CFPB Debt Collection Survey

Dear Sir or Madam,

The American Bankers Association (ABA) appreciates the opportunity to submit commentsregarding the Bureau of Consumer Financial Protection’s (Bureau) request for approvalunder the Paperwork Reduction Act (PRA) to conduct a national web-based survey of 8,000 individuals aspart of the Bureau’s research on debt collection disclosures (Survey). The Survey asks respondents to review a draft validation noticeand answer questions regarding (1) the notice and the disclosures contained therein, (2) the respondent’s perception and understanding of debt-related lawsuits, and (3) the respondent’s self-assessment of his/her financial well-being. The Bureau seeks PRA approval to conduct this Survey to inform its Fair Debt Collection Practices Act (FDCPA) rulemaking; in particular, the Survey will explore consumer comprehension and decision making in response to debt collection forms required by the FDCPA.

The PRA and its public comment process was enacted “to ensure the greatest possible publicbenefit from and to maximize the utility of information created, collected, maintained, used, shared and disseminated by or for the Federal government” and “to improve the quality and use of federal information to strengthen decision making, accountability, and openness in Government andsociety.” The PRA usually affords two opportunities for public comment: the first, a 60-day noticeperiod for substantive comment, and a subsequent 30-day notice period which typically runsconcurrent to OIRA’s review. As we have commented previously, the Bureau has on numerousoccasions under the previous Director gone through the motions of PRA compliance withoutproviding meaningful opportunity for substantive public comment on its data collection efforts.We are concerned that it may do so again in this instance.

On August 4, 2017, we opposed the initial request for approval of the proposed Survey because ofthe Bureau’s failure to release the draft validation notices to be tested by the Survey. Our commentexplained that the Survey asks respondents to answer a series of questions after reading a draftvalidation notice. However, the validation notice was not included in the materials available tothe public during the 60-day comment period. Therefore, it was impossible to commentmeaningfully on the Survey.

In its second PRA submission, made in November 2017, the Bureau published the draft validationnotices. Seeking to justify why it had not released the materials previously, the Bureau stated that“[t]he information collection for which the Bureau is seeking OMB approval at this time is for thetesting project itself, not the specific content of the draft disclosure forms” (emphasis added).However, the Survey seeks to test consumers’ understanding of the validation notices and draftdisclosure text contained therein. There can be no meaningful assessment of the Survey’s putativevalue, as required by the PRA, without an evaluation of the draft disclosures about which theBureau sought to test consumers’ understanding. The Bureau’s assertion that it was seekingapproval for the testing project itself rather than the substantive content was a circular argumentthat does not excuse compliance with the PRA.

While the Bureau’s second PRA request was put on hold due to then Acting Director Mulvaney’s“freeze” on new regulatory actions,13 the Bureau has renewed it with the filing made on February4, 2019.

We support the use of empirical data within the Bureau’s rulemaking process, however we areconcerned that the Bureau is putting the cart before the horse with this proposed Survey. TheBureau’s reasons for conducting this Survey—to determine whether to include additionaldisclosures and information to the validation notices—are not appropriately addressed via a PRArequest.

For example, the draft validation notices, while published as part of the Bureau’s Small BusinessRegulatory Enforcement Fairness Act (SBREFA) consultation, have not been subject to broadpublic comment. We support the Bureau drafting and releasing a “model” validation notice, whichwould promote consumer understanding while curtailing frivolous litigation regarding thesufficiency of these notices. However, the content and form of the notice should be considered aspart of the rulemaking process. The Survey’s validation notice includes specific information onamounts owed, interest, and fees. The systems and procedures necessary to generate thatinformation quickly and accurately will need to be developed. As part of the rulemaking process,policymakers should compare the cost of generating such infrastructure with the benefit toconsumers of having the information presented exactly as shown. Once the Bureau has heard fromall interested parties regarding the feasibility of its draft validation notices, then such notices canbe put forward for consumer testing.

The additional disclosures to be tested by the Survey also present important policy issues thatshould be considered as part of an Administrative Procedure Act rulemaking, not through a PRArequest. Several of the disclosures that the Bureau seeks to test are variations of statements aboutwhether a debt is within the statute of limitations and/or whether the collector intends to sue tocollect. However, whether a statute of limitation applies to a particular debt is a legal determinationoften adjudicated by a judge in a court of law. Thus, the Bureau’s proposed disclosures areessentially legal determinations that are highly fact-specific and subject to varying state laws. Newlegal and technological infrastructure will be required to generate such individualized disclosures,and to ensure accuracy for each consumer and account. Again, such infrastructure is not currentlyin place. The Bureau’s policymakers should compare the cost of generation to the benefit ofconsumers having this additional information. These are policy questions. Assuming thisbalancing is resolved in favor of the new disclosures, then the Bureau should move forward withtesting various iterations of disclosures for consumer comprehension.

Instead, the Bureau proposes to expend nearly half a million dollars in public funds to test thevalidation notices and their disclosures without first assessing their utility to consumer decisionmaking. ABA is concerned that once the validation notices and disclosures have been made subjectto consumer testing, the Bureau will rely on those data in the final rule to justify the inclusion ofthe disclosures, regardless of practicality or cost. Given the Bureau’s expression of intent to releasea Notice of Proposed Rulemaking in March 2019, it is unclear when or how the Bureau willallow the public an opportunity to comment on the Survey results before they are incorporated intothe rulemaking. Thus, we renew our objection to this PRA request from the Bureau.

Information collected at taxpayer expense should be designed to have the greatest public benefitand maximum utility, as envisioned by the PRA.19 Service of that goal requires that the Bureaurelease its data collection plan as part of the proposed rule and only embark on consumer testingafter it has heard from the public on the substantive issues presented by the validation noticesand disclosures.

ABA appreciates the opportunity to comment on the proposed Survey. If you have anyquestions, please contact the undersigned at 202-663-5338 or [email protected].

Sincerely,

Diana C. Banks
Senior Counsel, Center for Regulatory Compliance

cc: Mr. Darrin King
Paperwork Reduction Act Officer
Bureau of Consumer Financial Protection
1275 First Street, N.E.
Washington, D.C. 20002
[email protected]

Mr. Dan Smith
Assistant Director
Office of Financial Institutions and Business Liaison
Bureau of Consumer Financial Protection
[email protected]

Mr. John McNamara
Assistant Director
Consumer Lending, Reporting, and Collections Markets
Bureau of Consumer Financial Protection
[email protected]