NCLEJ Submits Public Comment Opposing CFPB Debt Collection Rules
On May 7, 2019, the Consumer Financial Protection Bureau (CFPB) announced a proposed rule that would provide a safe harbor for debt collection attorneys who engage in deceptive practices. This rule would set a minimal standard for “meaningful attorney review” in debt collection cases, creating a safe harbor for debt collection attorneys who bring abusive lawsuits, and exacerbating debt collection misconduct.
Widespread abuses by debt collection attorneys have been documented across the country, including cases brought beyond the statute of limitations and scores of cases where people never received notice of the suits, all of which resulted in wrongful judgments, often against the wrong people. The people sued typically have low incomes and lack legal representation. Many are elderly, disabled, or have literacy or language barriers. While the lucky few who obtain legal representation typically prevail in their cases due to the debt collectors’ inability to prove the debts, most people do not know how to defend themselves. Courts have become so overwhelmed and under-resourced that they cannot police debt collectors.
A robust meaningful attorney review requirement is critical to preventing debt collectors from engaging in unfair and abusive litigation practices. The proposed rule requires that prior to bringing a lawsuit attorneys review unspecified “information” and determine “to the best of the attorney’s knowledge, information, and belief” that “legal contentions are warranted by existing law” and “factual contentions have evidentiary support.” The typical practices that many debt collection attorneys currently use would have met this standard, giving them a safe harbor for a cursory “review” that reveals no meaningful information.
The CFPB’s proposed standard is so toothless as to be meaningless, and therefore it encourages attorneys to file lawsuits without conducting any meaningful review whatsoever. Instead, the CFPB should require attorneys to review original, account-level documents prior to filing suit and determine, based on the evidence, that the lawsuit is against the right person, on the right account, and for the right amount of money.