Congress Wants to Strengthen Consumer Protection Laws

If this is your first visit to my website, welcome! My name is Christine Springer and I'm the founder of Desert Edge Legal Services and the author of the content on this site.

Disclaimer: I’m a paralegal, not an attorney and cannot give you legal advice. This is not meant to be legal advice, and there is no guarantee that the information in this post will work for your individual situation. Please consult with an attorney if you have questions about your individual situation.

In May 2021, H.R.2547, the The Comprehensive Debt Collection Improvement Act was passed by the House of Representatives. As you may have figured out already, this bill was consumer-friendly and would change the way debts are collected from consumers.  

This was all started as a result of a foreclosure case, which is one reason I'm writing about it here. Although the bill has gone nowhere in the Senate (because there is not enough support for these kinds of bills), I think it's a good indicator of what kinds of changes are coming to make things more fair for everyone and not just the rich.

As it relates to foreclosure, the Fair Debt Collections Practices Act ("FDCPA") would be expanded to include law firms that are handling foreclosures for banks.

In Obduskey v. McCarthy and Holthus LLP, the nation’s high court sided unanimously with the law firm, affirming that in a nonjudicial state the firm would not qualify as a “debt collector” under the FDCPA. (Emphasis is Christine's) But in her concurring opinion, Justice Sonia Sotomayor said she felt this was a “close case.” She explicitly noted that “today’s opinion does not prevent Congress from clarifying this statute if we have gotten it wrong.” (via The Intercept)

The 2019 decision means that foreclosure law firms are not considered debt collectors under the FDCPA, which clarified an issue that I wondered about during the real estate crisis.

I may look at that case closer to see how the court arrived at that decision, because it's hard to imagine that the law firm is NOT a debt collector when they're the one sending out the letters to collect the debt.

Additionally, the other proposed changes include:

Amending the FDCPA to prohibit a debt collector from contacting a consumer electronically, including by email, text message, and direct message through social media, without a consumer’s prior consent;

Requiring the discharge of private student loans upon a borrower's death or total and permanent disability;

Installing regulations for debt owed to federal agencies that is sold or transferred to debt collectors;

Adjusting the damages amount permitted under the FDCPA for inflation and expressly permitting courts to award injunctive relief;

Amending TILA to prohibit the use of cognovits or confessions of judgment for small business owners as an unfair credit practice;

Amending the FDCPA to regulate communications with servicemembers, including prohibiting the use of threats to reduce rank or revoke security clearance;

Amending the FDCPA to provide a two-year waiting period before an entity can collect or attempt to collect a medical debt;

Amending the FCRA to prohibit the credit reporting of a debt arising from any “medically necessary procedure” and requiring the provision of prior notice of rights to a consumer before furnishing information regarding the medical debt of a consumer to a consumer reporting agency; and

Amending the FDCPA to include a loan, overpayment, fine, penalty, restitution, fee, or other money owed to a federal, state, or local government as “debt” subject to the FDCPA.

You can read the summary text of the bill at Congress.gov.