Consumer Advocates Lament Weak Debt Collection Rule

Andy Spears
3 min readDec 21, 2020

Consumer advocates from groups including the National Consumer Law Center, Consumer Federation of America, Americans for Financial Reform, and the National Association of Consumer Advocates expressed concern about the Consumer Financial Bureau’s new rule on consumer debt collection.

The group of advocates are now urging the incoming Biden Administration to revisit the debt collection rule and take further steps to protect consumers. Specifically, the group noted:

Time-barred (“zombie”) debt collection: The final rule prohibits suing and threatening to sue on time-barred debt. In an improvement from the draft proposal, the rule holds collectors to the Fair Debt Collection Practice Act’s strict liability standard and abandons the weaker “know or should know” standard that the CFPB previously proposed. The Bureau also opted not to finalize time-barred debt disclosures that showed high rates of non-comprehension by consumer testers. However, the rules fall short of the needed prohibition on the collection of time-barred debt, leaving debt collectors free to pursue collection of debts beyond the statute of limitations. The rule also permits such collection activities without including the prohibition against filing lawsuits on debts after consumers inadvertently revive a time-barred debt with a small payment or acknowledgment, which was in the 2016 outline of proposals.

Language access: The final rule allows debt collectors to provide translated validation notices to consumers, but it does not require collectors to provide translations, or even to require a short statement in Spanish explaining what the document is. The Bureau has also failed to provide translation of the model validation notice into the languages most commonly spoken by consumers with limited English proficiency.

Validation notices: The CFPB has expanded the amount of information that must be provided to consumers in the initial validation notice and created a model validation notice for consumers. Unfortunately, the notice adopted is still likely to be confusing to many consumers and needs further testing and improvements.

Parking debts: The final rule includes a prohibition on parking debts on a consumer’s credit report without first providing notice of the alleged debt to the consumer. However, new communication rules from the first part of the final debt collection rules raise concerns about consumers missing such notices…

Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .