U.S. Senator Introduces ‘Stop Debt Collection Abuse Act of 2015’

Bill targets collectors seeking repayment of government debt and debt buyers

On Nov. 5, U.S. Senator Cory Booker introduced S. 2255, the “Stop Debt Collection Abuse Act of 2015.”  Though primarily targeted toward debt collectors collecting on obligations owed to the federal government, the bill also brings debt buyers into the FDCPA definition of “debt collector.”  The bill has been assigned to the Senate Banking Committee.

Regarding private debt collectors under contract with the federal government:US Capitol Dome Houses of Congress Washington DC

  • The definition of “debt” (15 USC 1692a(5)) is expanded to include “any obligation or alleged obligation of a consumer (i) to pay a loan, an overpayment, a fine, penalty, a fee, or other money to a Federal agency; and (ii) that is not less than 180 days past due.”
  • The definition of “debt collector” (15 USC 1692a(6)) is expanded to include “any person who regularly collects debts owed or allegedly owed to a Federal agency.”
  • The bill provides that the federal government may sell or transfer debts to a private debt collector no sooner than 180 days after the date the obligation arose, and three separate notices must be sent to consumers beforehand.
  • 15 USC 1692f (Unfair Practices) is amended to provide that any amount charged by a debt collector collecting for the federal government must be:
    • Reasonable in relation to the actual costs;
    • Authorized by contract;
    • Not greater than 10 percent of the amount collected.
  • The Government Accounting Office is charged with commencing a study on the use of debt collectors by state and local governments.

With respect to debt buyers, the FDCPA definition of “debt collector” is amended to include any person who “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 purchased from another.”

On his official website, Senator Booker explains “debts owed to the government have too often become a license for debt collectors to harass and intimidate well-meaning families who are struggling to get by,” and adds that currently, in some cases, “courts have ruled that ‘debt buyers’ are not covered by the FDCPA.”

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Eric Rosenkoetter is based in Maurice Wutscher’s Austin office. For many years, he has focused his practice on various aspects of financial services law. As a litigation attorney, he has conducted every aspect of the litigation process, including countless depositions, motion proceedings, bench and jury trials, and appeals in various courts. In addition, he has significant experience as a compliance and transactional attorney, providing strategic, business growth, legislative, compliance and regulatory advice to national corporations and trade associations. For example, he has drafted consumer contracts and disclosures designed to state-specific statutory requirements, and developed “Best Practices” guides and state-by-state compliance grids, for national financial services companies. He also conducted research and crafted a metrics report for a national trade association with analysis designed to counter the claims of advocacy groups. Eric’s experience also includes working for a national corporation as Executive Counsel, Chief Compliance and Ethics Officer, and Director of Legislative Affairs, and as a federal lobbyist and Director of Government and Public Affairs for a national financial services trade association. In the government sector, Eric presided over approximately 6,000 state administrative hearings, served as a staff attorney for the Missouri Senate, and handled litigation in 33 counties as a regional managing attorney. Eric frequently speaks to audiences on topics relevant to the financial services industry and related advocacy initiatives.