FDCPA Reform: Sound and Fury?

Many people closely associated with the debt collection industry have assumed for years that Fair Debt Collection Practices Act (FDCPA) reform is imminent. And in the last Congress, there were bills filed that would have made substantive changes to the decades-old law.

But they never went anywhere. Are legislators serious about reforming the law?

Consumer and ARM industry advocates both agree that the FDCPA needs updating. Consumers would like more protections explicitly codified while debt collectors would like legal ambiguities clarified.

Lawmakers have seemingly gotten the message recently. In the last session of Congress, there were at least six bills introduced in the U.S. House and Senate that would have amended the FDCPA.

The most prominent bill was introduced by outgoing Rep. Barney Frank (D-Mass.). His Fair Debt Collection Practices Clarification Act of 2012 presented a fix to the Foti issue many debt collectors face when leaving voicemail messages by exempting “debt collectors from liability when using approved language in voice mails and messages.” When it was introduced in February 2012 (and subsequently re-introduced later in the year), the ARM industry was very eager to have a name with such gravitas behind it. The bill’s language was also encouraging in that it engaged the CFPB to write the copy of the approved voicemail.

But the bill was referred to a House committee where no additional action was taken.

Another “pro-collector” bill met a similar fate after it was introduced in very late 2012. North Carolina Republican Walter Jones, Jr. filed H.R.6706 — the Fair Debt Collection Practices Technical Correction Act of 2012 — on December 27, 2012. The bill’s stated purpose was “to amend the Fair Debt Collection Practices Act to preclude law firms and licensed attorneys from the definition of a debt collector when taking certain actions.”

On the consumer protection side, a Senate bill introduced by Minnesota Democrat Al Franken promised to shield consumers from improper collection actions on medical debt. The bill – S.3350, “End Debt Collector Abuse Act of 2012″ — was actually nearly identical to a bill Franken introduced in the previous Congressional session, except for the sections related to medical debt. Both bills died in committee and were never enacted.

In mid-2011, Rep. Steve Cohen (D-Tenn.) introduced H.R. 2361 – the Fair Debt Collection Improvement Act which would have required specific language from debt collectors in communications attempting to collect debt that was beyond the statute of limitations. Like all the other bills, it never shook free of a House committee.

In the current Congress, which started in January, only one bill with ARM industry implications has been filed. But that bill, the Medical Debt Responsibility Act, targets the Fair Credit Reporting Act (FCRA) rather than the FDCPA. While it could have a huge impact on debt collectors, it is relevant only to medical debt. It is currently in a Senate committee.

There is broad agreement among all stakeholders in the debt collection process – from consumers to debt collectors – that the FDCPA needs to be updated or entirely reformed. Of course, the reasons for that desire differ depending on constituency. But the one common thread is that neither side can get lawmakers to make FDCPA reform a priority in any way.

As we’ve been saying for years, we’ll just have to wait and see.

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