CBA Letter re CFPB Consumer Debt Collection Survey

August 4, 2017

 

By electronic delivery to:

www.regulations.gov

 

Darrin King

Paperwork Reduction Act Officer

Consumer Financial Protection Bureau

1275 First Street, N.E.

Washington, D.C. 20002

 

RE: Information Collection Activities: Common Request [Docket No: CFPB-2017-0013]

 

Dear Mr. King:

 

The Consumer Bankers Association (“CBA”)[1] appreciates the opportunity to respond to the Consumer Financial Protection Bureau’s (“CFPB” or “Bureau”) request for comments on its survey instrument[2] to gather quantitative consumer data on debt collection disclosures (“Proposal”).[3] Specifically, the Bureau seeks approval under the Paperwork Reduction Act (“PRA”) to conduct a national web-based survey of 8,000 individuals as part of the CFPB’s research on debt collection disclosures.[4] We ask the CFPB to amend the Proposal and re-issue it for public comment.

 

CBA is supportive of surveying consumers to gain relevant information, and we applaud the Bureau for carrying out this necessary research. Gathering this type of information from consumers and all stakeholders in the debt collection ecosystem would advance the Bureau’s interest in protecting consumers without imposing unnecessary burdens on industry. We are also supportive of new research that could measurably improve the ability of consumers to responsibly manage their debt obligations.

 

Unfortunately, the CFPB’s Proposal is incomplete and unlikely to elicit comments from the public that would aid the Bureau in improving the consumer survey. While the survey instrument provides a good framework for assessing consumer knowledge and perceptions about debt collection practices, the Bureau did not provide the disclosure(s) that are the subject of the survey.[5] At the very beginning of the survey instrument, respondents are asked to read through a “Scenario” about a hypothetical debt collector sending a “financial notice” to a consumer on behalf of a “Main Street Store.”[6] The respondent is then asked to provide an answer to a series of questions based on their personal knowledge and (we assume) the information provided in the financial notice. The Bureau did not provide this financial notice in its survey instrument, and it is unclear to us why this information was not offered for public inspection. We would recommend the CFPB amend its Proposal by including the financial notice and re-issue the Proposal for comment. Alternatively, the CFPB should include the financial notice during the second round of the PRA review process.

 

Based on information presented in the supporting statement, the missing financial notice could be referencing the validation notice required of debt collectors under the Fair Debt Collection Practices Act (“FDCPA”).[7] More specifically, the financial notice may be referring to the model validation notice issued by the CFPB in draft form for the small business review panel on debt collection.[8] If so, we would caution its use as the language used in the model validation notice provides consumers with incomplete information and a false sense of security. It states, for example, “We must stop collection on any amount you dispute until we send you information that shows you owe the debt. If you write AFTER January 11, we are not required to send that information to you, but we must stop collection until we confirm that our information is correct.”[9] Many consumers may interpret this language as permitting them to stop the collection process by simply disputing a debt. However, while certain parts of the collection process may be paused, other aspects proceed forward. For instance, unless the collector fails to verify or substantiate the debt, the delinquency period may continue to accrue. Therefore, the model validation notice should be designed to better inform consumers about their rights and obligations, and encourage them to communicate with collectors to resolve the debt or dispute.

 

The model validation notice is also likely to confuse consumers seeking to dispute a debt. Specifically, the model notice states: “Call us to dispute. But if you do call, we are not required to send you information that shows you owe the debt.”[10]  This statement is confusing and potentially harmful to consumers as it directs them to dispute a debt by calling the collector. Consumers would be better advised to submit their disputes in writing within 30 days of receiving the validation notice.[11]

 

Going beyond the issue of the missing financial notice, CBA would recommend the Bureau use this survey to poll consumers on their preferred communication standards. The Bureau has conducted such research in the past,[12] but this is another opportunity to gather more data on issues related to contact frequency and channel preference. For example, Q01A of the survey instrument asking, “How would you contact the debt collector,” should incorporate additional responses, including “by email” and “by text messaging.”[13] We believe the inclusion of these specific responses will provide better information about channel preference then simply giving respondents an opportunity to offer such responses under “Other _____ .”[14]

 

On contact frequency, we would recommend the addition of a survey question about the consumer’s responsibility to engage with the collector. As we have stated in the past, distressed consumers are better served and obtain more favorable outcomes when they engage with creditors and collectors about their debt. In many respects, contact frequency is largely driven by whether the creditor or collector is able to communicate with the borrower about a series of missed payments. Therefore, it would be beneficial to get a better understanding of what consumers believe is their obligation to be active and engaged in the debt collection process. This type of data may be used to deliver better information or more effective disclosures to consumers.

 

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Thank you for the opportunity to comment on the consumer survey proposal. If you have any questions or wish to discuss these issues further, please feel free to contact me.

 

Sincerely,

 

Dong Hong

Vice President, Senior Counsel

Consumer Bankers Association

dhong@consumerbankers.com

 

[1] The Consumer Bankers Association is the only national financial trade group focused exclusively on retail banking and personal financial services—banking services geared toward consumers and small businesses. As the recognized voice on retail banking issues, CBA provides leadership, education, research, and federal representation for its members. CBA members include the nation’s largest bank holding companies as well as regional and super-community banks that collectively hold two-thirds of the total assets of depository institutions. 

[2] CFPB, Debt Collection Quantitative Testing Survey Instrument, 60-day FRN (June 5, 2017) [hereinafter Survey Instrument].

[3] CFPB, Notice and Request for Comment, Debt Collection Quantitative Disclosure Testing, 82 Fed. Reg. 25779 (June 5, 2017).

[4] CFPB, Paperwork Reduction Act Submission, Information Collection Request, Supporting Statement A, Debt Collection Quantitative Disclosure Testing, OMB Control Number: 3170-XXXX (June 5, 2017) [hereinafter Supporting Statement A].

[5] See Survey Instrument, supra note 2, at 4.

[6] Id.

[7] Supporting Statement A, supra note 4, at 2.

[8] Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, Outline of Proposals Under Consideration and Alternatives Considered, app. F at 3 (July 28, 2016).

[9] Id.

[10] Id.

[11] See FDCPA § 809, 15 U.S.C.  § 1692g.

[12] See, e.g., CFPB, Consumer Experiences with Debt Collection, Findings from the CFPB’s Survey of Consumer Views on Debt (Jan. 2017).

[13] See Survey Instrument, supra note 2, at 4.

[14] Id.