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:

  • 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.”