Disclosure Of Time-Barred Debt And Revival

tested two ways of describing the law (one used in an FTC consent order, “The law limits howlong you can be sued for a debt,” and an alternative designed by Bureau researchers, “Accordingto the law, you can't be sued for debts over a certain age”). 8 The Bureau also tested two ways ofdescribing the debt (one, also used in an FTC consent order, stating that the debt collector “willnot sue” the consumer; and the other stating that the debt collector “cannot sue”). This resultedin four unique time-barred debt disclosures: (1) FTC-cannot (2) FTC-will not (3) Alternativecannot and (4) Alternative-will not. The notices are provided in Appendix B and summarized inTable 1 below.2.2.2 Revival NoticesThe revival disclosures tested by the Bureau (TBD with Revival Notices) also had two parts: atime-barred debt disclosure and a description of the actions that would trigger revival. Bureauresearchers tested five versions of a revival disclosure.The first revival disclosure, Revival(1), was designed by the Bureau to succinctly capture the keybehaviors that can trigger revival: “The law limits how long you can be sued for a debt. Becauseof the age of this debt, we will not sue you for it unless you make a payment or acknowledge it inwriting.” The next three revival disclosures (Revival(2), Revival(3), and Revival(4)) weremodelled on revival disclosures currently required in some states. These three disclosuresincorporated the main features of the state disclosures on which they were modelled. All threestarted with the FTC-will not time-barred debt disclosure.The last revival disclosure, Revival(5), was also designed by the Bureau: “The law limits howlong you can be sued for a debt. If you do nothing in response to this notice, we will not sue youto collect this debt. This is because the debt is too old. BUT if you make a payment oracknowledge in writing that you owe this debt, then we can sue you to collect it.” WhileRevival(5) incorporated the first sentence of the FTC disclosures, it also specified that inaction“will not” result in a lawsuit.The exact wording of all revival disclosures appears in Table 1.Table 1:87Notice Versions#ShortNameCellSizeAge ofDebtDescriptionDisclosure Language1ModelNotice8753 and 10yearBureau model noticewithout TBDdisclosureN/ASee United States v. Asset Acceptance, LLC, No. 8:12-cv-182 (M.D. Fla. Jan. 31, URE OF TIME-BARRED DEBT AND REVIVAL

8#ShortNameCellSizeAge ofDebtDescriptionDisclosure Language2Status QuoNotice8813 and 10yearN/A3FTCcannot8703 and 10year4FTC-willnot8983 and 10year5Alternative-cannot8783 and 10year6Alternative-will not8913 and 10year7Revival(1)9093 and 10yearHybrid of severalcurrent notices inuse without TBDdisclosuresModel Notice withFTC TBD disclosureplus "cannot"Model Notice withFTC TBD disclosureplus "will not"Model Notice withAlternative to FTCTBD disclosure plus"cannot"Model Notice withAlternative to FTCTBD disclosure plus"will not"TBD disclosure FTCwill not plus revivaldisclosure version 18Revival(2)459All 10 yearTBD disclosure FTCwill not plus revivaldisclosure version 29Revival(3)425All 10 yearTBD disclosure FTCwill not plus revivaldisclosure version 310Revival(4)471All 10 yearTBD disclosure FTCwill not plus revivaldisclosure version 4DISCLOSURE OF TIME-BARRED DEBT AND REVIVALThe law limits how long you can besued for a debt. Because of the age ofthis debt, we cannot sue you for it.The law limits how long you can besued for a debt. Because of the age ofthis debt, we will not sue you for it.According to the law, you can't be suedfor debts over a certain age. Because ofthe age of this debt, we cannot sue youfor it.According to the law, you can't be suedfor debts over a certain age. Because ofthe age of this debt, we will not sue youfor it.The law limits how long you can besued for a debt. Because of the age ofthis debt, we will not sue you for itunless you make a payment oracknowledge it in writing.The law limits how long you can besued for a debt. Because of the age ofthis debt, we will not sue you for it.Take note: You can renew the debt andthe statute of limitations for the filingof a lawsuit against you if you do any ofthe following: Make any payment onthe debt, sign a paper in which youadmit that you owe the debt or inwhich you make a new promise to pay;Sign a paper in which you give up orwaive your right to stop the creditorfrom suing you in court to collect thedebt.The law limits how long you can besued for a debt. Because of the age ofthis debt, we will not sue you for it.Even so, you may choose to makepayments on the debt. However, beaware: if you make a payment on thedebt, admit to owing the debt, promiseto pay the debt, or waive the statute oflimitations on the debt, the time periodin which the debt is enforceable incourt may start again.The law limits how long you can besued for a debt. Because of the age ofthis debt, we will not sue you for it.Even so, you may CHOOSE to makepayments. However, BE AWARE: if

#11ShortNameRevival(5)CellSize465Age ofDebtAll 10 yearDescriptionUnique TBDdisclosure (“willnot”) plus revivaldisclosure version 5Disclosure Languageyou make a payment [or acknowledgein writing that you owe this debt], thecreditor’s right to sue you to make youpay the entire debt may STARTAGAIN.The law limits how long you can besued for a debt. If you do nothing inresponse to this notice, we will not sueyou to collect this debt. This is becausethis debt is too old. BUT if you make apartial payment or acknowledge inwriting that you owe this debt, then wecan sue you to collect it.Note: Cell size refers to the number of respondents who viewed a notice. The contractorattempted to keep the cells balanced, but this is typically managed imperfectly due to nonresponse and random assignment. Age of debt refers to the age of the debt in the notice and/orthe vignette, with the purchase being made in 2016 (in the three-year scenario) or 2009 (in the10-year scenario). The Status Quo Notice did not mention the date of purchase on thedisclosure, so respondents who viewed that notice saw the date of purchase only in the vignettes.2.3 Survey DesignAfter reading the vignette and viewing their randomly assigned validation notice, respondentsanswered a series of questions, described briefly in sections 2.3.1–2.3.5. Respondents were toldthat at any point they could view the notice again by clicking on the thumbnail on the right oftheir screen. Additionally, if the respondents received a time-barred debt or revival disclosure,the contents of that disclosure were displayed on the screen at two points during the survey (seeAppendix A). This was intended to increase the likelihood that respondents would use theinformation from the disclosures when responding to the comprehension questions designed tomeasure the effectiveness of those disclosures. The questionnaire is in Appendix A. Thequestionnaire contained 33 questions and took approximately 15 minutes to complete.Respondents could go back in the survey to revise their answers.2.3.1 UsabilityFirst, the survey asked three questions meant to assess the usability of the Model Notice relativeto the Status Quo Notice: (1) “According to the notice, if Person A wanted to make a payment onthe debt, who should he or she send the payment to?”; (2) “According to the notice, does PersonA have a legal right to dispute this debt if he or she thinks there is an error?”; and (3) “Imaginethat Person A believes the debt on the notice is not correct. According to the notice, what mustPerson A do to have the debt collector send Person A information showing that he or she owes9DISCLOSURE OF TIME-BARRED DEBT AND REVIVAL

the debt?” Each question employed a multiple-choice question format, with one correct answerand several incorrect answers. 9The survey also asked respondents a usability question related to disputing: “How clear are theinstructions provided in the notice for how to dispute the debt?” Response options were 1 (“Notat all clear”), 2 (“Only a little clear”), 3 (“Somewhat clear”), and 4 (“Very clear”).2.3.2 Hypothetical BehaviorsFollowing the usability questions, respondents who received a TBD Notice or a TBD withRevival Notice were told, “Please take another look at this box of text that appears on the notice.The following questions relate to this text, so please make sure you read the text carefully beforecontinuing.” Below these instructions was a box containing the specific disclosure contained intheir notice. After seeing this disclosure, respondents indicated how likely they would be “tomake a full or partial payment” and “to ignore the notice and take no action” using a five-pointscale ranging from 1 (“Very unlikely”) to 5 (“Very likely”). Note that the vignette indicated that“it would not be easy, but Person A probably could find a way to come up with money to pay thedebt.” Therefore, responses may better represent this particular circumstance than the full rangeof circumstances faced by real-world consumers with debts in collection.Immediately following these questions about hypothetical behaviors, the survey asked, “Whenyou answered the two questions above, what were you thinking about? Please list everything youwere thinking about in the space below.” This question was included primarily to allow theBureau to better understand what factors may have influenced respondents to say they wouldpay the debt or ignore the notice.Later, the survey asked respondents to consider how they would dispute the debt if they wantedto (see Appendix A). Specifically, the survey asked respondents, “If you were Person A and youwanted to dispute the debt, how would you do so? Please check all that apply,” with responseoptions including, “I would call the debt collector using the number on the notice,” “I wouldwrite to the debt collector,” “I would fill out the tear-off at the bottom of the notice,” “I would dosomething else,” and “I don’t know.”2.3.3 Comprehension of Time-Barred Debt and RevivalNext, after prompting respondents with a reminder of what their randomly assigned disclosuressaid, the survey asked respondents to review five scenarios. For each scenario, the survey asked9Each question was followed by a companion question asking, “How confident are you in your answer to the previousquestion?” with a response scale of 1 (“Not at all confident”), 2 (“Somewhat confident”), and 3 (“Very confident”).The confidence questions were included to provide more nuance on responses; for example, correct or incorrectanswers provided with low confidence could suggest that respondents were simply guessing, and incorrect answersprovided with high confidence could suggest that the content may be confusing. However, this report does notcontain analysis of these questions because there was little variation in the three primary usability questions.10DISCLOSURE OF TIME-BARRED DEBT AND REVIVAL

whether, based on what they read in the notice, respondents thought a debt collector would belegally allowed to sue the consumer to collect the debt. The survey then presented the samescenarios and asked how likely the debt collector would be to sue in each scenario. The fivescenarios, which were presented in random order, were that the consumer: (1) ignored thenotice and took no action; (2) made a payment; (3) sent the debt collector a letteracknowledging the debt; (4) called the debt collector acknowledging the debt; or (5) mailed in atear-off portion of the validation notice to dispute the debt. For the first set of questions, theresponse options were, “Yes, they are legally allowed to sue,” “No, they are not legally allowed tosue,” “It depends,” and “Not sure/Don’t know.” For the second set of questions, the responsesconsisted of five points from 1 (“Very unlikely to sue”) to 5 (“Very likely to sue”). 102.3.4 Attitudes about Debt and Debt CollectorsNext, respondents rated their agreement with four statements about debt and debt collectors:(1) “People should pay their debts even if money is tight”; (2) “Debt collectors generally haveaccurate information about the debts that they are asking people to pay”; (3) “If a debt collectorsues a consumer, it is because the debt collector has some evidence that proves that theconsumer owes the debt”; and (4) “Debt collectors will often sue consumers if they do not paytheir debts.” These items were displayed with a response scale of 1 (“Definitely disagree”) to 5(“Definitely agree”).Finally, the survey asked respondents about their willingness to receive a validation notice viaeach of four channels: (1) “By postal mail”; (2) “By email”; (3) “By clicking a link delivered in anemail”; and (4) “By clicking a link delivered in a text message,” with a four-point response scaleof 1 (“Not at all willing”), 2 (“Only a little willing”), 3 (“Somewhat willing”), and 4 (“Verywilling”).10The second set of questions was included to address the concern that respondents—especially those with debtcollection experience—would try to indicate two perspectives in response to one question or be confused aboutwhich perspective to offer. That is, they could want to indicate that they believed the debt collector was allowed tosue but was unlikely to do so (or vice versa). Providing respondents with the opportunity to express their views onboth the likelihood of being sued and the legality of being sued preserved the integrity of the data in response toboth questions.11DISCLOSURE OF TIME-BARRED DEBT AND REVIVAL

3. Results3.1 Interpreting Findings in this ReportIn general, the Bureau believes that effects observed in a controlled setting, such as thatemployed in this testing, may be larger than those that might be observed in practice. Forexample, in the testing described here, respondents were given monetary incentives toparticipate, and therefore were likely to read and think carefully about the survey. Further,respondents were prompted at various times to refer to the notices and the specific disclosuresso that the Bureau could most effectively test the content of the disclosures themselves.Consumers may read less (and less carefully) in the context of everyday life, and Bureauconducted cognitive testing interviews suggest this is true for at least some consumers in thedebt collection context. 11One advantage to testing the disclosures in a large, incentivized survey is that the data areexpected to reflect comprehension conditional on reading the disclosures. Had this researchoccurred in the field, there is a risk that the data would have reflected, to a much larger extent,consumers’ knowledge and experience independent of reading the disclosure. Althoughknowledge and experience are important to decision-making in general, the Bureau focused onanalyzing respondents’ comprehension of the disclosures to inform its decision about whetherdisclosures, when read, can effectively inform consumers and, if so, what those disclosuresshould say. For this reason, the testing attempted to increase the proportion of respondentswho read the disclosures, to the extent possible. This was accomplished by using a largeincentivized panel, but also by repeatedly showing respondents the disclosure language andmaking the validation notice viewable throughout the survey.Whether consumers read the disclosure in real life is an important issue for disclosure policy,but the testing was not designed to address this question.Note that all differences between groups discussed in the text of this report were statisticallysignificant at the 95 percent level or higher unless otherwise noted.11See 84 FR 23274, 23279 (May 21, 2019). At the same time, the Bureau notes that a consumer actually facing debtcollection also has an incentive to pay close attention to a validation notice, and would be interacting with the noticein a real, rather than hypothetical, context.12DISCLOSURE OF TIME-BARRED DEBT AND REVIVAL

3.2 UsabilityAs described in section 2.3.1, the survey included three usability questions that referred tocontent on the notice unrelated to time-barred debt and revival.The first usability question asked respondents, “According to the notice, if Person A wanted tomake a payment on the debt, who should he or she send the payment to?” In this case, theModel Notice performed significantly better than the Status Quo Notice: 59 percent ofrespondents who viewed the Model Notice correctly selected “North South Group,” compared to42 percent of respondents who viewed the Status Quo Notice.Nearly all respondents answered the second and third usability questions correctly; there wereno significant differences between groups. The second usability question asked respondents,“Does Person A have a legal right to dispute the debt if he or she thinks there is a mistake on thenotice?” 95 percent of respondents who viewed the Model Notice answered correctly, comparedto 92 percent of respondents who viewed the Status Quo Notice.The third usability question asked, “Imagine Person A believes the debt on the notice is notcorrect. According to the notice, what must Person A do to have the debt collector send PersonA information showing that he or she owes the debt?” 90 percent of respondents who viewed theModel Notice answered correctly, compared to 86 percent of respondents who viewed the StatusQuo Notice.Each of the three usability questions was paired with a confidence question: “How confident areyou in your answer to the previous question?” Respondents who answered the usabilityquestions correctly tended to express relatively higher confidence than respondents whoanswered incorrectly. The findings related to confidence ratings are provided in Appendix D:Frequency Tables.Figures 1, 2, and 3 display the responses to the three usability questions graphically, with theproportion of respondents providing each answe

The first revival disclosure, Revival(1), was designed by the Bureau to succinct ly capture the key behaviors that can trigger revival: “The law limits how long you can be sued for a debt. Because of the age of this debt, we will not sue you for it unless you make a payment or ackn