On March 21, the House Financial Services Committee voted 35-25 to approve a bill that would amend the Fair Debt Collection Practices Act to exclude lawyers and law firms from the definition of a “debt collector” when such entities are engaged in “activities related to legal proceedings.” Introduced by Rep. Alex Mooney (R-W.Va.) in February, H.R. 5082, titled the “Practice of Law Technical Clarification Act of 2018”, will also amend the Consumer Financial Protection Act of 2010 to restrain the Consumer Financial Protection Bureau’s oversight and enforcement authority over lawyers.
If the bill proceeds, it would add the following language to definition of a debt collector under the FDCPA:
The term [debt collector] does not include –
(F) any law firm or licensed attorney, to the extent that –
(i) such firm or attorney is engaged in litigation activities in connection with a legal action in a court of law to collect a debt on behalf of a client, including –
(I) serving, filing, or conveying formal legal proceedings, discovery requests, or other documents pursuant to the applicable statute or rules of civil procedure;
(II) communicating in, or at the direction of, a court of law (including in depositions or settlement conferences) or in the enforcement of a judgment; or
(III) any other activities engaged in as a part of the practice of law, under the laws of the State in which the attorney is licensed, that relate to the legal action; and
(ii) such legal action is served on the defendant debtor, or service is attempted, in accordance with the applicable statute or rules of civil procedure.
The bill now moves to the full House for further consideration. Should it proceed to become law, the bill would undoubtedly have a significant impact on the debt collection industry as a whole as well as the role of the CFPB in regulating the industry.
We will continue to monitor this bill as it moves through the legislative process.