Rep. Cleaver's Bill to Protect Consumers From Predatory Debt Collection Practices Passed By House of Representatives

Press Release

oday, the House of Representatives passed H.R. 2547, the Comprehensive Debt Collection Improvement Act, a comprehensive bill that would expand important protections for small businesses, servicemembers, students, and other consumers against mistreatment and harassment by debt collectors. Included in H.R. 2547 was the Stop Debt Collection Abuse Act, a bill introduced by United States Representative Emanuel Cleaver, II (D-MO) to close a loophole that allowed for debt collectors hired by the federal government to utilize aggressive debt collection practices and charge excessive fees.

"Congress has created fair debt collection standards to protect consumers and hold the private sector accountable for abusive practices, and debt collection agents contracted by the federal government should be held to those same standards," said Congressman Cleaver. "There is no justifiable reason for a loophole that allows government-hired debt collectors to inflict extraordinarily aggressive debt collection techniques on American consumers, and I'm thrilled that my bill to put a stop to these kinds of practices was included in this historic package."

The Fair Debt Collection Practices Act (FDCPA) makes it illegal for debt collectors to use abusive, unfair, or deceptive practices when collecting debts from consumers. However, a major exception in the FDCPA are collections on debts owed to the government. The Stop Debt Collection Abuse Act, which passed out of the Financial Services Committee with a unanimous 54-0 vote in 2019, aims to close that exemption.

Specifically, the Stop Debt Collection Abuse Act would:

Amend the FDCPA to make clear that protections from overly aggressive debt collection practices also apply to debt collection agents hired by the federal government;
Amend the FDCPA to make clear that overpayment, fines, penalties, and fees owed by private individuals to federal government entities should be considered "consumer debts" that fall under the FDCPA's protections;
Prevent private debt collectors from charging exorbitant and unfair fees;
Ensure that fees from debt collectors working on behalf of the federal government cannot be greater than 10% of the amount collected and must be reasonable;
Confirm that debt buyers are debt collectors for the purposes of the FDCPA;
Set forth requirements that prevent debt collectors from taking aggressive action unnecessarily quickly after a debt has allegedly gone unpaid; and
Require the Government Accountability Office (GAO) to conduct a study into the use of third party debt collectors by state and local government.
A recent report from the Consumer Financial Protection Bureau (CFPB) on debt collection noted that almost 26% of Americans have an item in collections listed on their credit reports. Research has also shown that abusive debt collection practices disproportionately harm communities of color and low-income communities. During the COVID-19 pandemic, many consumers and small businesses have struggled to keep up with their bills, while debt collectors have seen record profits. Meanwhile, recent reporting from the CFPB reveals that its consumer complaint database saw a 10% increase in complaints in 2020.

"There is a reason that more than 20 civil rights and consumer rights groups across the nation have supported my legislation to end these abusive practices from federally contracted debt collectors, and I'm thrilled that the House of Representatives has sent the message that we will not tolerate abuse of hardworking consumers at a time when millions are struggling to get by," said Congressman Cleaver. "Now, I call on the Senate to join the House of Representatives in passing this legislation and sending it to the President's desk for signature."

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