A pair of consumer advocacy groups have come out swinging against the Consumer Financial Protection Bureau’s Supplemental Notice of Proposed Rulemaking that would require debt collectors provide additional notices to individuals when collecting on debts where the statute of limitations to sue to recover those debts has expired.
Echoing a familiar argument that they have been making since before the CFPB issued its proposed debt collection rule last May, the National Consumer Law Center and Americans for Financial Reform Education Fund want the Bureau to place an outright ban on the collection of time-barred debts.
“To truly protect consumers, the CFPB should ban collection of time-barred debt in and out of court because these debts are so old that records are lost, the collector may have the wrong person or wrong amount, and the debt cannot be collected without mistakes or deception,” said Linda Jun, senior policy counsel at Americans for Financial Reform Education Fund, in a statement.
The CFPB issued the Supplemental Notice of Proposed Rulemaking on Friday. The proposed rule would not affect the lengths of statutes of limitations set by each state, but would establish a national standard for what collectors must disclose to individuals when collecting on debts where the statutes have expired.
EDITOR’S NOTE: AccountsRecovery.net is hosting a webinar to discuss this NPRM on Thursday, February 27 at 1pm ET. Joann Needleman, Stefanie Jackman, Rick Perr, and Brit Suttell will discuss the impact of the NPRM during the webinar, which is being sponsored by TCN. You can register here.
The two consumer advocacy groups are accusing the CFPB of not doing enough to protect consumers from the “abusive collection of time-barred debts.”
“Unfortunately, disclosures cannot adequately protect vulnerable consumers from abusive practices related to the collection of time-barred debt,” said April Kuehnhoff, an attorney at the NCLC who focuses on debt collection. “Consumers pressured to pay old debts will not understand why they are being contacted if the debt is too old to sue on, or how a $25 payment might restart the statute of limitations on the debt.”
