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CFPB Turns Toward Debt Collectors and Away from Consumers

Tuesday, February 25, 2020

WASHINGTON, DC - On Friday, February 21, the Consumer Financial Protection Bureau (CFPB) released a Supplemental Notice of Propose Rulemaking (Supplemental NPRM), that would provide a path for debt collectors to pursue time-barred debt. The rule supplements a proposed debt collection rule that the CFPB released in May 2019. As proposed, debt collectors could collect debt that is beyond statutes of limitations – as long as consumers receive certain disclosures at the time of initial contact and for any required validation notice. The consumer disclosure would apply only if the debt collector “knows or should know” that the debt is time-barred, following the same legal standard the CFPB proposed for comment in May.

In response, Kiran Sidhu, a Policy Counsel with the Center for Responsible Lending (CRL) released the following statement:

Once again the CFPB is more concerned with enabling the $11 billion debt collection industry and failing to protect consumers. Nearly one-third of adults among the nation’s 71 million consumers with active credit files are aggressively pursued by debt collectors based on information that is often in error, incomplete, or so old that the statute of limitations has passed.

As courts have held, collection and threat of collection of time-barred debt violates the Fair Debt Collection Practices Act’s (FDCPA) prohibition on false or misleading representations, prohibition on unfair practices or both. Statutes of limitations are imposed not just as technicalities – they are borne out of a real concern that evidence becomes less reliable with the passage of time. Debt collectors, including debt buyers, typically flood courts with collection cases regardless of whether the debt is time-barred. These actions disregard statutes of limitations designed to protect consumers.

The supplemental NPRM does not protect consumers from collection of time-barred, zombie debt. In some states statutes of limitations can be circumvented with a partial payment or acknowledgement of the debt.

CRL calls on the CFPB to ban the collection of all time-barred debt – both in and out of court. Disclosures alone do not sufficiently protect consumers from the clear abuses of the debt collection industry.


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