Recently, courts have held that debt collectors can escape 1692i's venue provisions entirely by pursuing debt collection through arbitration instead. As the NAF studies reflect, arbitration has not proven a satisfactory alternative. I urge the CFPB to include in a rule language interpreting 1692i as requiring debt collectors to proceed in court, not through largely-unregulated arbitral forums.
State and local court rules sometimes make default judgments much more likely. For example, when a person who allegedly owes a debt is told to come to court on a work day, they may be forced to choose between a default judgment and their job. I urge the CFPB to find practices that involve scheduling hearings at inconvenient times unfair, deceptive, and abusive, or inconsistent with 1692i.
When alleged debtors are served with state court summonses, they are not always comprehensible to laypersons. I suggest that the CFPB encourage or mandate the use of a standard-form, plain English letter advising defendants in collection lawsuits of the following:
- Any requirements to file papers to avoid default judgment
- The date of any scheduled hearing and procedures for changing the date
- Local and online sources of information for pro se defendants, and possibly local non-profit advice organizations.
- That the debtor may wish to consider bankruptcy if they cannot pay their debts.
There is currently a split between the Ninth and First Circuits as to whether 1692i and other FDCPA provisions apply in garnishment proceedings. In many states, the nominal defendant is the judgment debtor's employer, but the judgment debtor is the real party in interest. To allow consumers to better assert the defenses to and exemptions from garnishment available under state law, the CFPB should issue a rule applying 1692i to garnishment proceedings.
In many districts where bad check diversion programs exist, there is anecdotal evidence that the companies administering the programs threaten with prosecution individuals who do not come within the state's bad check law - for example, checks that bounce due to printing errors, checks for which there were funds available when written but not when presented, and individuals who pay the amount due by other means within grace periods permitted by state law. The CFPB should ensure that bad check diversion programs have a realistic means of ensuring that only individuals realistically subject to prosecution are targeted, and should also require that, in order to qualify for the 1692p safe harbor, diversion programs prohibit misleading communications and misstatements of state bad check law.
To avoid consumers getting sued repeatedly on the same debt, the CFPB should require or encourage states to adopt rules requiring that judgments be preclusive of future consumer-collector litigation on the same debt; instead, if there is a dispute between assignees as to who has title to the debt, they should work it out between themselves instead of risking subjecting the consumer to multiple liability.
Consumer attorneys occasionally advise their clients not to record unlawful communications due to state laws requiring both parties' consent for recording. The CFPB should require that debt collectors subject to the FDCPA impliedly consent to recording by consumers.
The CFPB should issue a rule confirming that implying that collection is possible on a time-barred debt (including by filing suit) is forbidden by the FDCPA, in order to remove any doubt about what the law is.
There is currently dispute among federal district and circuit courts as to whether a post-default assignee of a debt comes within the creditor exception. The CFPB should issue a rule providing that a post-default assignee is a collector for FDCPA purposes.
The FDCPA contains an exception for creditors. The CFPB should include in any rule confirmation that the same practices prohibited for collectors under the FDCPA would be unfair, deceptive, or abusive acts and practices if done by a creditor.
Assignments without notice could lead to consumers paying the wrong person. The CFPB should encourage proper notice by ruling that a payment made to either of the assignee or the assignor reduces the debt.
The simplest way to implement a non-English notice would be to require notice in both English and the native language where:
(i) The original creditor has information about the debtor's language;
(ii) The collector obtains information about the debtor's language; *or*
(iii) The debtor lives in a ZIP code known to have a significant (5%?) number of non-English speakers.
This requirement should only apply to languages with large LEP populations - a threshold might be 100,000 - to avoid undue cost. For smaller populations, where obtaining a full translation might be uneconomical, collectors could include the following passage translated into the appropriate languages on an otherwise English letter: "This is an urgent debt collection letter. If you cannot read English, it is important that you find a translator."
josephusmyer
1
Recently, courts have held that debt collectors can escape 1692i's venue provisions entirely by pursuing debt collection through arbitration instead. As the NAF studies reflect, arbitration has not proven a satisfactory alternative. I urge the CFPB to include in a rule language interpreting 1692i as requiring debt collectors to proceed in court, not through largely-unregulated arbitral forums.
View this comment in the discussion thread
josephusmyer
2
State and local court rules sometimes make default judgments much more likely. For example, when a person who allegedly owes a debt is told to come to court on a work day, they may be forced to choose between a default judgment and their job. I urge the CFPB to find practices that involve scheduling hearings at inconvenient times unfair, deceptive, and abusive, or inconsistent with 1692i.
View this comment in the discussion thread
josephusmyer
3When alleged debtors are served with state court summonses, they are not always comprehensible to laypersons. I suggest that the CFPB encourage or mandate the use of a standard-form, plain English letter advising defendants in collection lawsuits of the following: - Any requirements to file papers to avoid default judgment - The date of any scheduled hearing and procedures for changing the date - Local and online sources of information for pro se defendants, and possibly local non-profit advice organizations. - That the debtor may wish to consider bankruptcy if they cannot pay their debts.
View this comment in the discussion thread
josephusmyer
4
There is currently a split between the Ninth and First Circuits as to whether 1692i and other FDCPA provisions apply in garnishment proceedings. In many states, the nominal defendant is the judgment debtor's employer, but the judgment debtor is the real party in interest. To allow consumers to better assert the defenses to and exemptions from garnishment available under state law, the CFPB should issue a rule applying 1692i to garnishment proceedings.
View this comment in the discussion thread
josephusmyer
5
In many districts where bad check diversion programs exist, there is anecdotal evidence that the companies administering the programs threaten with prosecution individuals who do not come within the state's bad check law - for example, checks that bounce due to printing errors, checks for which there were funds available when written but not when presented, and individuals who pay the amount due by other means within grace periods permitted by state law. The CFPB should ensure that bad check diversion programs have a realistic means of ensuring that only individuals realistically subject to prosecution are targeted, and should also require that, in order to qualify for the 1692p safe harbor, diversion programs prohibit misleading communications and misstatements of state bad check law.
View this comment in the discussion thread
josephusmyer
6
To avoid consumers getting sued repeatedly on the same debt, the CFPB should require or encourage states to adopt rules requiring that judgments be preclusive of future consumer-collector litigation on the same debt; instead, if there is a dispute between assignees as to who has title to the debt, they should work it out between themselves instead of risking subjecting the consumer to multiple liability.
View this comment in the discussion thread
josephusmyer
7
Consumer attorneys occasionally advise their clients not to record unlawful communications due to state laws requiring both parties' consent for recording. The CFPB should require that debt collectors subject to the FDCPA impliedly consent to recording by consumers.
View this comment in the discussion thread
josephusmyer
8
The CFPB should issue a rule confirming that implying that collection is possible on a time-barred debt (including by filing suit) is forbidden by the FDCPA, in order to remove any doubt about what the law is.
View this comment in the discussion thread
josephusmyer
9
There is currently dispute among federal district and circuit courts as to whether a post-default assignee of a debt comes within the creditor exception. The CFPB should issue a rule providing that a post-default assignee is a collector for FDCPA purposes.
View this comment in the discussion thread
josephusmyer
10
The FDCPA contains an exception for creditors. The CFPB should include in any rule confirmation that the same practices prohibited for collectors under the FDCPA would be unfair, deceptive, or abusive acts and practices if done by a creditor.
View this comment in the discussion thread
josephusmyer
11
Assignments without notice could lead to consumers paying the wrong person. The CFPB should encourage proper notice by ruling that a payment made to either of the assignee or the assignor reduces the debt.
View this comment in the discussion thread
josephusmyer
12
The simplest way to implement a non-English notice would be to require notice in both English and the native language where: (i) The original creditor has information about the debtor's language; (ii) The collector obtains information about the debtor's language; *or* (iii) The debtor lives in a ZIP code known to have a significant (5%?) number of non-English speakers. This requirement should only apply to languages with large LEP populations - a threshold might be 100,000 - to avoid undue cost. For smaller populations, where obtaining a full translation might be uneconomical, collectors could include the following passage translated into the appropriate languages on an otherwise English letter: "This is an urgent debt collection letter. If you cannot read English, it is important that you find a translator."
View this comment in the discussion thread
josephusmyer
13
I'm aware of that, but I don't think many appellate courts have considered the issue. To confirm that it's the law, it should be included in a rule.
View this comment in the discussion thread