The Consumer Financial Protection Bureau (CFPB) has issued a Supplemental Notice of Proposed Rulemaking (Supplemental NPRM) regarding the collection of time-barred debt, prohibiting collectors from using non-litigation means (such as calls) to collect on time-barred debt unless collectors disclose to consumers during the initial contact and on any required validation notice that the debt is time-barred.
In May 2019, the CFPB published a proposal (May 2019 NPRM) to implement the Fair Debt Collection Practices Act (FDCPA). The May 2019 NPRM would provide consumers with clear protections against harassment by debt collectors and straightforward options to address or dispute debts; set clear, bright-line limits on the number of calls debt collectors may place to reach consumers on a weekly basis; clarify how collectors may communicate lawfully using newer technologies, such as voicemails, emails and text messages, that have developed since the FDCPA’s passage in 1977; and require collectors to provide additional information to consumers to help them identify debts and respond to collection attempts.
The May 2019 NPRM also proposed to prohibit debt collectors from suing or threatening to sue on debts they know or should know are time barred. The Bureau included the “know or should know” standard in its proposal recognizing the concern that, in some instances, debt collectors may be genuinely uncertain whether the statute of limitations has expired even after undertaking a reasonable investigation. The Bureau received over 14,000 public comments on the May 2019 NPRM. A large number of comments addressed time-barred debt, including the proposed “know or should know” standard. The Bureau is analyzing those comments as part of the process of taking final action on the May 2019 NPRM. Given that the analysis is ongoing, the supplemental NPRM also proposes that standard.
The Supplemental NPRM proposes model language and forms that debt collectors could use to comply with the proposed disclosure requirements. As with the May 2019 NPRM, the Supplemental NPRM also proposes to require disclosures only if a debt collector knows or should know that the debt is time barred to address debt collector liability if there was too much uncertainty as to whether a debt was time-barred. The public is invited to submit written comments on the proposed rule, including on the proposed knowledge standard. The Bureau will carefully consider all comments received before a final regulation is issued.