Law Professor Makes Clever Suggestion To Help CFPB Understand Time-Barred Debt Disclosures

A law professor who specializes in consumer finance has proposed a very interesting idea to help the Consumer Financial Protection Bureau obtain real-world insight into how individuals react to time-barred debt disclosures in collection letters.

Last month, the CFPB issued a Supplemental Notice of Proposed Rulemaking that would require debt collectors to include additional disclosures when collecting on debts where the statute of limitations had expired. Along with issuing the SNPRM, the CFPB also released the results of a survey it conducted of consumers regarding how they would react and respond to those time-barred disclosures.

The issue with the survey, as noted by Jeff Sovern, is that the surveys are conducted in a vacuum and not in real life. Sovern, a professor at St. John’s University School of Law, pointed out that in real life, individuals do not pay attention to all of the disclosures in a collection letter.

Sovern’s idea is to have the CFPB buy some portfolios of debt and send out collection letters to see how consumers respond. He writes:

I don’t know what constraints the Bureau operates under, but conceivably the Bureau could buy some time-barred debt–at pennies on the dollar, it would probably cost less than the staff needed to conduct a survey–send out its debt collection notices, and then see what happens. To be sure, consumers can be hard to reach when they are ducking calls from debt collectors, but perhaps they would be easier to reach when the Bureau, as opposed to a debt collector, calls to survey them. The Bureau would have to be careful not to act in such a way as to create a conflict with its consumer protection mission, and would have to return any money consumers actually sent it, but such an experiment might tell more about how effective such notices are than a sterile survey.

Noting that if John Oliver from HBO’s Last Week Tonight can buy portfolios of debt