regulators lacked sufficient data to foresee and adequately respond to a crisis in the mortgage markets.Page 4 of 4

full

- scale experiments. These techniques are meant to reduce the total public burden of the information collection by ensuring that the large

- scale information collection is optimized. In addition, the CF PB is considering examining whether differences in, say, the length of the Privacy Act Statement affect survey nonresponse. The CFPB understands that there has been limited research on this and related questions. If the CFPB concludes it is feasible and

v aluable to conduct this research in the context of this survey, the CFPB anticipates that it would likely randomize across two versions of the Privacy Act Statement of differing length as well as, possibly, the location of the statement (for example on the inside of the first page or the back page). To mitigate the potential effects of this experiment on overall survey response rates in the event there are sizable differences in response rates, the majority (say, 80 or 90 percent) of sample cases would be assigned the version that the CFPB believes is more likely to produce a higher response rate.

5. Contact Information for Statistical Aspects of the Design

Ken Brevoort (Supervisory Economist, Office of Research, CFPB) Brian Bucks (Economist, Office of Research, CFPB) Mick Couper (Research Professor, University of Michigan and Joint Program in Survey Methodology)