Attorney General Becerra Opposes Proposal by Consumer Financial Protection Bureau that Protects Debt Collectors at Consumers’ Expense

SACRAMENTO – California Attorney General Xavier Becerra, as part of a coalition of 23 attorneys general, submitted a comment letter opposing the Consumer Financial Protection Bureau’s (CFPB) proposed rule on the collection of time-barred debt. Time-barred debt is debt for which the statute of limitations has expired. The proposed rule follows up on the CFPB’s previously proposed Debt Collection Practices Rule, which fails to protect consumers from abusive and unscrupulous debt collectors. In the letter, the coalition argues that the proposed rule is contrary to both the Fair Debt Collection Practices Act (FDCPA) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and also fails to adequately protect consumers’ rights.

“Navigating debt collection is already confusing, complicated, and stressful for consumers struggling to make ends meet. As families are experiencing economic strain as a result of the COVID-19 pandemic, the last thing we need is a rule that further puts them at the mercy of predatory debt-collectors,” said Attorney General Becerra. “We urge the CFPB to do its job and withdraw this irresponsible proposal and replace it with policy that will actually protect consumers, not harm them.” 

In their letter, the attorneys general argue that the proposed rule:  

• Inappropriately allows debt-collectors to self-report claims of ignorance when illegally suing a consumer on time-barred debt; 

• Relies heavily on insufficient quantitative data gathered through a self-conducted survey; 

• Incorporates poorly-tested model disclosures and allows for the revival of debt as to which the statute of limitations has expired; 

• Establishes a blanket exemption that provides debt collectors a safe harbor from liability under the FDCPA and Dodd-Frank Act for using a model disclosure form; and

• Fails to address obsolete debt, meaning debt that cannot be reported to a consumer reporting agency due to its age – which is normally seven years.

Attorney General Becerra has stood firm in protecting independent CFPB oversight and challenging rollbacks that endanger consumer protections. In September 2019, he submitted a comment letter denouncing CFPB’s proposed Debt Collection Practices Rule for failing to meaningfully address debt-collection risks to consumers. In February 2019, he opposed CFPB’s proposal to grant itself additional authority to offer product and industry-wide exemptions from CFPB-administered statutes and regulations. That same month, he denounced CFPB’s rollback of the Payday Lending Rule. Furthermore in November 2018, he joined a bipartisan coalition criticizing former CFPB Acting Director Mick Mulvaney’s failure to protect military service members under the Military Lending Act. In June 2018, he called on the Trump Administration to preserve the CFPB’s public consumer complaint database. Additionally, in January 2020, Attorney General Becerra filed an amicus brief in the U.S. Supreme Court in Seila Law LLC. V. Consumer Financial Protection Bureau to protect the CFPB’s independence and uphold a provision that limits the President’s ability to remove its director.

Joining Attorney General Becerra in sending the comment letter are the attorneys general of Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Virginia, Washington, Wisconsin, and the District of Columbia.

A copy of the letter can be found here.