CFPB’s debt collection rule fails to prevent unfair practices

Media Contacts
Lucy Baker

U.S. PIRG

WASHINGTON – On Friday, the Consumer Financial Protection Bureau (CFPB) released the expected second and final part of its debt collection rule. The first part of the debt collection rule was primarily focused on communications by debt collectors, whereas this second centers on consumer disclosures. 

The final rule removed provisions in the draft proposal that would have weakened consumer protections from debt that has exceeded its statute of limitations, known as time-barred debt or “zombie debt”. However, the rule still allows for the collection of such debt. If partial payment on time-barred debt is made, a consumer can be held liable for the entire debt all over again. 

Lucy Baker, U.S. PIRG’s Consumer Program associate issued the following statement in response.

“The Consumer Financial Protection Bureau could have put an end to zombie debt once and for all but didn’t.

“While the CFPB’s final rule no longer includes the more egregious debt collector friendly provisions that were in the draft, it’s a far cry from the protections consumers need. 

“Debt collectors can still pursue debt that has exceeded its statute of limitations, known as time-barred debt or “zombie debt”. That’s a big problem because consumers who make partial payments on time-barred debt can be held liable for the entire debt all over again. 

“The CFPB should have just outright banned the collection of time-barred debt. That would have been the far better outcome, especially during a pandemic that has harmed consumer and family finances.”

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