Home Banking House bill aims to protect consumers from debt collector harassment

House bill aims to protect consumers from debt collector harassment

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WASHINGTON — The House was poised to pass a bill Thursday to ease the economic consequences for service members, medical patients and others from rising consumer debts.

The Comprehensive Debt Collection Improvement Act would place new restrictions on debt collectors and credit bureaus. The legislation has been championed by consumer advocates and congressional Democrats but sharply criticized by Republicans and the banking industry.

The bill, which has been endorsed by the Biden administration, would require debt collectors to seek consent from consumers before sending them electronic communications. It would also prohibit debt collectors from representing to service members that failure to cooperate with debt collection could jeopardize their military rank or status.

The bill would also prohibit credit reporting agencies from including debt arising from medically necessary procedures on consumers’ credit reports. And it would require the discharge of a consumer’s private student loan in the event of death or total and permanent disability.

“Many debt collectors harass consumers with frequent phone calls, make threats and provide misleading information to consumers,” said House Financial Services Committee Chairwoman Maxine Waters, D-Calif.

“Many debt collectors harass consumers with frequent phone calls, make threats and provide misleading information to consumers,” said House Financial Services Committee Chairwoman Maxine Waters, D-Calif.

Bloomberg News

“Many debt collectors harass consumers with frequent phone calls, make threats and provide misleading information to consumers,” said House Financial Services Committee Chairwoman Maxine Waters, D-Calif. “This bill … brings new accountability to the debt collection industry and stronger protection for consumers from harassment and abuse.”

But Rep. Patrick McHenry, R-N.C., said on the House floor that the legislation would hurt small businesses who are owed money.

“The fact is, limiting the ability of businesses and individuals to be repaid for these services already provided will not benefit anyone,” McHenry said. “This is especially true for small businesses who have been hit hardest by pandemic shutdowns.”

A coalition of consumer advocacy groups, including the National Consumer Law Center, Americans for Financial Reform, and the Center for Responsible Lending, urged House lawmakers to pass the legislation in a letter Thursday.

“Debt in collection can wreak havoc on consumers, subjecting them to harassing debt collection calls and potential lawsuits,” the coalition wrote. “Enactment … will protect vulnerable consumers from abusive debt collection practices.”

But the Consumer Bankers Association in a letter Wednesday warned that the bill would have “unintended or negative impacts on individuals and the banking services they pursue.”