ACA Calls for Greater Transparency in Debt Collection Notice Testing

Comments to Consumer Financial Protection Bureau reflect the need for more detailed model validation notices and testing.

ACA International submitted comments on the Consumer Financial Protection Bureau’s debt validation notice qualitative testing to assess the effectiveness and performance of its model debt validation notices.

The CFPB notes that it plans to conduct cognitive interviews to assess the effectiveness and validate the performance of the model debt collection validation notices.

The CFPB will also collect information on how consumers locate and use information in the model notice, including:

  • Whether the consumer can locate and use important information effectively, such as information about the debt, information about the consumer’s rights, and information about how the consumer may respond if they so choose.
  • How consumers view and respond to paper and electronic versions of the model validation notice.

“Consumer testing can be a helpful aspect of developing policymaking. However, there are also many other aspects surrounding the testing of any model validation notice that the bureau must consider, including applicable state laws, electronic alternatives, predatory litigation in this area that targets highly technical violations (which can have little to no impact on consumers), and the host of issues outlined in ACA’s Comments on the Notice of Proposed Rulemaking (NPRM) to implement the Fair Debt Collection Practices Act,” ACA stated in its comments.

The model validation notice to be tested was not included in the request for comment.

ACA asked the CFPB to consider the previous comments outlining improvements in the model notice included in the FDCPA NPRM.

“In general, greater transparency about why data is being collected and how it is being used in the rulemaking process is critical. To that end, not knowing for certain exactly how this new model validation notice to be tested will be included, or if it will be included, in the forthcoming final rule, it is impossible at this time to determine or comment on whether its use will comply with Administrative Procedures Act requirements,” ACA concluded in its comments on the debt validation notice qualitative testing.

ACA noted in its September 2019 model validation notice comments on the FDCPA NPRM that, “The bureau must ensure that its form will withstand judicial scrutiny—and be prepared to support its model form in litigation as amicus, if necessary. It should also expressly state how it aligns with the statutory text to create a safe harbor from litigation. Beware of those who complain about a standard validation form, as a model form will reduce opportunities for plaintiff lawyers to profit from frivolous FDCPA litigation. The bureau’s proposal for a model form validation notice to address the plethora of ambiguities in FDCPA Section 809 concerning the validation of debts is a step in the right direction and provides some important clarifications. However, in several parts of its proposal the Bureau attempts to add new requirements for the accounts receivable management industry despite a lack of quantitative evidence of consumer harm in those areas, and often with razor-thin research, lacking empirical data to support its solutions.”

In its current state, the proposed debt collection rule includes certain disclosures, such as an itemization of the debt and plain-language information about how a consumer may respond to a collection attempt, including by disputing the debt and methods by which collectors may provide required disclosures electronically, for example, by email or text message.

Next, the comment deadline on the CFPB’s Supplemental Notice of Proposed Rulemaking (SNPRM) on out-of-statute debt disclosures is approaching Aug. 4.

The CFPB extended the comment deadline on two occasions to allow more time for stakeholders to provide feedback.

Out-of-statute debt was the subject of many comments to the CFPB after the release of its May 2019 proposed FDCPA rule for the debt collection industry, including from ACA.

The CFPB conducted research and testing on consumer disclosures related to out-of-statute debt that were not included in the May 2019 proposed rule for the industry.