September 18, 2019

Director Kathy Kraninger

Consumer Financial Protection Bureau Comment Intake-CFPB

1700 G Street, NW Washington, DC 20552

Re: Docket No. CFPB-2019-0022, Debt Collection Practices

The 232 undersigned consumer, civil and human rights, labor, community and legal services organizations from all 50 states and the District of Columbia submit the following comments on the Consumer Financial Protection Bureau’s (CFPB or Bureau) proposed debt collection rules.

The rule as proposed does far more to protect abusive debt collectors than consumers. The proposal opens consumers up to harassment, abuse and violations of their privacy by telephone, email, text and other means; obscures information about consumers’ rights; and protects debt collectors and collection attorneys who pursue debts after the legal deadline or with false, deceptive or misleading representations. CFPB must strengthen the rule to fulfill the Bureau’s obligation to faithfully implement the Fair Debt Collection Practices Act’s (FDCPA).

Background

Between one in three and one in four adults with a credit report has a debt in collection.¹ Medical debt accounts for more than half of debts in collection.² Debt impacts everyone, but the impacts are particularly strong in some communities:

• Debt collection and debt collection litigation perpetuate and are symptoms of the racial wealth gap. Debt collection, collection lawsuits and judgments, and wage garnishments are more common in communities of color, due to systemic and historical discrimination in financial services, housing and employment. Forty-five percent of borrowers living in areas that are predominantly communities of color had debt in collections versus 27 percent of borrowers living in predominantly white areas. In addition, in a survey, the CFPB found that 44 percent of borrowers of color reported having been contacted about a debt, compared to 29 percent of white respondents.³These statistics highlight the disproportionate impact communities of color face, and the proposed debt collection rule will only widen these disparities and the existing racial wealth gap.
• Louisiana tops the states with an astounding 46 percent of adults with a credit report having a debt in collection. Other states with high rates of debt include Texas (44 percent), South Carolina (43 percent), West Virginia (42 percent), and Nevada (41), followed by several other states at 40 percent: Alabama, Georgia, Kentucky, Mississippi, New Mexico and Oklahoma.⁴

• For military personnel, consumer debt can negatively impact their careers. Debt also adds to the stress and suicide risk of servicemembers and veterans. 39% of complaints by servicemembers, veterans and their families to the CFPB are about debt collection, compared to 26% for other consumers.⁵
• Student loan debt is a growing crisis in this country. Two in three students graduate with significant student debt, and more than one million borrowers default on their student loans each year.⁶
• Debt is a growing problem for older consumers. One out of every two families headed by someone aged 75 or older were in debt, more than twice the rate reported by older consumers in 1989. The National Council on Aging found that elders skip meals, discontinue medications, miss medical appointments, or forgo home and auto repairs to pay debt.⁷

Despite the 1977 passage of the FDCPA, debt collection abuses have year in and year out been one of the top, and often the top, complaints of consumers to the Federal Trade Commission (FTC) and now the CFPB. More than half of the debt collection complaints compiled by the FTC are about collectors who call repeatedly, including after getting a stop calling notice.⁸Nearly a quarter of the complaints to the FTC are that the collector has made a false representation about the debt.⁹ Another top complaint to the FTC is identity theft, which can lead to collection efforts for a debt that the person never incurred.¹⁰At the CFPB, the top debt collection complaint is attempts to collect debt not owed, which together with false statements or representations comprise half of all debt collection complaints.¹¹

Yet despite this compelling evidence of a serious problem, the CFPB has proposed a rule that in many ways will make matters worse. The rule will do far more to help debt collectors – often at the expense of harassment, privacy violations, and the pursuit of debts against the wrong person, for the wrong amount, or beyond the time-limit to sue – than it will to protect consumers.

This proposal will impact far more than those who have a debt in collection. The proposal may also lead to increased burdens and less productivity for employers, increased nuisance contacts with friends and family, and even cybersecurity threats and increased identity theft.

While the proposal does have some positive elements, they are far outweighed by the negative ones. We urge the Bureau to go back to the drawing board and develop a rule true to the CFPB’s mission of protecting consumers. In particular, as discussed in more detail below, we urge the Bureau to:

• Impose stricter limits on telephone calls, clarify that consumers can simply say “stop calling,” and prohibit messages left with employers or other third parties.
• Prohibit emails, texts or direct messages without people’s consent, allow consumers to simply reply “stop,” and prohibit use of hyperlinks to deliver notices.
• Eliminate any “safe harbor” for collection attorneys who make false, deceptive or misleading representations and require them to review original account documents before filing lawsuits.

• Prohibit debt collectors from threatening or filing lawsuits after the legal deadline, and also from other efforts to collect time-barred debt, which is too old to collect without mistakes or deception.
• Improve the model validation notice.
• Improve the ban on “parking” debts on credit reports by requiring notice by mail unless the consumer consents to electronic communication, and extend the ban on sale of certain debts to include time-barred and disputed debts as well.

1. Telephone calls

The Bureau has proposed to allow collectors to make seven attempted calls to a consumer and to have one actual conversation per week for each debt in collection. The same limit would apply to calls to friends or family members seeking the consumer’s location information.

We support the concept of a clear, specific limit on the number of both attempted calls and conversations. But constantly ringing phones, and actual conversations with collectors, can be deeply disturbing, and collectors need clear limits. Hearing the phone ring so often is likely to cause significant stress and harassment. It could also interfere with work, potentially jeopardizing the consumer’s ability to pay her debts, and could also disturb business places and employers.

However, in order to provide clear and reasonable limits, the limits must be per consumer, not per debt. Many if not most consumers facing debt collection have more than one debt in collection. People also should not have to listen to the phone ringing from collectors every single day. Thus, the rule should be amended to limit collectors to three attempted calls and one conversation per consumer per week.

We support the right of a consumer to tell a collector to stop calling. However, the CFPB should clarify that consumers can stop calls through an oral request, and that collectors should stop calling any phone number unless the consumer specifies a particular number.

The proposed rule allows collectors to leave “limited-content messages” with a third party who answers the phone. Even without specific information about the debt, people are likely to know that a message urging a consumer to call back “to discuss an account” is from a debt collector. CFPB should not exempt any form of communication, including limited-content messages, from privacy rules.

Especially alarming, the proposal could be read to allow debt collectors to deliberately contact third parties such as employers, neighbors, family or friends to convey a message for the consumer.

Collectors should not be allowed to call or leave messages with employers or other third parties to convey a message for the consumer. Limited-content messages, if allowed, should only be left on a private voicemail, email or text belonging to the consumer.

2.Emails, text and social media messages

A.The CFPB should not allow emails, texts or social media messages without the consumer’s consent by full compliance with the E-Sign Act.

The Bureau has proposed to allow debt collectors to contact consumers through email, text messages, and private social media direct messages. As long as the collector follows minimal procedures that are unlikely to ensure either that the consumer will actually see a message or that it is private, the rule would allow collectors to send legally required notices electronically without complying with the E-Sign Act (which requires consumer consent and a demonstration that the consumer is able to access the information) and would not be responsible if a message is seen by third parties. Yet the mere fact that the consumer gave an email address or cell phone number to the creditor at some point in the past says nothing about whether it is appropriate for a debt collector to communicate that way.

As a result, it is likely that some consumers will never see the important information detailing the debt and the consumer’s right to dispute it. Email addresses and phone numbers often change. Many low income people do not have a computer or sufficient data access, and may only be able to access email, if at all, sporadically at libraries or work. The millions of low income consumers with Lifeline, pay-as-you- go or limited data cell phones are often not able to receive emails or access the internet, or may incur costs for texts and emails. Emails with the word “debt” may be sent to spam or consumers may automatically delete messages coming from an unknown party. Some older consumers who have cell phones may not be able to access texts, or they may have forgotten how to access texts or email. People simply may not regularly monitor email and may prefer to receive information by mail. Even those who can access emails and texts through smartphones may have trouble reviewing legal notices on small screens or printing and saving them to review later, making it more difficult for consumers to understand the notices or to seek help in dealing with them.

Collectors also should not be exempt from privacy rules when they send emails, texts or direct messages without the consumer’s consent. We support the proposed ban on communications on public social media platforms, but far more is needed to protect consumer privacy. Mobile phones or email may be shared among family members, including children who can see text and social media messages. Phone numbers can be reassigned. Collectors may be using work email addresses that are not private, even if the collector claims not to know that it is a work email. Collectors may have the wrong person and may send an email, text or social media message to a third party.

All of these problems would be avoided by requiring collectors to get the consumer’s consent and comply with the E-Sign Act before sending electronic communications.

B. Collectors should not be allowed to convey legally required information through hyperlinks, which risks consumers not receiving information or subjecting themselves to viruses and identity theft.

The proposal contains an especially alarming proposal to allow debt collectors to send validation notices through hyperlinks. Many consumers will not recognize the debt collector and will be reluctant to click on a hyperlink that could expose the consumer to a virus, malware or spyware. As the CFPB itself notes, “federal agencies have advised consumers against clicking on hyperlinks provided by unfamiliar senders,” and “consumer email services can be configured to block hyperlinks from unrecognized senders.” The minimal procedures proposed to give consumers notice and opportunity to opt out of hyperlinks do not give any reasonable assurance that the email will not be sent to spam or that the consumer will recognize an email or text from a debt collector or be comfortable clicking on a hyperlink.

Requiring the validation notice to be accessed through a secure website – while intended to protect the consumer’s privacy –will also make it less likely that a consumer will see the notice, especially if they are required to provide personal information to access the site. People will fear that the hyperlink is a phishing email. If the collector does not require additional steps, the consumer’s private information could potentially be viewable by the public.

Allowing debt collectors to send unsolicited texts or emails with hyperlinks will also put everyone at greater risk of viruses and identity theft. It will complicate or be inconsistent with warnings from government, employers and advocates that people should never click on a hyperlink from an unknown party. Scammers and criminals are likely to impersonate debt collectors and use collection messages to spread viruses and to induce consumers into turning over personal information. Business computers could also be exposed if consumers – especially those who do not have computers at home – access supposed debt collection emails at work. Debt collectors should not provide legally required written information through hyperlinks without the consumer’s consent.

C. Consumers should be able to opt out of emails, texts and direct messages through any convenient channel.

To the extent that consumers do receive emails, texts or direct messages from collector, we support the proposed right to opt out of those messages. However, some collectors could make opting out difficult. Collectors should be required to accept an opt-out sent through any reasonable method – such as by replying “stop” to an email, text or direct message, or orally by phone. Collectors should be required to describe the opt-out right in clear, conspicuous and simple language accessible to the least sophisticated consumer. The CFPB should provide model opt-out language.

D. The CFPB should monitor and consider limits on texts, emails and direct messages.

The proposal does not impose any specific limits on the number of texts, emails, or direct messages. The CFPB should carefully monitor and require reporting on collectors’ use of emails, texts and direct messages and should consider specific limits if collectors abuse these media.

3. The proposed rule protects false, deceptive, or misleading practices by collection attorneys.

Some collection attorneys file thousands of collection lawsuits a year without adequate review. Debts are often sold and resold without accompanying records. As a result, lawsuits may be filed against the wrong person, for the wrong amount, or by an entity without legal authority to collect that debt.

The FDCPA prohibits false, deceptive or misleading representations by debt collection attorneys. Yet the proposed rule gives collection attorney a “safe harbor” from liability as long as the attorney reviews unspecified “information” and somehow “determines” that the claims in the lawsuit are correct. This weak to nonexistent standard is not strong enough to protect consumers.

Filing a lawsuit against a consumer is a serious business. Many lawsuits will result in judgments, often default judgments, and credit report damage even if the collector has the wrong person or wrong amount. Consumers who are forced to fight these lawsuits will incur the burden, stress, and expense of doing so, and even the potential risk to their job of taking time off work.

The CFPB should require collection attorneys to review original account-level documentation of alleged indebtedness and make independent determinations that they are filing a lawsuit against the right person, for the right amount, based on accurate information about the age of the debt, and that their client has the legal authority to file the lawsuit.

4.The proposed rule could encourage abusive collection of time-barred zombie debt.

The proposed rule prohibits collectors from filing or threatening a lawsuit if the collector “knows or should know” that the legal time limit to sue has expired, instead of holding the collector responsible for knowing the time limit, as courts have done. The vast majority of debt collection lawsuits end up with default judgments, and consumers who show up in court frequently lack attorneys. Collectors should not be allowed to file or threaten lawsuits knowing that very few consumers will object and the few that do may have difficulty showing the collector knew or should have known that the debt was time-barred. No collector should be allowed to threaten or file a lawsuit unless they have determined that the debt is still within the legal statute of limitations.

Even out of court, collecting older debts pose too high a risk of mistake, deception and abuse. Consumers, especially older consumers, may pay even if they do not recognize a debt simply out of fear or to stop harassment. Collectors may also try to trick people into making a small payment that, in many states, will revive the debt and re-start the statute of limitations. The CFPB should prohibit out-of-court collection of time-barred debt, which is too old to collect without mistakes or deception. At a bare minimum, the Bureau should restore its earlier outline proposal that would have prohibited lawsuits on “revived” debt.

5.The CFPB must improve the proposed model validation notice.

We support the concept of a model validation notice. A clear, understandable consumer-tested notice will support the requirement of the FDCPA that consumers be given information about the debt and their rights. However, several aspects of the proposed notice fall short.

First, collectors should not be allowed to provide the notice orally. Consumers are unlikely to be able to accurately remember all of the information that they are provided in a stressful call. Second, the notice should make clear that the consumer may dispute the debt “at any time,” not by a specified date. Third, the validation notice should include a statement of rights, as the Bureau proposed earlier, not just a link to the CFPB website. Fourth, the CFPB should restore the prior proposal to develop a model validation notice in Spanish and other languages and to require collectors to provide notice in the language of the original transaction if the Bureau has a validation notice in that language.

6.We support but urge the Bureau to strengthen proposals regarding parking debts on credit reports and sale of debt.

We support the proposal that prohibits collectors from “parking” debts on credit reports – reporting debts to credit bureaus without first informing a consumer that they are attempting to collect the debt. However, collectors should be required to provide notice about the debt by mail before credit reporting unless the consumer has opted in to electronic communications.

We also support the proposal to prohibit collectors from selling accounts that were paid, discharged in bankruptcy, or where an identity theft report was filed. These debts are either not owed or are highly likely to be fraudulent, and the collectors who are willing to buy these types of debts are likely to engage in unscrupulous and unlawful efforts to collect. The Bureau should also prohibit the sale of time- barred debts and disputed debts for the same reasons.

* * *

Overall, this proposal does far more to protect abusive collectors and to encourage harassing and abusive collection practices than it does to protect consumers. We urge the Bureau to go back to the drawing board, reject the proposal rule, and start over again.

Yours very truly,

National groups:

Action Center on Race and the Economy AFL-CIO

Allied Progress

American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) Americans for Financial Reform Education Fund

Center for Digital Democracy Center for Justice & Democracy

Center for Responsible Lending Center for Survivor Agency and Justice

Congregation of Our Lady of Charity of the Good Shepherd, U.S. Provinces Consumer Action

Consumer Federation of America Demos

Human Rights Watch

Interfaith Center on Corporate Responsibility Local Initiatives Support Corporation (LISC) NAACP

National Association of Consumer Advocates

National Association of Consumer Bankruptcy Attorneys (NACBA) National Center for Law and Economic Justice

National Coalition for Asian Pacific American Community Development (National CAPACD) National Consumer Law Center (on behalf of its low income clients)

National Consumers League National Disability Institute National Fair Housing Alliance National Health Law Program National Housing Law Project

National Legal Aid & Defender Association National LGBTQ Task Force

National Urban League Public Citizen

The Leadership Conference on Civil and Human Rights

U.S. PIRG Woodstock Institute

State groups

Alabama Appleseed Center for Law & Justice Southern Poverty Law Center (Alabama) Alaska AFL-CIO

Alaska Community Action on Toxics

Alaska Public Interest Research Group (AkPIRG) Native Peoples Action (Alaska)

American Council on Consumer Awareness (Arizona)

Arizona PIRG

Center for Economic Integrity (Arizona) Community Legal Services, Inc. (Arizona) Southwest Fair Housing Council (Arizona)

Wildfire: Igniting Community Action to End Poverty in Arizona

Arkansans Against Abusive Payday Lending Arkansas Community Institute

California Reinvestment Coalition CALPIRG (California)

Consumer Advocacy and Protection Society (CAPS) (California) Consumer Federation of California

Consumers for Auto Reliability and Safety (California) Fair Housing Advocates of Northern California Greater Napa Valley Fair Housing Center (California) Housing and Economic Rights Advocates (California)

Justice & Diversity Center of the Bar Association of San Francisco (California) Legal Aid Society of San Diego

Maternal and Child Health Access (California) Media Alliance (California)

Public Counsel (California) Public Law Center (California)

Western Center in Law & Poverty (California) Colorado Center on Law and Policy

COPIRG (Colorado)

The Bell Policy Center (Colorado) Connecticut Legal Services, Inc. ConnPIRG (Connecticut)

Delaware Community Reinvestment Action Council, Inc. Legal Aid Society of the District of Columbia

Prosperity Now (District of Columbia)

The Equal Rights Center (District of Columbia) Tzedek DC

Florida Alliance for Consumer Protection Florida Consumer Action Network Florida PIRG

Legal Services of Greater Miami, Inc. (Florida) St. Johns County Legal Aid (Florida)

Atlanta Legal Aid Society, Inc. Georgia PIRG

Georgia Watch

Metro Fair Housing Services, Inc. (Georgia)

Hawaii Appleseed Center for Law & Economic Justice United Vision for Idaho

Heartland Alliance (Illinois) Illinois PIRG

Legal Aid Chicago

Chicago Area Fair Housing Alliance Citizens Action Coalition of Indiana Indiana Institute for Working Families Indiana Legal Services, Inc.

Indiana PIRG

Iowa Citizens for Community Improvement Iowa PIRG

Kansas Appleseed Kansas Legal Services

Kentucky Equal Justice Center

Greater New Orleans Fair Housing Action Center Louisiana Budget Project

Coastal Enterprises, Inc. (Maine) Legal Services for the Elderly (Maine) Maine Center for Economic Policy CASH Campaign of Maryland Maryland PIRG

Public Justice Center (Maryland)

Chronic Illness Advocacy & Awareness Group, Inc. (Massachusetts) Greater Boston Legal Services, on behalf of its low-income clients

Greater Boston Legal Services, on behalf of its low-income clients (Massachusetts) Justice Center of Southeast MA

MASSPIRG (Massachusetts)

The Midas Collaborative (Massachusetts) Center for Civil Justice (Michigan) Michigan League for Public Policy

PIRG in Michigan (PIRGIM) Mid Minnesota Legal Aid Prepare + Prosper (Minnesota) Mississippi Center for Justice Empower Missouri

Missouri Faith Voices, A Faith in Action Federation MoPIRG (Missouri)

Organization for Black Struggle (Missouri) AFSCME Montana Council 9

Angela's Piazza (Montana)

Big Sky Central Labor Council (Montana) Billings First Congregational Church (Montana) Billings Rises (Montana)

Bitterroot RC&D (Montana) Cheyenne Tailriders (Montana)

Greater Yellowstone Central LABOUR Council (Montana) Har Shalom (Montana)

Harvest House Inc. (Montana) Homeword, Inc. (Montana)

Missoula Area Central Labor Council (Montana) Montana AFL-CIO

Montana Fair Housing

Montana Federation of Public Employees Montana Human Rights Network Montana Native Vote

Montana Organizing Project Montana Voter Policy Institute MontPIRG (Montana)

Rural Dynamics (Montana) SEIU 775 (Montana)

ST. Paul Lutheran Church Western Native Voice (Montana) Nebraska Appleseed

Legal Aid Center of Southern Nevada Progressive Leadership Alliance of Nevada New Hampshire PIRG

NHPIRG (New Hampshire) Consumers League of New Jersey CWA Local 1081 (New Jersey)

La Casa de Don Pedro (New Jersey) Legal Services of New Jersey

New Jersey Appleseed Public Interest Law Center New Jersey Citizen Action

NJ Communities United NJPIRG New Jersey)

Centro Savila (New Mexico) Encuentro (New Mexico)

Enlace Comunitario (New Mexico) New Mexico Caregivers Coalition New Mexico Center on Law & Poverty New Mexico Legal Aid, Inc.

NMPIRG (New Mexico) Prosperity Works (New Mexico)Empire Justice Center (New York)

Housing and Family Services of Greater New York, Inc. Legal Services NYC

Lincoln Square Legal Service, Inc. (New York) Mobilization for Justice (New York)

New Economy Project (New York)

New York Public Interest Research Group (NYPIRG) Equality North Carolina

NCPIRG (North Carolina) North Carolina Justice Center

Reinvestment Partners (North Carolina)

North Dakota Economic Security and Prosperity Alliance Legal Aid Society of Southwest Ohio, LLC

Ohio Domestic Violence Network Ohio PIRG

Policy Matters Ohio Oklahoma Policy Institute Innovative Changes (Oregon)

Metropolitan Family Service (Oregon) Oregon Food Bank

Oregon PIRG (OSPIRG)

Community Legal Services of Philadelphia PennPIRG (Pennsylvania)

The One Less Foundation (Pennsylvania) Economic Progress Institute (Rhode Island) Rhode Island PIRG

SC Appleseed

Bread for the World - South Dakota chapter Take it Back (South Dakota)

Tennessee Citizen Action

Brazos Valley Affordable Housing Corporation Center for Public Policy Priorities (Texas) Foundation Communities (Texas)

Greater Houston Fair Housing Center (Texas) Helping Hands Ministry of Belton (Texas)

His Sanctuary Community Development Corporation (Texas) Lubbock Housing Finance Corporation (Texas)

North Texas Fair Housing Center Pathfinders (Texas)

Project LIFT (Texas)

RAISE Texas

San Gabriel Christian Church (Texas) Texas Appleseed

Texas Association of Goodwills Texas Legal Services Center Texas RioGrande Legal Aid, Inc. TexPIRG (Texas)

Young Invincibles (Texas) Crossroads Urban Center (Utah) Vermont Legal Aid, Inc.

Vermont Public Interest Research Group Blue Ridge Legal Services, Inc. (Virginia) Virginia Citizens Consumer Council Virginia Organizing

Virginia Poverty Law Center Solid Ground (Washington)

Statewide Poverty Action Network (Washington) WASHPIRG (Washington)

Mountain State Justice, Inc. (West Virginia) West Virginia Center on Budget and Policy

West Virginia Healthy Kids and Families Coalition West Virginians for Affordable Healthcare

WV Citizen Action Group Wisconsin PIRG

Montana – North Wyoming Conference United Church of Christ Wyoming State AFL-CIO

1 Data compiled by the Urban Institute shows that one in three adults with a credit report had a debt in collection. Urban Institute, Debt in America: An Interactive Map, https://apps.urban.org/features/debt-interactive- map/?type=medical&variable=perc_debt_collect (“Urban Institute, Debt in America”).   A newer report by the CFPB puts the number at one in four. CFPB, Market Snapshot: ThirdParty Debt Collections Tradeline Reporting (July 2019), https://files.consumerfinance.gov/f/documents/201907_cfpb_third-party-debt-collections_report.pdf (“CFPB, Market Snapshot”).

2 CFPB, Market Snapshot.

3 See National Consumer Law Center, Racial Disparities in Consumer Debt Collection (citing Urban Institute, Debt in America, https://www.nclc.org/images/pdf/debt_collection/fact-sheets/fact-sheet-racial-disparities-in-debt- collection.pdf; CFPB, Consumer Experiences with Debt Collection: Findings from the CFPB’s Survey of Consumer Views on Debt (Jan. 2017), https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201701_cfpb_Debt-Collection-Survey- Report.pdf); and Annie Waldman & Paul Kiel, ProPublica, Racial Disparity in Debt Collection Lawsuits:

A Study of Three Metro Areas (Oct. 8, 2015), https://static.propublica.org/projects/race-and- debt/assets/pdf/ProPublica-garnishments-whitepaper.pdf).