On September 19, the Stop Debt Collection Abuse Act of 2019 was introduced by Reps. Emanuel Cleaver (D-Mo.) and French Hill (R-Ark.) in the House and Sens. Cory Booker (D-N.J.) and Mike Lee (R-Utah) in the Senate. This is the third iteration of the proposed bill, which was previously introduced in November 2015 and March 2017. Neither prior bill ever made it out of Committee.
The Stop Debt Collection Abuse Act would amend the Fair Debt Collection Practices Act to apply that statute’s restrictions to collectors of debt owed to a federal agency. Currently, entities attempting to collect privately owned debt must adhere to the fairly restrictive provisions of the FDCPA. As is the case in the private industry, the proposed legislation would require debt collectors employed by federal agencies to call debtors between the hours of 8 a.m. and 9 p.m. and to forward validation notices to debtors within five days of contact. The proposal, among other things, would prohibit contact with a debtor after the debtor communicates that they do not wish to be contacted.
In addition to adding federal agency debt collection to the FDCPA generally, the Stop Debt Collection Abuse Act would also prohibit federal agency creditors from selling or transferring debt to a debt collector until 90 days after the obligation arises. In so doing, the agency would be required to notify the consumer on at least three occasions prior to taking such action – with each notification occurring at least 30 days after the prior notification.
Furthermore, collectors of any debt owed to a federal agency would be prohibited from collecting any interest, fee, charge, or expense incident to the principal amount of the debt unless the amount collected is: (1) reasonable, (2) authorized by a contract between the debt collector and the federal agency, and (3) not greater than 10% of the amount collected by the debt collector.
As for state-hired debt collectors, the Stop Debt Collection Abuse Act would require the Government Accountability Office to conduct a study of the use of third-party debt collectors by state and local government. Although Congress cannot direct state agencies to comply with the FDCPA, the bill appears intended in part to shed some light on state agency debt collection practices.
In short, the bill would do away with the federal agency exemption to the FDCPA, causing debt collectors hired by the federal government to be held to the same standards as those hired by the private sector.
Troutman Sanders’ Consumer Financial Services litigation practice will continue to monitor the proposed legislation and provide updates.