Professor Jeff Sovern’s op-ed, co-authored with St. John’s Associate Professor of
Psychology Kate Walton, Phantom Debts Plague Collections System, ran July 28 in the American Banker
. The op-ed, which reports on Sovern’s and Walton’s research for their article, Are Validation Notices Valid? An Empirical Evaluation of Consumer Understanding of Debt Collection Validation Notices
[W]e conducted a survey of consumers (funded by the National Conference of Bankruptcy Judges Endowment for Education). We showed one group a collection letter that had been found sufficient by a federal court of appeals. We showed another set of consumers the same letter, but without the validation notice. Then we compared respondents’ answers to questions about the validation notice.
The results were disappointing, unless you’re a debt buyer. On most of our inquiries, respondents shown the letter with the validation notice did not perform significantly better than respondents who didn’t see the notice. Roughly a quarter did not grasp that they could request verification of the debt, and nearly all who did mistakenly thought that an oral request would protect their rights: both the law and notice say a written request is required.
The sentence in the validation notice that read, “Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid” left many respondents mystified about when the collector would assume the debt to be valid. And the validation notice may actually have caused consumer confusion. For example, more than a fifth of the respondents thought that if they missed the 30-day deadline for disputing the debt specified in the validation notice, they would either have to pay the debt or would not be able to defend against a suit to collect it — even if they did not owe the debt.
It is Professor Sovern’s third op-ed this summer. He was also quoted in the Law360 article, CFPB Enforcement Actions Could Guide Debt Collection Rules, as follows:
“The bureau has sifted through many comments, brought cases, supervised debt collectors and studied this area for years. I am confident that they know a great deal about the subject and have given the issues considerable thought,” said Jeff Sovern, a professor at St. John’s University School of Law.
And the American Banker quoted him in another article, Five Issues to Watch in CFPB’s Debt Collection Plan :
* * * Some courts have said that threatening to sue to enforce a debt that has exceeded the statute of limitations is a violation of the FDCPA. Others have allowed debt collectors to ask a consumer to pay a time-barred debt, and if the consumer pays even part of it, the clock on the statute of limitations starts all over again.
“Some see this as an attempt by a collector to take advantage of consumer ignorance of the law,” said Jeff Sovern, a professor at St. John’s University School of Law, in an email response.
* * *
Many industry observers are curious how the CFPB will deal with electronic communications.
“Is sending someone a ‘friend’ request when you are trying to collect a debt from them misleading?” asked Sovern.