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A Timely Update for Consumer Debt Collection Protections 

U.S. House Votes to Protect Consumers, Servicemembers,  Student Loan Borrowers from Certain Debt Collection Abuses   

WASHINGTON – The U.S. House of Representatives’ passage today of the Comprehensive Debt Collection Improvement Act (H.R. 2547), by a 215 – 207 vote, provides new protections for consumers from harmful debt collection practices and increases accountability for collectors that mistreat consumers, the National Association of Consumer Advocates (NACA) said today.

“Consumers have been struggling with aggressive debt collection tactics for a long time now,” said Angie Robertson,  a consumer attorney based in Palos Hills, Ill. and NACA’s Illinois co-chair. “With the added hardship from the ongoing pandemic, this was the right time for Congress to take a strong stance against some injustices in debt collection practices.”

The bill, championed by Financial Services Committee Chairwoman Maxine Waters and other lawmakers, addresses a number of important issues facing consumers, servicemembers, small businesses, and student loan borrowers in the debt collection market. It would, among other things:

  • Adjust and index statutory remedies available under the Fair Debt Collection Practices Act (FDCPA) to inflation
  • Require debt collectors to obtain consumer consent before sending texts, emails, or other electronic communications and send written validation notices
  • Prohibit debt collectors from threatening servicemembers with reductions in rank or revocation of security clearance
  • Halt collection of medical debt for the first two years and negative credit reporting of medical debt for the first year
  • Require the discharge of private student loans in cases of permanent disability and when the private lender receives notice that a borrower’s federal student loans have been discharged

The House additionally voted in favor of a block of amendments to H.R. 2547 to provide further protections, including an amendment that would prohibit collection of time-barred debts.

“It is past time for an update to the remedies available for harmed consumers which have not been changed or adjusted for inflation for over four decades since Congress first passed the federal debt collection law in 1977,” said Christine Hines, NACA’s legislative director. “Its inclusion in this legislation is a welcome development.”

“We’re also happy to see some clarity and limits on how debt collectors use electronic communications,” Robertson said. “If debt collectors are allowed to skip sending written notices, the risk goes up that consumers, especially older consumers and those without reliable access to technology, won’t receive critical information about the debt they are being asked to pay.”

Now that the House has approved the bill, the Senate should consider and quickly pass these necessary protections.

Read more on our blog.