Amendment Proposed By U.S. Rep. Newman Passes With Comprehensive Debt Collection Improvement Act
WASHINGTON, D.C. – Today, U.S. Representative Marie Newman (D-IL) voted to pass the Comprehensive Debt Collection Improvement Act, which will provide important protections for small businesses, service members, students, and other consumers against mistreatment and harassment by debt collectors. Included in the legislation passed today was an amendment proposed by Congresswoman Newman which would require the Consumer Financial Protection Bureau to create a page on their website to provide consumers with not only an outline of their rights but also resources to help them avoid abusive debt collectors.
The amendment passed today is designed to increase transparency for consumers and create a one-stop-shop website where Americans can better know their rights when it comes to abusive debt collectors and where best to find resources to prevent abusive practices.
“Throughout this pandemic, millions of Americans and small businesses have fallen victim to abusive debt collectors. While families were struggling to pay their debt and businesses were working to keep their doors open, these abusive debt collectors were making a fortune,” said Congresswoman Newman. “I’m proud that my amendment to further protect consumers passed with today’s legislation. With this amendment, we can further ensure Americans have the resources they need to know their rights as consumers and better avoid abusive debt collectors.”
Research has demonstrated that abusive debt collection practices disproportionately harm communities of color and low-income communities. That is why Congresswoman Newman’s amendment also requires the website information to be offered in different languages to ensure all Americans can access this information.
A recent Consumer Financial Protection Bureau (CFPB) report on debt collection noted that almost 26% of Americans have an item in collections listed on their credit reports. Furthermore, throughout the COVID-19 pandemic, many consumers and small businesses have struggled to keep up with their bills, through no fault of their own, while debt collectors have seen record profits.
Today’s passage of the Comprehensive Debt Collection Improvement Act better enhances consumers’ rights and increases accountability for debt collectors. Specifically, the Comprehensive Debt Collection Improvement Act amends the Fair Debt Collection Practices Act (FDCPA) and other federal laws to:
- Protect Small and Minority-Owned Businesses:
- Codifies protections that currently exist under a Federal Trade Commission (FTC) regulation for consumer loans prohibiting the use of “confessions of judgment” that waive due process protections, and extends those protections to commercial loans to protect small and minority-owned businesses.
- Protect Servicemembers:
- Prohibits debt collectors from threatening a servicemember with reducing their rank, revoking their security clearance, or prosecuting them under the Uniform Code of Military Justice.
- Requires a Government Accountability Office (GAO) study on the impact of debt collection on servicemembers.
- Protect Private Student Loan Borrowers with Disabilities:
- Requires discharge of private student loans for both the borrower and cosigner in the case of permanent disability of the borrower, extending protections that currently exist for federal student loan borrowers.
- Requires private lenders who are notified that the federal government has discharged the federal student loans of a borrower to discharge the private student loans of that same borrower.
- Protect Consumers Against Debt Collection Harassment:
- Prohibits a debt collector from contacting a consumer by email or text message without a consumer’s consent to be contacted electronically.
- Requires CFPB to analyze and annually report on the impact of electronic communications utilized by debt collectors.