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This protection against liability for filing lawsuits with false information could encourage collection attorneys to file even more inaccurate lawsuits against innocent consumers. Without access to legal help, most people do not show up in court – meaning debt collectors win by default. This leads to inappropriate judgments and wage garnishments. That’s not justice; it’s theft. Second, the proposal could encourage collectors to file suits against consumers after the legal time limit to sue has expired, allowing them to claim that they did not know that the statute of limitations had expired. Instead, the CFPB should hold collectors responsible for knowing the deadline and directly ban all lawsuits on time-barred debt. The proposal also fails to prevent collectors from tricking consumers into making a small payment toward expired debt, which resets the time clock to sue in many states. This kind of debt, known as “zombie debt,” is so old that payment records are often lost and the debt collector may be pursuing a debt already paid. Third, the proposal would allow collectors to make up to seven attempted calls per debt per week, either to the consumer or to friends and family to ask for the consumer’s contact information. A consumer with eight medical debts could receive 56 calls a week.

Then she received a phone call. And another.. Another. And another. The calls were from a debt collector who was looking to recoup an alleged debt owed to her former landlord. Believing it was surely a mistake, Terry shared records proving she had paid the debt 10 years earlier. It didn’t matter. The debt collector garnished her wages, taking more than $6,000 from her paychecks, all for a debt she’d already paid a decade ago. Terry’s story may seem shocking, but it is far from unique. And new rules from the federal government could soon make situations like Terry’s even worse. Debt collection burdens 71 million Americans, including medical bills, student loans, and credit-card debt. It also perpetuates racial injustice: 45% of residents with credit reports living in predominantly nonwhite ZIP codes are affected by debt collection. In 2018, consumers filed 620,800 complaints about debt collection with the Federal Trade Commission and the Consumer Financial Protection Bureau (CFPB). Many people complained that they didn’t owe the debt or had paid long ago, just like Terry. A few large debt-buying corporations overload our civil courts against powerless defendants who can’t afford the legal help to defend themselves. With fewer than 10% of consumers represented by an attorney, most debt buyers win default judgments, even if they don’t provide evidence the person owes the debt or the deadline to sue has not passed.

The results for consumers can be devastating, from wage garnishments to jail time. In a country that promises justice for all, the reality is our civil justice system has failed to mitigate this debt-collection crisis. And things could soon get worse. In May, the CFPB proposed a sweeping debt-collection rule directly undermining its established goal of protecting consumers. Unless the CFPB makes significant changes, the rule could exacerbate the crisis in our civil justice system, and all of us stand to lose. First, the CFPB’s proposal weakens the federal Fair Debt Collection Practices Act by protecting collection attorneys who engage in false, deceptive, or misleading practices. With some collection attorneys filing thousands of lawsuits each year, many don’t review original documentation or have evidence admissible in court before suing. This lack of research often results in debt-collection lawsuits against the wrong people or for the wrong amount. The CFPB’s rule would not mandate adequate review before filing a lawsuit. Instead, it would give collection attorneys a “safe harbor” from liability for false information as long as they review vague and unspecified “information” and somehow “determine” that the lawsuit is warranted.

The CFPB should protect regular folks – not collectors who make false or deceptive representations in court filings, sue on zombie debt, or harass consumers with regular phone calls. The CFPB should ban the collection of zombie debt and hold collection attorneys accountable by requiring them to review original account documents to make sure they have the right person and right amount, admissible evidence, and legal grounds to sue. Fortunately, Americans can make their voices heard before the rule is implemented, but time is running out. The deadline to submit public comments to the CFPB is September 18. The necessary fixes to our civil justice. Debt collection crises go far beyond the CFPB’s proposed rule. Consumers who are dunned or sued on a debt need legal representation, yet current funding levels for civil legal aid fail to address the unmet legal needs of many. There is less than one attorney for every 10,000 low-income Americans. We need to increase access to justice by urging our members of Congress to adequately fund the Legal Services Corp., which provides civil legal help to those who need it most, so consumers can fight back against unfair collection lawyers.


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