Proposed Debt Collection Rule Docket No
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COMMENTS to the Consumer Financial Protection Bureau on its Proposed Debt Collection Rule Docket No. CFPB-2019-0022 RIN 3170-AA41 By the National Consumer Law Center On behalf of its low-income clients and Americans for Financial Reform Education Fund Consumer Federation of America National Association of Consumer Advocates U.S. PIRG Woodstock Institute September 18, 2019 1 Table of Contents I. Summary of Comments .......................................................................................... 12 Summary of Comments and Key Recommendations ................................................................13 Authority ................................................................................................................................13 Number of phone calls (§§ 1006.10(c), 1006.14(b))...............................................................14 Emails, texts, social media messages and other electronic communications (§§ 1006.6(d), (e), 1006.22(f), 1006.34(c), 1006.42) ....................................................14 Limited-content messages (§ 1006.2(j)) .................................................................................15 Requests to stop phone calls or cease communication through other media (§§ 1006.14(h)) ............................................................................................................15 False, deceptive, or misleading representations by collection attorneys (§ 1006.18(g)) .........16 Time-barred debt (§ 1006.26) ................................................................................................17 Model validation notice (§§ 1006.34, 1006.38, Appx. B) ........................................................17 Deceased consumers (§§ 1006.2(e), 1006.6(a), 1006.10(a), 1006.34(a), 1006.38) ...............19 Use of aliases (§ 1006.18(f)) .................................................................................................19 Parking debts on credit reports (§ 1006.30(a)) .......................................................................19 Sale of debt (§ 1006.30(b)) ....................................................................................................20 II. Understanding Consumer Experiences with Debt Collection............................ 20 1. Brief History of the FDCPA ................................................................................................20 2. Predatory Lending and the Recession Lead to Increased Debt for Consumers. ...............21 3. Current Consumer Debt Levels are at an All-Time High and Continue to Grow. ................23 4. Low-Income and Non-White Consumers are Disproportionately Impacted by Debt Collection. ..........................................................................................................................24 5. Debt Collection Conduct is a Top Complaint of Consumers. ..............................................26 6. The Emergence of Debt Buyers Has Contributed to Debt Collection Abuses. ...................26 7. Debt Collectors Continue to Engage in Abusive and Harassing Communications Practices. ...........................................................................................................................27 8. Many Consumers Complain about False Representations Made by Debt Collectors. ........29 9. The Surge of Debt Collection Lawsuits Based on Insufficient Review and Supporting Documentation Has Caused Significant Harm to Consumers. ...........................................31 10. The Consequences of Default Judgments on Consumers is Devastating. ...........................32 11. Debt Collectors Continue to Attempt to Collect, Threaten to Sue on, and Sue on Time-Barred Debt. .............................................................................................................33 12. Consumers Complain about a Lack of Written Notification about the Debt. .......................35 2 13. Mental Health Issues Plague Consumers Facing Debt Collection. .....................................35 III. The CFPB Lacks General Authority to Exempt Debt Collectors from or to Weaken the FDCPA’s Statutory Protections. ...................................................... 38 IV. Comments on Specific Proposals ........................................................................ 39 1. Introduction ........................................................................................................................39 2. § 1006.1 Authority, purpose, and coverage ........................................................................40 2.1 § 1006.1(a): Authority...................................................................................................40 2.2 § 1006.1(b): Purpose ...................................................................................................40 2.3 § 1006.1(c): Coverage .................................................................................................41 3. § 1006.2 Definitions ...........................................................................................................42 3.1 § 1006.2(b): Attempt to communicate ..........................................................................42 3.2 § 1006.2(d): Communicate or communication ..............................................................42 3.3 § 1006.2(e): Consumer ................................................................................................43 3.3.1 Introduction ............................................................................................................43 3.3.2 Expanding the definition of ―consumer‖ to be applicable for the entire regulation is confusing and overly broad. ...............................................................43 3.3.3 Expanding the definition for the entire statute is unnecessary and is not supported by the authority the Bureau cites. ..........................................................43 3.3.4 Expanding the definition is useful in limited sections. .............................................44 3.4 § 1006.2(h): Debt .........................................................................................................45 3.5 § 1006.2(i): Debt collector ............................................................................................46 3.6 § 1006.2(j): Limited-content message ..........................................................................47 3.6.1 Overview ................................................................................................................47 3.6.2 The proposed limited-content message rule should be withdrawn because it is arbitrary and capricious, beyond the CFPB‘s authority, and would allow abusive practices. ................................................................................................................47 3.6.2.1 Exempting limited-content messages from the definition of ―communication‖ would conflict with the FDCPA‘s definition and its use of that term, and is beyond the CFPB‘s authority. ..........................................................................47 3.6.2.2 The CFPB‘s proposed treatment of limited-content messages would authorize violations of several provisions of the FDCPA, exceeding the CFPB‘s authority. ......................................................................................51 3.6.2.2.1 Overview ................................................................................................51 3.6.2.2.2 Limited-content messages left with third parties or sent by postcard would violate consumers‘ privacy in violation of the FDCPA. ..................52 3 3.6.2.2.3 The proposed limited-content message rule would allow communications to be sent to consumers without the disclosures required by the FDCPA. .........................................................................52 3.6.2.2.4 The limited-content message rule would go beyond the Bureau‘s authority by allowing calls that do not meaningfully disclose the caller‘s identity. .......................................................................................53 3.6.2.3 Even if the limited-content message rule were within the Bureau‘s authority, it should withdraw it because of the abusive practices it would allow. .............54 3.6.3 If the CFPB proceeds with its limited-content message proposal, it must limit and clarify it. ..................................................................................................................54 3.6.3.1 Overview .........................................................................................................54 3.6.3.2 The CFPB must put meaningful limits on how limited-content messages can be sent. ....................................................................................................55 3.6.3.3 The CFPB must clearly prohibit debt collectors from contacting third parties to leave limited-content messages. ......................................................56 4. § 1006.6 Communications in connection with debt collection. ............................................57 4.1 § 1006.6(a): Definition of ―consumer‖ in §§ 1006.6 and 1006.14(h) ..............................57 4.1.1 Overview ................................................................................................................57 4.1.2 The Bureau should not issue comments interpreting surviving spouses as spouses/consumers. ..............................................................................................59 4.1.2.1 Including ―surviving spouse‖ as a ―consumer‖