The CFPB recently posted on its website the text of an amicus brief filed (jointly with the FTC) in a FDCPA case involving an out-of-statute debt collection letter. The assertions made in the brief may provide insight into how the CFPB may approach out-of-statute debt in the upcoming FDCPA rulemaking. Some excerpts from the brief are listed below:

  • “Depending on the circumstances, a time-limited settlement offer could plausibly mislead an unsophisticated consumer to believe a debt is enforceable in court even if the offer is unaccompanied by any clearly implied threat of litigation.”
  • FTC reports have recognized, “the potential that consumers will be misled when debt collectors seek payment on time-barred debt” and “concluded that in many circumstances, attempts to collect on a time-barred debt may create the misleading impression that the collector can legally file suit on the debt, and in such circumstances collectors would need to make clear disclosures to avoid creating the misimpression.”
  • “To avoid misleading consumers, sellers and debt collectors alike may be required to correct consumers’ misimpressions [about time-barred debt] even if they did not directly create, or only partially created, the misimpression.”
  • “In sum, the debt collector need not make an overt threat or a false or misleading representation about the debt to violate the FDCPA. Rather, the court must consider a practice’s effect on unsophisticated consumers from their perspective – for example, in light of circumstances such as their prior collections experience and any preexisting misconceptions. In particular, it will often be relevant that most consumers do not know or understand their legal rights with respect to time-barred debt. In some circumstances, a debt collector may be required to make affirmative disclosures in order to avoid misleading consumers.”

The CFPB’s amicus brief is available here.