An interesting bill was recently proposed by representative Mia Love from Utah amending the Fair Debt Collection Practices Act (“FDCPA”) and making several pro-consumer changes. The bill was only recently introduced and is probably in part a response to the recent Supreme Court decision of Henson v. Santander which ruled upon the definition of a “debt collector” under the FDCPA. So, what does the bill change?
- Debt Collectors: The bill dramatically broadens the definition of what a debt collector is and thus expands the scope of who is subject to the FDCPA. Right now a debt collector is defined in the FDCPA as someone who uses any instrumentality of interstate commerce to collect debts AND falls into several other categories related to debt collection. The bill would remove the “and” requirement. Meaning that people persons who do not use the instruments of interstate commerce could be subject to FDCPA liability.
- Government Notice: It is not uncommon for governmental agencies who are owed debts to later assign the rights to collect upon the debts to private companies. The bill would create a requirement under the law that before any agency does so, the agency itself must notify the debtor of the assignment. That would eliminate the scenario now where consumers are often advised by the company to whom the debt was assigned. A debtor might reasonably not trust some random company they have never heard of which claims they bought a debt. Now the governmental agencies would have to inform them if the bill passes.
- Reasonable Collection Costs: Some contracts allow for collection fees. This would limit the amount of fees that debt collectors could receive to “reasonable” fees and not more than 10% of the amount of the debt. Enshrining that in law would be a huge win for members of the public and a huge blow to debt collectors.
There are a few other provisions but those are the most important ones. The bill was only just introduced and Washington is highly politically charged at the moments so the bill probably won’t pass but the changes it proposes would certainly help strengthen the rights of the public against harassment by debt collectors.
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This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorney in connection with any legal issues related to the matters discussed in this article as the applicability of state, local and federal laws may vary.