Section 1 Short title
This Act may be cited as the “Stop Debt Collection Abuse Act of 2019”.
Stop Debt Collection Abuse Act of 2019
A BILL
To amend the Fair Debt Collection Practices Act to restrict the debt collection practices of certain debt collectors.
Sec. 2 Definitions
Section 803 of the Fair Debt Collection Practices Act (15 U.S.C. 1692a) is amended—
in paragraph (4), by striking “facilitating collection of such debt for another” and inserting “collection of such debt”;
by striking paragraphs (5) and (6) and inserting the following:
“(5) The term debt means—
“(A) any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services that are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment; or
“(B) any obligation or alleged obligation of a consumer—
“(i) to pay a loan, an overpayment, a fine, a penalty, a fee, or other money to a Federal agency; and
“(ii) that is not less than 180 days past due.
“(6) The term debt collector—
“(A) means any person who—
“(i) uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts;
“(ii) regularly collects or attempts to collect, directly or indirectly, by its own means or by hiring another debt collector, debts owed or due or asserted to be owed or due another or that have been obtained by assignment or transfer from another; or
“(iii) regularly collects debts owed or allegedly owed to a Federal agency;
“(B) includes—
“(i) any creditor who, in the process of collecting the debts of the creditor, uses any name other than the name of the creditor which would indicate that a third person is collecting or attempting to collect such debts; and
“(ii) for purposes of section 808(6), any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests; and
“(C) does not include—
“(i) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;
“(ii) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;
“(iii) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;
“(iv) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;
“(v) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and
“(vi) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another or that has been obtained by assignment or transfer from another to the extent such activity—
“(I) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement;
“(II) concerns a debt which was originated by such person;
“(III) concerns a debt which was not in default at the time it was obtained by such person; or
“(IV) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.”
Sec. 3 Debt collection practices for debt collectors hired by government agencies
The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.) is amended by inserting after section 812 (15 U.S.C. 1692j) the following:
“812A. Debt collection practices for debt collectors hired by Federal agencies
“(a) Limitation on time To turn debt over to debt collector—A Federal agency that is a creditor may sell or transfer a debt described in section 803(5)(B) to a debt collector not earlier than 90 days after the date on which the obligation or alleged obligation arises.
“(b) Required notice
“(1) In general—Before transferring or selling a debt described in section 803(5)(B) to a debt collector or contracting with a debt collector to collect such a debt, a Federal agency shall notify the consumer not fewer than 3 times that the Federal agency will take such action.
“(2) Frequency of notifications—The second and third notifications described in paragraph (1) shall be made not less than 30 days after the date on which the previous notification is made.”
Sec. 4 Unfair practices
Section 808 of the Fair Debt Collection Practices Act (15 U.S.C. 1692f) is amended by striking paragraph (1) and inserting the following:
“(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless—
“(A) such amount is expressly authorized by the agreement creating the debt or permitted by law; or
“(B) in the case of any amount charged by a debt collector collecting a debt for a Federal agency, such amount is—
“(i) reasonable in relation to the actual costs of the collection;
“(ii) authorized by a contract between the debt collector and the Federal agency; and
“(iii) not greater than 10 percent of the amount collected by the debt collector.”
Sec. 5 GAO study and report
Study— The Comptroller General of the United States shall conduct a study on the use of debt collectors by Federal, State, and local government agencies, including—
the powers given to the debt collectors by Federal, State, and local government agencies;
the contracting process that allows a Federal, State, or local government agency to award debt collection to a certain company, including the selection process;
any fees charged to debtors in addition to principal and interest on the outstanding debt;
how the fees described in paragraph (3) vary from State to State;
consumer protection at the State level that offer recourse to those whom debts have been wrongfully attributed;
the revenues received by debt collectors from Federal, State, and local government agencies;
the amount of any revenue sharing agreements between debt collectors and Federal, State, and local government agencies;
the difference in debt collection procedures across geographic regions, including the extent to which debt collectors pursue court judgments to collect debts; and
any legal immunity or other protections given to the debt collectors hired by State and local government agencies, including whether the debt collectors are subject to the Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.).
Report— Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to Congress a report on the completed study required under subsection (a).