A Deeper Dive into the CFPB’s Debt Collection Disclosure Survey

On Monday, the Consumer Financial Protection Bureau (CFPB or Bureau) published its notice and request for comments on a survey regarding debt collection disclosures. Along with the notice, the CFPB published several other documents, including:

These documents provide some interesting information. Here are the four things you need to know.

1. Focus: Validation Notice, Consumer Rights Disclosures, and Disclosures for Time-Barred Debts

According to the Bureau’s justification of the survey in Supporting Statement, Part A, it is looking for information on three main items:

Whether additional information is needed in the validation notice to assist consumers in recognizing their debts;
Whether additional information should be given to consumers about their rights at the time that the validation notice is given; and
Whether consumers should receive disclosures regarding time-barred debt in initial and subsequent communications.

The sample validation notices that will be used in the survey can be found here. These sample letters include, for the most part, identical disclosures – the only variable disclosure is the one regarding time-barred nature of the debt. Disclosures such as the mini-Miranda, the validation notice, the notice of consumer rights, and the debt itemization all appear to be uniform.

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2. One Step Closer to Electronic Disclosures

The Survey Instrument, which includes the survey questions, contains a section dedicated to electronic disclosures. As insideARM previously published, the industry is slowly moving toward modern communication channels but there are still several hurdles along the way. The good news is that the Bureau is using this survey to explore consumer preferences in receiving notices electronically. The Bureau also seems to recognize that there is a fair chance these notices will fall into their spam folder, as two questions on the survey specifically relate to how respondents treat spam emails.

3. The Bureau Still Prefers a “Tear Off” at the Bottom of Letters Containing the Validation Notice

When the Bureau issued its Outline of Proposed Rules in July 2016, it included a sample validation notice letter with a tear off section for a consumer fill out with a dispute and return. After two and a half years and after many conversations between the industry and the Bureau about the issues of such a tear off section, it seems nothing has changed.

The tear off portion in the newest sample validation notice provides consumers with the following options:

Dispute the debt – not my debt.
Dispute the debt – wrong amount.
Dispute the debt – other.
Request name and address of the original creditor.
Enclose a payment.
Request information in Spanish.

One situation that is not addressed is where a consumer acknowledges that the debt is owed but cannot pay at this time. This would not fall under a dispute category but it is information that would be helpful to a debt collector. Debt collectors usually have options available for consumer who cannot pay all or part of their debt due to a hardship, but a debt collector cannot avail a consumer of such options if the debt collector does not know the situation.

4. The Survey Will Likely Not Delay the Bureau’s Debt Collection Rules

The Bureau’s Fall 2018 Rulemaking Agenda listed the estimated date of the Notice of Proposed Rulemaking (NPRM) for the debt collection rules as March 2019. Since the disclosure survey comments are due on March 4, there was some speculation about whether or not the rules will be delayed.

Two items in the supporting documentation indicate that there might not be a delay after all. In the Supporting Statement, Part A, the Bureau states as follows:

The Bureau has also previously released examples of possible consumer disclosures as part of the Outline of Proposals Under Consideration for the Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking. The Bureau has received and continues to receive feedback from stakeholders on these examples and related topics, and these disclosures continue to be under consideration and development. Any disclosures that become part of a rulemaking will be released at a later date and will be subject to public notice and comment.

(Emphasis added.)

The same document also states:

The Public will also have an opportunity to comment on the proposed disclosures when the Bureau publishes its notice of Proposed Rulemaking for the rule that this research will support.

This indicates that the NPRM and finalized disclosures are not co-dependent on each other, and that the NPRM's March timeline will likely not be impacted by this survey.