Stop Debt Collection Abuse Act of 2019

II 116TH CONGRESS 1ST SESSION S. 2516 To amend the Fair Debt Collection Practices Act to restrict the debt collection practices of certain debt collectors. IN THE SENATE OF THE UNITED STATES SEPTEMBER 19, 2019 Mr. BOOKER (for himself and Mr. LEE) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Fair Debt Collection Practices Act to restrict the debt collection practices of certain debt collectors. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Stop Debt Collection 4 Abuse Act of 2019’’. 5 SEC. 2. DEFINITIONS. 6 Section 803 of the Fair Debt Collection Practices Act 7 (15 U.S.C. 1692a) is amended— 8 VerDate Sep 11 2014 21:00 Sep 23, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2516.IS S2516 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 2516 IS (1) in paragraph (4), by striking ‘‘facilitating 1 collection of such debt for another’’ and inserting 2 ‘‘collection of such debt’’; 3 (2) by striking paragraphs (5) and (6) and in- 4 serting the following: 5 ‘‘(5) The term ‘debt’ means— 6 ‘‘(A) any obligation or alleged obligation of 7 a consumer to pay money arising out of a 8 transaction in which the money, property, in- 9 surance, or services that are the subject of the 10 transaction are primarily for personal, family, 11 or household purposes, whether or not such ob- 12 ligation has been reduced to judgment; or 13 ‘‘(B) any obligation or alleged obligation of 14 a consumer— 15 ‘‘(i) to pay a loan, an overpayment, a 16 fine, a penalty, a fee, or other money to a 17 Federal agency; and 18 ‘‘(ii) that is not less than 180 days 19 past due. 20 ‘‘(6) The term ‘debt collector’— 21 ‘‘(A) means any person who— 22 ‘‘(i) uses any instrumentality of inter- 23 state commerce or the mails in any busi- 24 VerDate Sep 11 2014 21:00 Sep 23, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2516.IS S2516 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 2516 IS ness the principal purpose of which is the 1 collection of any debts; 2 ‘‘(ii) regularly collects or attempts to 3 collect, directly or indirectly, by its own 4 means or by hiring another debt collector, 5 debts owed or due or asserted to be owed 6 or due another or that have been obtained 7 by assignment or transfer from another; or 8 ‘‘(iii) regularly collects debts owed or 9 allegedly owed to a Federal agency; 10 ‘‘(B) includes— 11 ‘‘(i) any creditor who, in the process 12 of collecting the debts of the creditor, uses 13 any name other than the name of the cred- 14 itor which would indicate that a third per- 15 son is collecting or attempting to collect 16 such debts; and 17 ‘‘(ii) for purposes of section 808(6), 18 any person who uses any instrumentality 19 of interstate commerce or the mails in any 20 business the principal purpose of which is 21 the enforcement of security interests; and 22 ‘‘(C) does not include— 23 VerDate Sep 11 2014 21:00 Sep 23, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2516.IS S2516 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 2516 IS ‘‘(i) any officer or employee of a cred- 1 itor while, in the name of the creditor, col- 2 lecting debts for such creditor; 3 ‘‘(ii) any person while acting as a debt 4 collector for another person, both of whom 5 are related by common ownership or affili- 6 ated by corporate control, if the person 7 acting as a debt collector does so only for 8 persons to whom it is so related or affili- 9 ated and if the principal business of such 10 person is not the collection of debts; 11 ‘‘(iii) any officer or employee of the 12 United States or any State to the extent 13 that collecting or attempting to collect any 14 debt is in the performance of his official 15 duties; 16 ‘‘(iv) any person while serving or at- 17 tempting to serve legal process on any 18 other person in connection with the judicial 19 enforcement of any debt; 20 ‘‘(v) any nonprofit organization which, 21 at the request of consumers, performs 22 bona fide consumer credit counseling and 23 assists consumers in the liquidation of 24 their debts by receiving payments from 25 VerDate Sep 11 2014 21:00 Sep 23, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2516.IS S2516 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 2516 IS such consumers and distributing such 1 amounts to creditors; and 2 ‘‘(vi) any person collecting or attempt- 3 ing to collect any debt owed or due or as- 4 serted to be owed or due another or that 5 has been obtained by assignment or trans- 6 fer from another to the extent such activ- 7 ity— 8 ‘‘(I) is incidental to a bona fide 9 fiduciary obligation or a bona fide es- 10 crow arrangement; 11 ‘‘(II) concerns a debt which was 12 originated by such person; 13 ‘‘(III) concerns a debt which was 14 not in default at the time it was ob- 15 tained by such person; or 16 ‘‘(IV) concerns a debt obtained 17 by such person as a secured party in 18 a commercial credit transaction in- 19 volving the creditor.’’. 20 SEC. 3. DEBT COLLECTION PRACTICES FOR DEBT COLLEC- 21 TORS HIRED BY GOVERNMENT AGENCIES. 22 The Fair Debt Collection Practices Act (15 U.S.C. 23 1692 et seq.) is amended by inserting after section 812 24 (15 U.S.C. 1692j) the following: 25 VerDate Sep 11 2014 21:00 Sep 23, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2516.IS S2516 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 2516 IS ‘‘§ 812A. Debt collection practices for debt collectors 1 hired by Federal agencies 2 ‘‘(a) LIMITATION ON TIME TO TURN DEBT OVER TO 3 DEBT COLLECTOR.—A Federal agency that is a creditor 4 may sell or transfer a debt described in section 803(5)(B) 5 to a debt collector not earlier than 90 days after the date 6 on which the obligation or alleged obligation arises. 7 ‘‘(b) REQUIRED NOTICE.— 8 ‘‘(1) IN GENERAL.—Before transferring or sell- 9 ing a debt described in section 803(5)(B) to a debt 10 collector or contracting with a debt collector to col- 11 lect such a debt, a Federal agency shall notify the 12 consumer not fewer than 3 times that the Federal 13 agency will take such action. 14 ‘‘(2) FREQUENCY OF NOTIFICATIONS.—The 15 second and third notifications described in para- 16 graph (1) shall be made not less than 30 days after 17 the date on which the previous notification is 18 made.’’. 19 SEC. 4. UNFAIR PRACTICES. 20 Section 808 of the Fair Debt Collection Practices Act 21 (15 U.S.C. 1692f) is amended by striking paragraph (1) 22 and inserting the following: 23 ‘‘(1) The collection of any amount (including 24 any interest, fee, charge, or expense incidental to the 25 principal obligation) unless— 26 VerDate Sep 11 2014 21:00 Sep 23, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2516.IS S2516 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 2516 IS ‘‘(A) such amount is expressly authorized 1 by the agreement creating the debt or permitted 2 by law; or 3 ‘‘(B) in the case of any amount charged by 4 a debt collector collecting a debt for a Federal 5 agency, such amount is— 6 ‘‘(i) reasonable in relation to the ac- 7 tual costs of the collection; 8 ‘‘(ii) authorized by a contract between 9 the debt collector and the Federal agency; 10 and 11 ‘‘(iii) not greater than 10 percent of 12 the amount collected by the debt col- 13 lector.’’. 14 SEC. 5. GAO STUDY AND REPORT. 15 (a) STUDY.—The Comptroller General of the United 16 States shall conduct a study on the use of debt collectors 17 by Federal, State, and local government agencies, includ- 18 ing— 19 (1) the powers given to the debt collectors by 20 Federal, State, and local government agencies; 21 (2) the contracting process that allows a Fed- 22 eral, State, or local government agency to award 23 debt collection to a certain company, including the 24 selection process; 25 VerDate Sep 11 2014 21:00 Sep 23, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2516.IS S2516 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 2516 IS (3) any fees charged to debtors in addition to 1 principal and interest on the outstanding debt; 2 (4) how the fees described in paragraph (3) 3 vary from State to State; 4 (5) consumer protection at the State level that 5 offer recourse to those whom debts have been wrong- 6 fully attributed; 7 (6) the revenues received by debt collectors 8 from Federal, State, and local government agencies; 9 (7) the amount of any revenue sharing agree- 10 ments between debt collectors and Federal, State, 11 and local government agencies; 12 (8) the difference in debt collection procedures 13 across geographic regions, including the extent to 14 which debt collectors pursue court judgments to col- 15 lect debts; and 16 (9) any legal immunity or other protections 17 given to the debt collectors hired by State and local 18 government agencies, including whether the debt col- 19 lectors are subject to the Fair Debt Collection Prac- 20 tices Act (15 U.S.C. 1692 et seq.). 21 (b) REPORT.—Not later than 1 year after the date 22 of enactment of this Act, the Comptroller General of the 23 VerDate Sep 11 2014 21:00 Sep 23, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2516.IS S2516 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 2516 IS United States shall submit to Congress a report on the 1 completed study required under subsection (a). 2 Æ VerDate Sep 11 2014 21:00 Sep 23, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\S2516.IS S2516 pamtmann on DSKBC07HB2PROD with BILLS