Banking and Finance Law Daily Round Two for legislation to stop predatory practices by federally-hired debt collectors
Monday, September 23, 2019

Round Two for legislation to stop predatory practices by federally-hired debt collectors

By Katalina M. Bianco, J.D.

Lawmakers re-introduced legislation that would amend the FDCPA to bolster consumer protections.

Representatives Emanuel Cleaver II (D-Mo) and French Hill (R-Ark) have introduced the Stop Debt Collection Abuse Act of 2019 (H.R. 4403). Senators Cory Booker (D-NJ) and Mike Lee (R-Utah) introduced a companion bill in the Senate. The legislation is intended to strengthen consumer protections against predatory debt collection practices by amending the Fair Debt Collection Practices Act to "close a loophole in federal law to hold debt collectors hired by the federal government to industry standards, ensuring that no one is subject to predatory collection practices." The legislation first was introduced in March 2017 (see Banking and Finance Law Daily, March 9, 2017).

The legislators noted that although the FDCPA bars abusive, unfair, or deceptive practices by debt collectors, "one of the biggest exemptions to the FDCPA are debt collectors hired by state or federal government entities."

The Stop Debt Collection Abuse Act of 2019 would amend the FDCPA to:

  • clarify that FDCPA protections also apply to debt collection agents hired by the federal government;
  • make clear that overpayment, fines, penalties, and fees owed by private individuals to federal government entities should be considered consumer debts that are covered by the FDCPA;
  • provide private debt collectors from charging exorbitant and unfair fees;
  • require that fees from debt collectors working on behalf of the federal government could not be greater than 10 percent of the amount collected and must be reasonable;
  • clarify that debt buyers are debt collectors under the FDCPA;
  • prevent debt collectors from taking aggressive action unnecessarily quickly after a debt has allegedly gone unpaid; and
  • require the Government Accountability Office to conduct a study into the use of third-party debt collectors by state and local government.

MainStory: TopStory DebtCollection UDAAP

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