CUNA concerned with CFPB test on bankruptcy forms

May 26, 2016

CUNA is concerned with a report on consumer testing used by the Consumer Financial Protection Bureau (CFPB) to analyze periodic statement forms for consumers in bankruptcy, but concurs with some of its findings. The bureau issued a report in February on its study that tracked comprehension, perceived utility and attitudinal reactions in response to various forms. 

The data comes from 51 one-on-one interviews with subjects who had experience in various types of bankruptcy and some with no bankruptcy experience.  Interviews were conducted in three locations: Arlington, Va., Ft. Lauderdale, Fla. and Chicago, Ill.

“We concur with the finding that clear information about consequences of non-payment are important to be included in the statement, even if the information appears somewhat threatening to the borrower,” CUNA’s comment letter reads. “We hope the CFPB will acknowledge that there are consequences to non-payment of borrowed funds, not only in the bankruptcy context, but in other situations as well.”

CUNA went on to urge the CFPB to go further with this conclusion and amend the forms to include more information about the consequences of non-payment, including information about late fees and when they will be assessed.

CUNA does have a number of issues with the study itself. While CUNA believes that such testing can be useful in developing standardized forms, it is concerned about using those results to shape policy.

“While we appreciate the use of this tool, what is not present in the report is perhaps the next step: How does this sophisticated testing correlate to a policy decision that results in a periodic statement that provides necessary information for a consumer?” CUNA’s letter reads. “The nexus between the psychological analysis and the conclusions of what should be contained in an appropriate policy that will dictate what will be on a periodic statement is unclear.”

CUNA is also concerned that:

  • The conclusion indicates consumer look mostly to the payment coupon on forms, but not on the outstanding principal balance. This reinforces CUNA’s concerns that what a borrower may be focusing on might not be the most important piece they need to make a good decision;
  • An executive branch agency such as the CFPB would promulgate rules affecting a judicial branch function. CUNA urged the bureau to work with bankruptcy courts as much as possible and defer to their expertise on what should be included in a periodic statement.

A lack of references to any medical support or medical journals to support the report’s conclusions, is also troubling to CUNA, as is a lack of documentation of the qualifications the firm conducting the study.

CUNA also signed onto a joint letter with a number of other financial services trade organizations, highlighting a number of other specific concerns.

In its request for comment, the bureau sought only comments on the report, not on the proposed rule itself.