DC Protects Consumers Against Unfair Debt Collection Practices Amendment Act of 2021 | Troutman pepper

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On March 15, the DC Council of the District of Columbia Committee of the Whole met in a full hearing, in part to hear amendments introduced to B24-0357 by the board member and the president Phil Mendelson (D).

B24-0357 is the Consumer Protection from Unfair Debt Collection Practices Act of 2021, and was raised by Mendelson in July 2021 as a trio of statutes to address debt collection in the district during the pandemic with urgency B24-0347 and temporary B24-0348. All three assign debt collection to DC; legislation like this is often presented as a series of emergency, temporary and permanent bills. B24-0357 is the permanent version of consumer protection legislation.

At the hearing (video here), President Mendelson gave a brief overview of B24-0357 and then presented amendments to the bill. The amendments add significant challenges to debt collectors seeking to communicate with consumers or pursue legal remedies in the district.

  • Revise the law so that it applies to all consumer debt except a loan directly secured on real estate or a direct installment loan on a motor vehicle.
  • Adds new definitions for “consumer” and “original creditor” to clarify the law.
  • Protects consumers, in addition to current law, by prohibiting more and specific types of harassment against consumers, such as:
    • Disclosure of Debt Information in Consumer Disputes;
    • Disclose citizenship status; and
    • Visiting or threatening to visit a consumer’s home or workplace (except to serve a lawsuit).
  • Limit calls to four per account per week, with limited exceptions. “It’s stronger than federal law,” Mendelson explained. “If the consumer has two accounts in collection, the consumer could receive eight calls in a week under our print committee cap; under federal law, it’s fourteen years. So you can see that it protects consumers more.
  • Requires debt collectors to receive consumer consent to communicate via email, text, and private message, and limits the number of electronic communications to five per week per account.
  • Includes more stringent posting and notice requirements than the Board adopted in B24-0348, including a provision that notices must be in English and Spanish, unless a language other than Spanish has been used in the contract; in which case, the notice must be sent in English and in the language used in the contract.
  • Requires the plaintiff in a debt collection case to submit proof of address verification and include a photograph with contact information and time stamp on the photo.

After presenting these amendments in committee, Mendelson answered questions from other board members. These responses provide additional insight into the DC City Council’s thinking on debt collector regulation and consumer protection.

Council Member Allen asked how appeal caps would be applied. Mendelson explained that they would be applied “in a reactive sense”; that is, dealt with after the fact, probably under a private right of action or enforcement. Councilmember Bonds reminded the committee that DC has the second highest number of debt collection complaints per capita, then asked, “Why [is] the district… tormented so generously. Mendelson referred the board member to the Racial Equity Impact Assessment for B24-0357, which discusses the specific socio-economic idiosyncrasies of DC Bonds closed her comments by noting that she felt four contacts per account per week was “still too many.”

These changes were unanimously approved by the council (with white and gray council members absent).

The bill now returns to staff to make technical and conforming changes, after which the bill will be reconsidered and likely approved by council. If passed by the council, the new legislation will go into effect, after approval by the mayor (or in case of the mayor’s veto, council action to override the veto), a 30-day period of consideration by Congress and publication in the District of Columbia Registry.

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