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Bloomberg Law: Debt Collection Rule Could Leave Non-English Speakers Vulnerable

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By Evan Weinberger

Debt collectors can be downright mean when going after people who owe money, but this one appeared to have reached a new low—the caller threatened to get the debtor deported.

The January 2019 complaint, filed with the Consumer Financial Protection Bureau, was one of only 12 like that have been filed, a tiny fraction of the more than 277,000 debt collection complaints the agency has received. But consumer and immigration activists say it signals a potentially broader problem.

Most consumers, particularly those with limited English proficiency, and especially those concerned about their ability to stay in the country, would not know that debt collectors are barred from making threats like the one in the California example.

“People are terrified of anything that involves going to court, or even in some cases writing a letter, which is really the first step in responding to a debt collection attempt,” said Susan Shin, the legal director of the New Economy Project, a New York-based activist organization.

The CFPB, however, could make it easier for non-English speakers to know their rights by asking debt collectors to speak the debtors’ language. Consumer and immigrant activists say the rule should be mandatory.

“If you permit and don’t mandate language access, it simply won’t happen,” Alys Cohen, a staff attorney with the National Consumer Law Center, said.

The bureau declined to comment for this story because the debt collection proposal is still being finalized.

‘It’s Terrifying’

Debt collection is governed by the Fair Debt Collection Practices Act, a 1977 law that sets limits on when and how collectors can contact consumers and lays out prohibitions on abusive conduct. It does not mention providing information in languages other than English.

Collectors are banned from threatening consumers with potential criminal prosecution or arrest for not paying their debts under the law.

Fear of deportation is something unscrupulous debt collectors can prey on, said Sarah Ludwig, the New Economy Project’s founder and co-director.

“If you were that person getting that call, it’s terrifying,” Ludwig said.

Several callers to a New Economy Project hotline have “expressed anxiety” about being accused of owing money, and contesting debts they don’t owe, because of concerns that it could impact their immigration status, Shin said.

“It’s enforcing your basic rights under the FDCPA, and people are afraid of even doing that because of what it might trigger,” she said.

No Language Requirement

Despite being on the books since 1977, there are no formal rules governing federal debt collection law. The 2010 Dodd-Frank Act gave the CFPB the power to write them.

The bureau’s May 2019 proposal would allow for increased electronic communication between debt collectors and consumers, among a host of other changes. It does not mandate that those communications be in Spanish—around 63.3 percent of U.S. residents with limited English proficiency list Spanish as their primary language, according to 2017 U.S. Census data.

The CFPB’s proposed to “permit” debt collectors to provide consumers with Spanish-language validation notices, key documents that report both the amount owed and to whom as well as enumerating rights to dispute the debt, if the consumer asks for it. The bureau would also provide model validation and other forms in Spanish, the proposal said.

The bureau considered mandating Spanish language validation notices and other documents, but found that doing so would be too burdensome, according to the proposal.

“Requiring debt collectors to provide a translation on a separate page with each validation notice could result in significant cost on a cumulative, industry-wide basis, especially for smaller debt collectors and for languages whose use is not prevalent in the United States,” the bureau’s proposal said.

Staffing Problems

Consumer and immigration advocates have called on the CFPB to move beyond Spanish to provide model validation forms and notices in eight other languages, including Mandarin and Cantonese Chinese, Vietnamese, Tagalog and Russian.

Beyond the burden of providing extra documents to consumers, there are problems of consumer expectations once they get validation notices in their preferred language, said Joann Needleman, the leader of Clark Hill’s consumer financial services regulatory and compliance practice group who represents debt collection industry groups.

If a consumer gets a notice in their language of choice, they will want to speak with someone in that language, Needleman said.

“How do you staff up enough to ensure that a Cantonese-speaking consumer can call in and say, I want to make a payment?” she said.

New York Model?

New York is one of four U.S. cities that license debt collectors, the others being Chicago, Buffalo and Yonkers, N.Y.

New York urged the CFPB to make language access mandatory in a comment letter on the bureau’s proposal.

The city is actively considering doing so as well, according to Lorelei Salas, the commissioner of New York’s Department of Consumer Affairs.

Mayor Bill de Blasio’s (D) administration is considering submitting legislation to the New York City Council that would mandate language access for the approximately 1,200 debt collectors from 45 states and 12 countries that the city licenses, she said in a November interview.

A September DCA study found that few provided documents in languages other than English. That is a major problem with around 2 million residents with limited English proficiency.

“What the rule would do is put the requirement on the debt collection agencies to actually provide that to the consumers that they’re trying to collect the debt from,” Salas said.

The de Blasio administration is also considering submitting a proposal that would require regulators to include a glossary of key debt collection terms in the 10-most used languages in New York City, as well as requiring notices of consumer rights in multiple languages, Salas said.

The National Consumer Law Center’s Cohen said that the CFPB should set up a similar requirement.

Much of New York’s debt collection industry is made up of small operations that cater to specific communities, so going beyond providing the validation notice in English could help create a niche market in New York.

And it would also put consumers on a more equal footing.

“Disclosures only go so far, but they are helpful. If they’re not in the language the person understands, they’re utterly useless,” Shin said.