Congress should vote down this harmful debt collection legislation

Congress should vote down this harmful debt collection legislation
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This week, the House Financial Services Committee will vote on whether to open the floodgates to abusive litigation conduct by debt collection attorneys and debt buyers who work in their name. The Practice of Law Technical Clarification Act would unwind a bedrock protection for the 77 million Americans with debts in collection, including struggling families, elders, servicemembers and veterans.

Debt collection is a multibillion dollar industry that consistently generates the most consumer complaints to the Consumer Financial Protection Bureau (CFPB). Servicemembers and veterans are especially impacted by abusive debt collection activities, which were the subject of 42 percent of all complaints to the CFPB from military consumers. Why would Congress want to limit consumer protections against an industry that is clearly among the most abusive of consumers?

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Yet reducing consumer protections is exactly what the Practice of Law Technical Clarification Act, sponsored by Rep. Vicente Gonzalez (D-Texas) and Rep. Alexander Mooney (R-W.Va.), aims to do. The bill would exempt attorneys and “law firms” engaged in litigation activity from the federal Fair Debt Collection Practices Act (FDCPA).  Consumers would lose their FDCPA protections against abusive litigation-related conduct by debt collection attorneys and law firms, and the CFPB would not be able to pursue illegal, harassing, and abusive litigation-related debt collection conduct.

If Congress passes this bill, attorneys and law firms engaged in debt collection around the country would no longer be in violation of the FDCPA even if they file lawsuits in courts hundreds of miles away from where members of the armed services are stationed or other the consumers live, making it nearly impossible for most consumers to appear in court to defend themselves against the collection lawsuit, and file lawsuits on old debts long after the legal time limit to sue has expired, pursuing zombie debt so old that people no longer have records to show they already paid.

They would no longer be in violation if they pressure the elderly into signing over protected Social Security income to pay off default judgments, proceeding to trial without any witnesses or admissible evidence, relying on court rules to award them judgment if the consumer does not appear or asking the court to continue or dismiss the case if the consumer does appear, or run collection mills that generate tens of thousands of robo-signed legal complaints weekly with as little as 30 seconds of attorney review.

Law-abiding collection lawyers are put at a disadvantage competing against disreputable attorneys who engage in abusive practices such as the ones described here. Congress should not facilitate a race to the bottom among collection attorneys by removing FDCPA remedies for these and other abusive litigation practices.

Under current law, servicemembers, veterans, seniors and other consumers can use the FDCPA to obtain relief from the attorneys whose litigation practices violate the law. But if this bill passes, this relief will not be available throughout the nation. There are private remedies available in some state laws, but the coverage is uneven. The CFPB would also be barred from addressing abusive litigation-related and post-judgment debt collection practices by attorneys and law firms.

Proponents of the Practice of Law Technical Clarification Act argue that court rules and state bar associations will adequately protect consumers. But to date, neither the courts nor bar associations have been effective in policing litigation abuses by collection attorneys. There is no reason to believe that these agencies will suddenly step up now if FDCPA sanctions against collection attorneys for litigation abuses are eliminated. Moreover, only the FDCPA provides a means for consumers to obtain redress after they have been harmed by the actions of debt collection attorneys.

Does this Congress really want to remove penalties for lawyers who knowingly bring claims with no evidence, often against the wrong person or for the wrong amount? Who needs to be protected? Bad acting lawyers or our veterans and other consumers? Dozens of advocacy groups representing consumers across America oppose this bill. We hope Congress recognizes this bill for what it is — legislation that removes an important consumer protection tool from the hands of servicemembers, working families and elders — and vote against it.

Bart Stichman is an attorney and executive director of the National Veterans Legal Services ProgramMargot Saunders is senior counsel with the National Consumer Law Center.