Consumer Law

What Happens When You Tell Consumers You're Trying to Collect a Time-Barred Debt?

By Jeff Sovern

Nathalie Martin of New Mexico and Timothy E. Goldsmith of New Mexico's Psychology Department report the answer in Testing Materiality Under the Unfair Practices Acts: What Information Matters When Collecting Time-Barred Debts? Forthcoming in the Consumer Finance Law Quarterly Report.  Here's the abstract:

Should creditors and debt collectors be required to disclose the fact that a debt is time-barred when attempting to collect from a consumer? This article describes an empirical study that compares how consumers react to two different collection letters, one in which the recipients are told explicitly that the debt being collected is time-barred, and one in which they are not given this information. The study measures whether consumers are equally willing to pay the debt, when they are told that the debt is time-barred. Appended to the article are the survey questions asked of the study participants.

Spoiler alert: telling them the debt is time-barred makes a difference to their willingness to pay it.

Full post as published by CL&P Blog on September 24, 2010 (boomark / email).