The Effect of the California Consumer Privacy Act on Data Management and Behavioral Conduct in the California Debt Collection Industry

Abstract

This study investigates the impact of the California Consumer Privacy Act of 2018 (CCPA) on the operational mechanisms of the debt collection industry, focusing on the possible tension between data-privacy mandates, firm-level data management and organization, and firm behavior towards consumers. Using a single-unit dynamic event-study model that also controls for several macroeconomic variables, seasonality, and long-term volatility, I analyze trends in debt collection consumer complaint data from the Consumer Financial Protection Bureau (CFPB) to determine the effects of the law’s early compliance requirements on total complaints, data-integrity-related grievances, and behavioral-conduct issues. The results display a potential significant reduction in multiple data-related complaint types, which suggests that the CCPA may have compelled debt collectors and skip-tracers to make data-management improvements and put forth a greater effort towards addressing data mismatches and errors. On the other hand, behavioral complaints remained unaffected, implying that the effect of the CCPA was rather technically restrained to data-related processes and did not make a generalized impact on collector conduct towards consumers. The study therefore concludes by discussing how data privacy mandates may help to alleviate information asymmetries in the debt collection market and reduce the amount of data-related frictions between firms and consumers. Consequently, the findings provide support for the expansion of data-governance policies that incentivize both data accuracy and privacy in the debt collection industry across the United States.