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The CFPB’s Aproach to Time-Barred Debt and the Proposed Disclosures Will Perpetuate Abusive Practices and Widen the Racial Wealth Gap

August 4, 2020
Debt Collection & Settlement
Comment Letter

The undersigned consumer and civil rights organizations appreciate the opportunity to submit comments on the Consumer Financial Protection Bureau’s (CFPB or Bureau) 2020 Supplemental Notice of Proposed Rulemaking (supplemental proposed rule) on debt collection. As organizations dedicated to eliminating abusive financial practices – particularly focused on communities of color and low- to moderate-income consumers – we are deeply concerned about the supplemental proposed rule’s content and impact.

The Bureau proposes in its supplemental proposed rule that collectors would be permitted to collect time-barred debt if collectors disclose to consumers during the initial contact and on any required validation notice that the debt is time-barred. As described in Section V, the supplemental proposed rule provides model language and forms that debt collectors may use to comply with the proposed time-barred debt disclosure requirements. We have deep concerns about the proposed disclosures as well as the research the CFPB relied upon to formulate the disclosures.

Furthermore, as part of its May 2019 Notice of Proposed Rulemaking (2019 NPRM), the Bureau is considering whether to adopt a “know or should know” standard or a strict liability standard with respect to collecting time-barred debt.3 We shared our concerns with the Bureau on this critical issue in our comments on the 2019 NPRM and reiterate our main concerns herein. We continue to urge the Bureau to ban the collection of time-barred debt in and out of court, as well as to adopt a strict liability standard for debt collectors in knowing whether a debt is time-barred. We also urge the Bureau to prohibit the revival of time-barred debt.

Download the comment.