[House Report 117-23]
[From the U.S. Government Publishing Office]
117th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 117-23
======================================================================
COMPREHENSIVE DEBT COLLECTION IMPROVEMENT ACT
_______
April 30, 2021.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Ms. Waters, from the Committee on Financial Services, submitted the
following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 2547]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 2547) to expand and enhance consumer, student,
servicemember, and small business protections with respect to
debt collection practices, and for other purposes, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 10
Background and Need for Legislation.............................. 10
Section-by-Section Analysis...................................... 19
Hearings......................................................... 24
Committee Consideration.......................................... 26
Committee Votes.................................................. 26
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 29
Statement of Performance Goals and Objectives.................... 29
New Budget Authority and CBO Cost Estimate....................... 29
Committee Cost Estimate.......................................... 29
Unfunded Mandate Statement....................................... 29
Advisory Committee............................................... 29
Application of Law to the Legislative Branch..................... 30
Earmark Statement................................................ 30
Duplication of Federal Programs.................................. 30
Changes to Existing Law.......................................... 30
Minority Views................................................... 86
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Comprehensive Debt
Collection Improvement Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--SMALL BUSINESS LENDING FAIRNESS ACT
Sec. 101. Short title.
Sec. 102. Obligor transactions.
Sec. 103. Enforcement of security interests.
TITLE II --FAIR DEBT COLLECTION PRACTICES FOR SERVICEMEMBERS ACT
Sec. 201. Short title.
Sec. 202. Enhanced protection against debt collector harassment of
servicemembers.
Sec. 203. GAO study and report.
TITLE III--PRIVATE LOAN DISABILITY DISCHARGE ACT
Sec. 301. Short title.
Sec. 302. Protections for obligors and cosigners in case of death or
total and permanent disability.
TITLE IV--CONSUMER PROTECTION FOR MEDICAL DEBT COLLECTIONS ACT
Sec. 401. Short title.
Sec. 402. Amendments to the Fair Debt Collection Practices Act.
Sec. 403. Prohibition on consumer reporting agencies reporting certain
medical debt.
Sec. 404. Requirements for furnishers of medical debt information.
TITLE V--ENDING DEBT COLLECTION HARASSMENT ACT
Sec. 501. Short title.
Sec. 502. Consumer protections relating to debt collection practices.
TITLE VI--STOP DEBT COLLECTION ABUSE ACT
Sec. 601. Short title.
Sec. 602. Definitions.
Sec. 603. Debt collection practices for debt collectors hired by
Federal agencies.
Sec. 604. Unfair practices.
Sec. 605. GAO study and report.
TITLE VII--DEBT COLLECTION PRACTICES HARMONIZATION ACT
Sec. 701. Short title.
Sec. 702. Award of damages.
Sec. 703. Prohibition on the referral of emergency individual
assistance debt.
TITLE VIII--NON-JUDICIAL FORECLOSURE DEBT COLLECTION CLARIFICATION ACT
Sec. 801. Short title.
Sec. 802. Enforcement of security interests.
TITLE IX--EFFECTIVE DATE
Sec. 901. Effective date.
TITLE I--SMALL BUSINESS LENDING FAIRNESS ACT
SEC. 101. SHORT TITLE.
This title may be cited as the ``Small Business Lending Fairness
Act''.
SEC. 102. OBLIGOR TRANSACTIONS.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by adding at the end the following:
``Sec. 140B. Unfair credit practices
``(a) In General.--In connection with the extension of credit or
creation of debt in or affecting commerce, as defined in section 4 of
the Federal Trade Commission Act (15 U.S.C. 44), including any advance
of funds or sale or assignment of future income or receivables that may
or may not be credit, no person may directly or indirectly take or
receive from another person or seek to enforce an obligation that
constitutes or contains a cognovit or confession of judgment (for
purposes other than executory process in the State of Louisiana),
warrant of attorney, or other waiver of the right to notice and the
opportunity to be heard in the event of suit or process thereon.
``(b) Exemption.--The exemptions described in section 104 shall not
apply to this section.''.
(b) Technical and Conforming Amendments.--
(1) Section 130 of the Truth in Lending Act (15 U.S.C. 1640)
is amended by adding at the end the following:
``(m) Creditor.--In this section, the term `creditor' refers to any
person charged with compliance that is not the obligor.''.
(2) The table of sections in chapter 2 of the Truth in
Lending Act (15 U.S.C. 1631 et seq.) is amended by adding at
the end the following:
``140B. Unfair credit practices.''.
SEC. 103. ENFORCEMENT OF SECURITY INTERESTS.
Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended
by adding at the end the following:
``(ff) The term `debt' means any obligation of a person to pay to
another person money--
``(1) regardless of whether such obligation is absolute or
contingent;
``(2) that includes the right of the person providing the
money to an equitable remedy for breach of performance if the
breach gives rise to a right to payment; and
``(3) regardless of whether the obligation or right to an
equitable remedy described in paragraph (2) has been reduced to
judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, recourse, nonrecourse, secured, or unsecured.''.
TITLE II --FAIR DEBT COLLECTION PRACTICES FOR SERVICEMEMBERS ACT
SEC. 201. SHORT TITLE.
This title may be cited as the ``Fair Debt Collection Practices for
Servicemembers Act''.
SEC. 202. ENHANCED PROTECTION AGAINST DEBT COLLECTOR HARASSMENT OF
SERVICEMEMBERS.
(a) Communication in Connection With Debt Collection.--Section 805 of
the Fair Debt Collection Practices Act (15 U.S.C. 1692c) is amended by
adding at the end the following:
``(e) Communications Concerning Servicemember Debts.--
``(1) Definition.--In this subsection, the term `covered
member' means--
``(A) a covered member or a dependent as defined in
section 987(i) of title 10, United States Code; and
``(B)(i) an individual who was separated, discharged,
or released from duty described in such section
987(i)(1), but only during the 365-day period beginning
on the date of separation, discharge, or release; or
``(ii) a person, with respect to an individual
described in clause (i), described in subparagraph (A),
(D), (E), or (I) of section 1072(2) of title 10, United
States Code.
``(2) Prohibitions.--A debt collector may not, in connection
with the collection of any debt of a covered member--
``(A) threaten to have the covered member reduced in
rank;
``(B) threaten to have the covered member's security
clearance revoked; or
``(C) threaten to have the covered member prosecuted
under chapter 47 of title 10, United States Code (the
Uniform Code of Military Justice).''.
(b) Unfair Practices.--Section 808 of the Fair Debt Collection
Practices Act (15 U.S.C. 1692f) is amended by adding at the end the
following:
``(9) The representation to any covered member (as defined
under section 805(e)(1)) that failure to cooperate with a debt
collector will result in--
``(A) a reduction in rank of the covered member;
``(B) a revocation of the covered member's security
clearance; or
``(C) prosecution under chapter 47 of title 10,
United States Code (the Uniform Code of Military
Justice).''.
SEC. 203. GAO STUDY AND REPORT.
(a) Study.--The Comptroller General of the United States shall
conduct a study on the impact of debt collection on covered members (as
defined under section 805(e)(1) of the Fair Debt Collection Practices
Act, as added by section 202), which shall--
(1) identify types of false, deceptive, misleading, unfair,
abusive, and harassing debt collection practices experienced by
covered members and make recommendations to eliminate these
practices;
(2) identify collection practices of creditors and debt
collectors experienced by covered members;
(3) discuss the effect of these practices on military
readiness; and
(4) discuss any national security implications, including the
extent to which covered members with security clearances would
be impacted by uncollected debt.
(b) Report.--Not later than one year after the date of enactment of
this Act, the Comptroller General of the United States shall submit to
Congress a report on the completed study required under subsection (a).
TITLE III--PRIVATE LOAN DISABILITY DISCHARGE ACT
SEC. 301. SHORT TITLE.
This title may be cited as the ``Private Loan Disability Discharge
Act of 2021''.
SEC. 302. PROTECTIONS FOR OBLIGORS AND COSIGNERS IN CASE OF DEATH OR
TOTAL AND PERMANENT DISABILITY.
(a) In General.--Section 140(g) of the Truth in Lending Act (15
U.S.C. 1650(g)) is amended--
(1) in paragraph (2)--
(A) in the heading, by striking ``in case of death of
borrower'';
(B) in subparagraph (A), by inserting after ``of the
death'', the following: ``or total and permanent
disability''; and
(C) in subparagraph (C), by inserting after ``of the
death'', the following: ``or total and permanent
disability''; and
(2) by adding at the end the following:
``(3) Discharge in case of death or total and permanent
disability of borrower.--The holder of a private education loan
shall, when notified of the death or total and permanent
disability of a student obligor, discharge the liability of the
student obligor on the loan and may not, after such
notification--
``(A) attempt to collect on the outstanding liability
of the student obligor; and
``(B) in the case of total and permanent disability,
monitor the disability status of the student obligor at
any point after the date of discharge.
``(4) Private discharge in cases of certain discharge for
death or disability.--The holder of a private education loan
shall, when notified of the discharge of liability of a student
obligor on a loan described under section 108(f)(5)(A) of the
Internal Revenue Code of 1986, discharge any liability of the
student obligor (and any cosigner) on any private education
loan which the private education loan holder holds and may not,
after such notification--
``(A) attempt to collect on the outstanding liability
of the student obligor; and
``(B) in the case of total and permanent disability,
monitor the disability status of the student obligor at
any point after the date of discharge.
``(5) Total and permanent disability defined.--For the
purposes of this subsection and with respect to an individual,
the term `total and permanent disability' means the individual
is totally and permanently disabled, as such term is defined in
section 685.102(b) of title 34, Code of Federal Regulations.''.
(b) Rulemaking.--The Director of the Bureau of Consumer Financial
Protection may issue rules to implement the amendments made by
subsection (a) as the Director determines appropriate.
TITLE IV--CONSUMER PROTECTION FOR MEDICAL DEBT COLLECTIONS ACT
SEC. 401. SHORT TITLE.
This title may be cited as the ``Consumer Protection for Medical Debt
Collections Act''.
SEC. 402. AMENDMENTS TO THE FAIR DEBT COLLECTION PRACTICES ACT.
(a) Definition.--Section 803 of the Fair Debt Collection Practices
Act (15 U.S.C. 1692a) is amended by adding at the end the following:
``(9) The term `medical debt' means a debt arising from the
receipt of medical services, products, or devices.''.
(b) Unfair Practices.--Section 808 of the Fair Debt Collection
Practices Act (15 U.S.C. 1692f), as amended by section 202(b), is
amended by adding at the end the following:
``(10) Engaging in activities to collect or attempting to
collect a medical debt owed or due or asserted to be owed or
due by a consumer, before the end of the 2-year period
beginning on the date that the first payment with respect to
such medical debt is due.''.
SEC. 403. PROHIBITION ON CONSUMER REPORTING AGENCIES REPORTING CERTAIN
MEDICAL DEBT.
(a) Definition.--Section 603 of the Fair Credit Reporting Act (15
U.S.C. 1681a) is amended by adding at the end the following:
``(bb) Medical Debt.--The term `medical debt' means a debt arising
from the receipt of medical services, products, or devices.
``(cc) Medically Necessary Procedure.--The term `medically necessary
procedure' means--
``(1) health care services or supplies needed to diagnose or
treat an illness, injury, condition, disease, or its symptoms
and that meet accepted standards of medicine; and
``(2) health care to prevent illness or detect illness at an
early stage, when treatment is likely to work best (including
preventive services such as pap tests, flu shots, and screening
mammograms).''.
(b) In General.--Section 605(a) of the Fair Credit Reporting Act (15
U.S.C. 1681c(a)) is amended by adding at the end the following new
paragraphs:
``(9) Any information related to a debt arising from a
medically necessary procedure.
``(10) Any information related to a medical debt, if the date
on which such debt was placed for collection, charged to profit
or loss, or subjected to any similar action antedates the
report by less than 365 calendar days.''.
SEC. 404. REQUIREMENTS FOR FURNISHERS OF MEDICAL DEBT INFORMATION.
(a) Additional Notice Requirements for Medical Debt.--Section 623 of
the Fair Credit Reporting Act (15 U.S.C. 1681s-2) is amended by adding
at the end the following:
``(f) Additional Notice Requirements for Medical Debt.--Before
furnishing information regarding a medical debt of a consumer to a
consumer reporting agency, the person furnishing the information shall
send a statement to the consumer that includes the following:
``(1) A notification that the medical debt--
``(A) may not be included on a consumer report made
by a consumer reporting agency until the later of the
date that is 365 days after--
``(i) the date on which the person sends the
statement;
``(ii) with respect to the medical debt of a
borrower demonstrating hardship, a date
determined by the Director of the Bureau; or
``(iii) the date described under section
605(a)(10); and
``(B) may not ever be included on a consumer report
made by a consumer reporting agency, if the medical
debt arises from a medically necessary procedure.
``(2) A notification that, if the debt is settled or paid by
the consumer or an insurance company before the end of the
period described under paragraph (1)(A), the debt may not be
reported to a consumer reporting agency.
``(3) A notification that the consumer may--
``(A) communicate with an insurance company to
determine coverage for the debt; or
``(B) apply for financial assistance.''.
(b) Furnishing of Medical Debt Information.--Section 623 of the Fair
Credit Reporting Act (15 U.S.C. 1681s-2), as amended by subsection (a),
is further amended by adding at the end the following:
``(g) Furnishing of Medical Debt Information.--
``(1) Prohibition on reporting debt related to medically
necessary procedures.--No person shall furnish any information
to a consumer reporting agency regarding a debt arising from a
medically necessary procedure.
``(2) Treatment of other medical debt information.--With
respect to a medical debt not described under paragraph (1), no
person shall furnish any information to a consumer reporting
agency regarding such debt before the end of the 365-day period
beginning on the later of--
``(A) the date on which the person sends the
statement described under subsection (f) to the
consumer;
``(B) with respect to the medical debt of a borrower
demonstrating hardship, a date determined by the
Director of the Bureau; or
``(C) the date described in section 605(a)(10).
``(3) Treatment of settled or paid medical debt.--With
respect to a medical debt not described under paragraph (1), no
person shall furnish any information to a consumer reporting
agency regarding such debt if the debt is settled or paid by
the consumer or an insurance company before the end of the 365-
day period described under paragraph (2).
``(4) Borrower demonstrating hardship defined.--In this
subsection, and with respect to a medical debt, the term
`borrower demonstrating hardship' means a borrower or a class
of borrowers who, as determined by the Director of the Bureau,
is facing or has experienced extenuating life circumstances or
events that result in severe financial or personal barriers
such that the borrower or class of borrowers does not have the
capacity to repay the medical debt.''.
TITLE V--ENDING DEBT COLLECTION HARASSMENT ACT
SEC. 501. SHORT TITLE.
This title may be cited as the ``Ending Debt Collection Harassment
Act of 2021''.
SEC. 502. CONSUMER PROTECTIONS RELATING TO DEBT COLLECTION PRACTICES.
(a) Reports on Debt Collection Complaints and Enforcement Actions.--
(1) Semi-annual report.--Section 1016(c) of the Consumer
Financial Protection Act of 2010 (12 U.S.C. 5496(c)) is
amended--
(A) in paragraph (8), by striking ``and'' at the end;
(B) in paragraph (9), by striking the period at the
end and inserting a semicolon; and
(C) by adding at the end the following:
``(10) an analysis of the consumer complaints received by the
Bureau with respect to debt collection, including a State-by-
State breakdown of such complaints; and
``(11) a list of enforcement actions taken against debt
collectors during the preceding year.''.
(2) Annual report.--Section 815(a) of the Fair Debt
Collection Practices Act (15 U.S.C. 1692m(a)) is amended by
adding at the end the following new sentence: ``Each such
report shall also include an analysis of the impact of
electronic communications by debt collectors on consumer
experiences with debt collection, including a consideration of
consumer complaints about the use of electronic communications
in debt collection.''.
(b) Limitation on Debt Collection Rules.--Section 1022 of the
Consumer Financial Protection Act of 2010 (12 U.S.C. 5512) is amended
by adding at the end the following:
``(e) Limitation on Debt Collection Rules.--The Director may not
issue any rule with respect to debt collection that allows a debt
collector to send unlimited email and text messages to a consumer.''.
(c) Protection of Consumers From Unlimited Texts and Emails Used in
Debt Collection.--Section 806 of the Fair Debt Collection Practices Act
(15 U.S.C. 1692d) is amended by adding at the end the following new
paragraph:
``(7) Contacting the consumer electronically (including by
email or text message) without consent of the consumer to
communicate via that method, after such consent has been
withdrawn, or more frequently than the consumer consents to be
contacted.''.
(d) Ensuring Consumers Receive Notice of Debt Collection
Protections.--Section 809(a) of the Fair Debt Collection Practices Act
(15 U.S.C. 1692g(a)) is amended in the matter preceding paragraph (1)--
(1) by striking ``Within five days'' and all that follows
through ``any debt,'' and inserting the following: ``Notice of
Debt; Contents.--Within five days after the initial
communication with a consumer in connection with the collection
of any debt,''; and
(2) by striking ``, unless the following information is
contained in the initial communication or the consumer has paid
the debt,''.
(e) Improved Limitations on Debt Collection Rules.--Section 814(d) of
the Fair Debt Collection Practices Act (15 U.S.C. 1692l(d)) is amended
by adding at the end the following: ``Such rules--
``(1) may not allow a debt collector to send unlimited
electronic communications to a consumer;
``(2) shall require debt collectors to obtain consent
directly from consumers before contacting them using a method
other than by postal mail or by phone;
``(3) may not waive the requirements of the Electronic
Signatures in Global and National Commerce Act (15 U.S.C. 7001
et seq.); and
``(4) shall allow consumers to opt out of any method of
communication that the debt collector uses to communicate with
consumers, including a method for which such consumer had given
prior consent.''.
TITLE VI--STOP DEBT COLLECTION ABUSE ACT
SEC. 601. SHORT TITLE.
This title may be cited as the ``Stop Debt Collection Abuse Act of
2021''.
SEC. 602. DEFINITIONS.
Section 803 of the Fair Debt Collection Practices Act (15 U.S.C.
1692a) is amended--
(1) in paragraph (4), by striking ``facilitating collection
of such debt for another'' and inserting ``collection of such
debt'';
(2) by amending paragraph (5) to read as follows:
``(5) The term `debt' means any obligation or alleged
obligation of a consumer--
``(A) to pay money arising out of a transaction in
which the money, property, insurance or services which
are the subject of the transaction are primarily for
personal, family, or household purposes, whether or not
such obligation has been reduced to judgment;
``(B) to pay a loan, overpayment, fine, penalty,
restitution, fee, or other money currently or
originally owed to or guaranteed by a Federal or State
government, including any courts or agencies; or
``(C) which is secured by real or personal property
that is used or was obtained primarily for personal,
family, or household purposes, where such property is
subject to forfeiture or repossession upon nonpayment
of the obligation or alleged obligation.''; and
(3) in paragraph (6)--
(A) by redesignating subparagraphs (A) through (F) as
clauses (i) through (vi), respectively;
(B) in clause (iii), as so redesignated, by inserting
``(not including an independent contractor)'' after
``any State'';
(C) by amending clause (vi), as so redesignated, to
read as follows:
``(vi) any person collecting or attempting to collect
any debt owed or due or asserted to be owed or due
another to the extent such activity--
``(I) is incidental to a bona fide fiduciary
obligation or a bona fide escrow arrangement;
``(II) concerns a debt which was originated
by such person;
``(III) concerns a debt which was not in
default at the time it was obtained by such
person; or
``(IV) concerns a debt obtained by such
person as a secured party in a commercial
credit transaction involving the creditor.'';
(D) by striking the paragraph designation and the
first and second sentences and inserting the following:
``(6)(A) The term `debt collector' means--
``(i) any person who uses any instrumentality of
interstate commerce or the mails in any business the
principal purpose of which is the collection of any
debts;
``(ii) any person who regularly collects or attempts
to collect, directly or indirectly, by the person's own
means or by hiring another debt collector, debts owed
or due or asserted to be owed or due another or that
have been obtained by assignment or transfer from
another;
``(iii) any person who regularly collects debts
currently or originally owed or allegedly owed to a
Federal or State agency or court; or
``(iv) notwithstanding subparagraph (B)(vi), any
creditor who in the process of collecting debts of such
creditor, uses another name that would indicate that a
third person is collecting or attempting to collect
such debts.''; and
(E) in the fourth sentence, by striking ``The term
does not include'' and inserting the following:
``(B) The term does not include''.
SEC. 603. DEBT COLLECTION PRACTICES FOR DEBT COLLECTORS HIRED BY
FEDERAL AGENCIES.
(a) In General.--The Fair Debt Collection Practices Act (15 U.S.C.
1692 et seq.) is amended by inserting after section 812 (15 U.S.C.
1692j) the following:
``Sec. 812A. Debt collection practices for debt collectors hired by
Federal agencies
``(a) Limitation on Time To Turn Debt Over to Debt Collector.--A
Federal agency that is a creditor may sell or transfer a debt described
in section 803(5)(B) to a debt collector not earlier than 90 days after
the date on which the obligation or alleged obligation becomes
delinquent or defaults.
``(b) Required Notice.--
``(1) In general.--Before transferring or selling a debt
described in section 803(5)(B) to a debt collector or
contracting with a debt collector to collect such a debt, a
Federal agency shall notify the consumer not fewer than 3 times
that the Federal agency will take such action.
``(2) Frequency of notifications.--The second and third
notifications described in paragraph (1) shall be made not less
than 30 days after the date on which the previous notification
is made.''.
(b) Clerical Amendment.--The table of contents for the Fair Debt
Collection Practices Act is amended by inserting after the item
relating to section 812 the following:
``812A. Debt collection practices for debt collectors hired by Federal
agencies.''.
SEC. 604. UNFAIR PRACTICES.
Section 808 of the Fair Debt Collection Practices Act (15 U.S.C.
1692f) is amended by striking paragraph (1) and inserting the
following:
``(1) The collection of any amount (including any interest,
fee, charge, or expense incidental to the principal obligation)
unless--
``(A) such amount is expressly authorized by the
agreement creating the debt or permitted by law; and
``(B) in the case of any amount charged by a debt
collector collecting a debt described in section
803(5)(B), such amount is--
``(i) reasonable in relation to the actual
costs of the collection;
``(ii) authorized by a contract between the
debt collector and the Federal or State
government; and
``(iii) not greater than 10 percent of the
amount collected by the debt collector.''.
SEC. 605. GAO STUDY AND REPORT.
(a) Study.--The Comptroller General of the United States shall
commence a study on the use of debt collectors by Federal, State, and
local government agencies, including--
(1) the powers given to the debt collectors by Federal,
State, and local government agencies;
(2) the contracting process that allows a Federal, State, or
local government agency to award debt collection to a certain
company, including the selection process;
(3) any fees charged to debtors in addition to principal and
interest on the outstanding debt;
(4) how the fees described in paragraph (3) vary from State
to State;
(5) consumer protection at the State level that offer
recourse to those whom debts have been wrongfully attributed;
(6) the revenues received by debt collectors from Federal,
State, and local government agencies;
(7) the amount of any revenue sharing agreements between debt
collectors and Federal, State, and local government agencies;
(8) the difference in debt collection procedures across
geographic regions, including the extent to which debt
collectors pursue court judgments to collect debts;
(9) information regarding the amount collected by Federal,
State, and local government agencies through debt collectors,
including the total amount and the percentage of the amount
referred to the debt collectors;
(10) the full cost of outsourcing collection to debt
collectors;
(11) government agency oversight of debt collectors to ensure
that the rights of a consumer (as defined in section 803(3) of
the Fair Debt Collection Practices Act (15 U.S.C. 1692a(3)))
are protected and that any debt relief and payment options
legally available to consumers is effectively communicated and
made available;
(12) the extent to which Federal, State, and local contracts
with debt collectors reflect or omit effective measures to
encourage debt collectors to align their practices with public
policy concerns (including relief for consumers experiencing
financial hardship) beyond maximizing debt collection;
(13) the extent to which debt collectors induce payment
through use or threat of adverse government actions, such as
arrest warrants or suspension of licenses or vehicle
registration; and
(14) demographic data, including race and income information,
regarding the individuals subject to private collection of
debts owed to government entities.
(b) Report.--Not later than one year after the date of enactment of
this Act, the Comptroller General of the United States shall submit to
Congress a report on the completed study required under subsection (a).
TITLE VII--DEBT COLLECTION PRACTICES HARMONIZATION ACT
SEC. 701. SHORT TITLE.
This title may be cited as the ``Debt Collection Practices
Harmonization Act''.
SEC. 702. AWARD OF DAMAGES.
(a) Additional Damages Indexed for Inflation.--
(1) In general.--Section 813 of the Fair Debt Collection
Practices Act (15 U.S.C. 1692k) is amended--
(A) in subsection (a)(2)--
(i) in subparagraph (A), by striking ``; or''
and inserting the following: ``with respect to
any one action taken by a debt collector in
violation of this subchapter; or'';
(ii) in subparagraph (B)(ii), by striking
``or 1 per centum of the net worth of the debt
collector; and'' and inserting the following:
``or 5 percent of the gross annual revenue of
the debt collector; and'';
(B) in subsection (b), by inserting ``the maximum
amount of statutory damages at the time of
noncompliance,'' before ``the frequency'' each place it
appears; and
(C) by adding at the end the following:
``(f) Adjustment for Inflation.--
``(1) Initial adjustment.--Not later than 90 days after the
date of the enactment of this subsection, the Bureau shall
provide a percentage increase (rounded to the nearest multiple
of $100 or $1,000, as applicable) in the amounts set forth in
this section equal to the percentage by which--
``(A) the Consumer Price Index for All Urban
Consumers (all items, United States city average) for
the 12-month period ending on the June 30 preceding the
date on which the percentage increase is provided,
exceeds
``(B) the Consumer Price Index for the 12-month
period preceding January 1, 1978.
``(2) Annual adjustments.--With respect to any fiscal year
beginning after the date of the increase provided under
paragraph (1), the Bureau shall provide a percentage increase
(rounded to the nearest multiple of $100 or $1,000, as
applicable) in the amounts set forth in this section equal to
the percentage by which--
``(A) the Consumer Price Index for All Urban
Consumers (all items, United States city average) for
the 12-month period ending on the June 30 preceding the
beginning of the fiscal year for which the increase is
made, exceeds
``(B) the Consumer Price Index for the 12-month
period preceding the 12-month period described in
subparagraph (A).''.
(2) Applicability.--The increases made under section 813(f)
of the Fair Debt Collection Practices Act, as added by
paragraph (1)(C) of this subsection, shall apply with respect
to failures to comply with a provision of such Act (15 U.S.C.
1601 et seq.) occurring on or after the date of enactment of
this section.
(b) Injunctive Relief.--Section 813(d) of the Fair Debt Collection
Practices Act (15 U.S.C. 1692k(d)) is amended by adding at the end the
following: ``In a civil action alleging a violation of this title, the
court may award appropriate relief, including injunctive relief.''.
SEC. 703. PROHIBITION ON THE REFERRAL OF EMERGENCY INDIVIDUAL
ASSISTANCE DEBT.
Chapter 3 of title 31, United States Code, is amended--
(1) in subchapter II, by adding at the end the following:
``Sec. 334. Prohibition on the referral of emergency individual
assistance debt
``With respect to any assistance provided by the Federal Emergency
Management Agency to an individual or household pursuant to the Robert
T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5122 et seq.), if the Secretary of the Treasury seeks to recoup any
amount of such assistance because of an overpayment, the Secretary may
not contract with any debt collector as defined in section 803(6) of
the Fair Debt Collection Practices Act (15 U.S.C. 1692a(6)) or other
private party to collect such amounts, unless the overpayment occurred
because of fraud or deceit and the recipient of such assistance knew or
should have known about such fraud or deceit.''; and
(2) in the table of contents for such chapter, by inserting
after the item relating to section 333 the following:
``334. Prohibition on the referral of emergency individual assistance
debt.''.
TITLE VIII--NON-JUDICIAL FORECLOSURE DEBT COLLECTION CLARIFICATION ACT
SEC. 801. SHORT TITLE.
This title may be cited as the ``Non-Judicial Foreclosure Debt
Collection Clarification Act''.
SEC. 802. ENFORCEMENT OF SECURITY INTERESTS.
Section 803(6) of the Fair Debt Collection Practices Act (15 U.S.C.
1692a(6)) is amended by striking ``For the purpose of section 808(6),
such term also includes any person who uses any instrumentality of
interstate commerce or the mails in any business the principal purpose
of which is the enforcement of security interests.''.
TITLE IX--EFFECTIVE DATE
SEC. 901. EFFECTIVE DATE.
This Act and the amendments made by this Act shall take effect on the
date that is 180 days after the date of enactment of this Act.
Purpose and Summary
On April 15, 2021, Chairwoman Maxine Waters introduced H.R.
2547, the ``Comprehensive Debt Collection Improvement Act,''
which would amend the Fair Debt Collection Practices Act
(FDCPA), the Truth in Lending Act (TILA), the Fair Credit
Reporting Act (FCRA), and the Consumer Financial Protection
Act, as well as reverse the recent Supreme Court decision in
Obduskey v. McCarthy and Holthus LLP\1\ in order to provide
important protections for small businesses, servicemembers,
students, and other consumers against the mistreatment and
harassment by certain debt collectors. H.R. 2547 includes
measures originally sponsored by Representative Velazquez,
Representative Dean, Representative Tlaib, Representative
Pressley, Representative Cleaver, Representative Meeks, and
Representative Auchincloss.
---------------------------------------------------------------------------
\1\Obduskey v. McCarthy & Holthus LLP, 586 U.S.----, (2019).
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Background and Need for Legislation
In a recent Consumer Financial Protection Bureau (CFPB)
report on debt collection, the CFPB notes that almost 26
percent of Americans have an item in collections listed on
their credit reports.\2\ Additionally, as discussed at hearings
held in September 2019 and March 2021 by the House Committee on
Financial Services (the Committee) on debt collection, nearly
one in three Americans with a credit record indicated in a CFPB
survey that they had been contacted by at least one creditor or
collector trying to collect one or more debts.\3\ Many lenders
or institutions contract with third-party debt collectors, who
will work with, or pursue, consumers to settle the debt. The
third-party debt collectors either purchase the debt, or
contract with the lender to receive a portion of the paid debt.
When a consumer is not able to settle a debt, the owner of the
debt may seize collateral associated with the loan, such as a
home for mortgage defaults or a vehicle for auto-loan defaults.
For non-collateral loans, a debt owner may garnish a consumer's
wages via a court order. Testimony before the Committee has
shown that being subject to a variety of debt collection
practices and tactics can cause immense stress and uncertainty,
especially when a consumer is subject to abuse and harassment
through threats of a lawsuit or some other type of negative
action against the consumer.\4\
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\2\Consumer Financial Protection Bureau, Fair Debt Collection
Practices Act, CFPB Annual Report 2021 (Mar. 2021).
\3\See House Committee on Financial Services, Examining Legislation
to Protect Consumers and Small Business Owners from Abusive Debt
Collection Practices, 116th Cong. (Sept. 26, 2019); Subcommittee on
Consumer Protection and Financial Institutions, Slipping Through the
Cracks: Policy Options to Help America's Consumer During the Pandemic,
117th Cong. (Mar. 11, 2021); see also Consumer Financial Protection
Bureau, Consumer Experiences with Debt Collection, at 5 (Jan. 2017);
Hanna Hassani & Signe-Mary McKernan, 71 Million US adults have debt in
collections, Urban Institute (July 19, 2018).
\4\House Committee on Financial Services, Testimony of April
Kuehnhoff, Examining Legislation to Protect Consumers and Small
Business Owners from Abusive Debt Collection Practices, 116th Cong., at
38 (Sept. 26, 2019).
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During the coronavirus pandemic, many consumers and small
businesses have struggled to keep up with their bills, while
debt collectors have seen record profits.\5\ Amidst these
developments, recent CFPB reporting reveals that its consumer
complaint database received 82,700 consumer complaints
regarding debt collection issues in 2020, a 10 percent increase
from the previous year.\6\ These complaints frequently claim
that the company was attempting collection on debt that was not
even owed by the consumer.
---------------------------------------------------------------------------
\5\See, e.g., Paul Kiel & Jeff Ernsthausen, Debt Collectors Have
Made a Fortune This Year. Now They're Coming for More, ProPublica (Oct.
5, 2020).
\6\Consumer Financial Protection Bureau, Fair Debt Collection
Practices Act, CFPB Annual Report 2021 (Mar. 2021).
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Research has demonstrated that abusive debt collection
practices disproportionately harm communities of color and low-
income communities. For example, case studies from cities like
Chicago, Newark, and St. Louis, as well as states like Maryland
and New York, show debt collection lawsuits are concentrated in
majority-minority communities.\7\ Additionally, recent research
has shown that in debt collection litigation, almost all
defendants are unable to secure legal representation. This is a
significant problem, as research has also shown that when a
defendant was represented by an attorney, the case was always
dismissed--demonstrating how debt collectors regularly cannot
prove they own the debt they are collecting on.\8\ Moreover,
the CFPB found that in 2019 and 2020, they received more
complaints regarding debt collection practices from consumers
that reside in predominantly minority counties compared to
those that live in predominantly white, non-Hispanic
counties.\9\
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\7\See, e.g., Paul Kiel & Annie Waldman, The Color of Debt: How
Collection Suits Squeeze Black Neighborhoods, ProPublica (Oct. 8,
2020); Student Borrower Protection Center, The Long Legacy of Predatory
Private Student Loans (Jan. 2021); Student Borrower Protection Center,
Dubious Debts: Ending an era of illegal private student loan debt
collection practices (Mar. 2021).
\8\See, e.g., Center for Responsible Lending, Court System
Overload: The State of Debt Collection in California after the Fair
Debt Buyer Protection Act (Oct. 2020).
\9\See Consumer Financial Protection Bureau, Complaint Bulletin:
County-level demographic overview of consumer complaints (Apr. 2021).
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Protecting Small Businesses
Title I of H.R. 2547, which is designated as the Small
Business Lending Fairness Act, would amend the TILA to codify
protections that currently exist in consumer loans regarding a
prohibition of the use of confessions of judgment, and to
extend those protections to commercial loans to provide the
same protections for small business owners.
A ``confession of judgment'' is essentially an agreement by
which a borrower agrees to an eventual judgment of liability
against them, without normal due process protections such as
notice, a hearing, and judicial review. For instance, merchant
cash advance companies may require borrowers to sign a
confession of judgment as a condition of receiving the cash
advance. These cash advances can often cost the equivalent of
400 percent or more in annualized interest. Once a borrower
misses a payment or some other dispute arises between the
borrower and lender, the lender can then send the signed
confession of judgment to a county clerk, who enters judgment
against the borrower. The lender can then take the judgment to
the local marshal, who can demand the money allegedly owed to
the lender from the borrower's bank. The lender can then take
the money directly from the borrower's bank, with interest and
fees added. At this point, a borrower's account will usually be
frozen, in some cases despite a borrower's compliance with
daily debt payments.
Some states outlawed these instruments in the middle of the
20th century, and the Federal Trade Commission (FTC) banned
them for consumer loans in 1985 as part of a regulation known
as the ``Credit Practices Rule.'' Small business loan borrowers
do not enjoy the same protections individual consumers have at
the federal level. Some small business loan terms include a
confession of judgment, which can place additional burdens on
small businesses struggling under the COVID-19 pandemic. As a
result of these agreements, the debt holder may collect on such
a contract, plus damages, immediately after the borrower falls
behind in their payments. Confessions of judgment often force a
borrower to relinquish defenses that could be used in court,
allowing the debt holders to receive a court order to force the
financial institution of the debtor to withdraw funds, access
the debtor's wages, or seize goods or property, all without the
debtor's knowledge or consent. Moreover, some small businesses
have been harmed by confessions of judgement included in
merchant cash advances, which some courts have ruled are not
technically loans and thus not subject to state bans on the
practice.
The Committee received testimony from Bhairavi Desai,
Executive Director of the New York Taxi Workers Alliance, and
learned that in the experience of taxi drivers that received
medallion loans, ``Confessions of Judgment [were] used to
intimidate borrowers into making large sum payments toward
outstanding loan balances or rush into refinancing agreements
with interest, even interest-only provisions.''\10\
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\10\House Committee on Financial Services, Testimony of Bhairavi
Desai, Examining Legislation to Protect Consumers and Small Business
Owners from Abusive Debt Collection Practices, 116th Cong. (Sept. 26,
2019). Also see Brian Rosenthal, ```They Were Conned': How Reckless
Loans Devastated a Generation of Taxi Drivers,'' New York Times (May
19, 2019).
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To address these issues, Title I of this bill amends TILA
to codify FTC's prohibition on the use of confessions of
judgment for consumers and extends those protections to small
business borrowers, and applies the ban to merchant cash
advances.
This title is substantially similar to H.R. 2540, the Small
Business Fairness Lending Act, introduced by Rep. Nydia
Velazquez (D-NY), and S. 1119, introduced by Sens. Sherrod
Brown (D-OH) and Marco Rubio (R-FL). This title is also similar
to H.R. 3490 in the 116th Congress, sponsored by Rep. Velazquez
and passed out of Committee on November 13, 2019 by a recorded
vote of 31 yeas and 23 nays. Title I is supported by a range of
consumer, civil rights, and small business groups, including
Americans for Financial Reform, Center for Responsible Lending,
Consumer Action, Consumer Federation of America, Consumer
Reports, Empire Justice Center, Main Street Alliance, NAACP,
National Association for Latino Community Asset Builders,
National Association of Consumer Advocates, National Community
Reinvestment Coalition (NCRC), National Consumer Law Center (on
behalf of its low income clients), Opportunity Fund,
Responsible Business Lending Coalition, Small Business
Majority, and Woodstock Institute.
Protecting Servicemembers
Title II of H.R. 2547, which is designated as the Fair Debt
Collection Practices for Servicemembers Act, would amend the
FDCPA to prohibit debt collectors from threatening a
servicemember with reducing their rank, having their security
clearance revoked, or prosecuting them under the Uniform Code
of Military Justice.
Approximately two out of every five complaints filed by
servicemembers with the CFPB were about debt collection, and
servicemembers were more likely to complain about debt
collection than all consumers filing complaints at the
CFPB.\11\ Abusive collection tactics include threatening
punishment under the military's justice system, threatening
reductions in rank, and threatening revocation of a security
clearance.
---------------------------------------------------------------------------
\11\See, e.g., House Committee on Financial Services, Testimony of
April Kuehnhoff, Examining Legislation to Protect Consumers and Small
Business Owners from Abusive Debt Collection Practices, 116th Cong.
(Sept. 26, 2019).
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To address these issues, this title enhances FDCPA to
prohibit debt collectors from threatening servicemembers about
their outstanding debts, among other things. The title would
cover active duty servicemembers, as well as servicemembers
recently separated or discharged in the previous year. The
title would also require a Government Accountability Office
(GAO) study on the impact of debt collection on servicemembers.
This title is substantially similar to H.R. 1491, the Fair
Debt Collection Practices for Servicemembers Act, introduced by
Rep. Madeleine Dean (D-PA). H.R. 1491 was passed by the House
of Representatives under suspension of the rules on April 20,
2021. This title is also similar to H.R. 5003 in the 116th
Congress, sponsored by Rep. Dean and unanimously passed out of
Committee on November 13, 2019 by a recorded vote of 31 yeas
and 23 nays. This bipartisan bill passed unanimously by the
House of Representatives on suspension in March 2, 2020. It is
also similar to S. 3334, the Military Lending Improvement Act
from the 115th Congress, sponsored by former Sen. Bill Nelson.
Title II is supported by the National Military Family
Association, Veterans Education Success, and Retired Army
Colonel Paul Kantwill, the former CFPB Assistant Director for
Servicemember Affairs.
Protecting Private Student Loan Borrowers With Disabilities
Title III of H.R. 2547, which is designated as the Private
Loan Disability Discharge Act, would amend TILA to include a
required discharge of private student loans for both the
borrower and cosigner in the case of permanent disability of
the borrower.
Federal student loans, generally provide greater
protections than private student loans. For example, any loan
that is issued by the federal government can be discharged in
the event of permanent total disability of the borrower or in
the event of death.\12\ By contrast, current law does not
require that a private student loan lender discharge the
student debt of a borrower or their cosigner in the case of
permanent disability of the borrower. TILA currently requires
the discharge of a student loan for the borrower and cosigner
in the case of death of the borrower. Beyond this requirement,
however, private student lenders are free to make any policy on
discharge of debt in their promissory notes. There is no
standard system for disability cancellations for private
student loans.
---------------------------------------------------------------------------
\12\See 20 U.S.C. Sec. 1087(a).
---------------------------------------------------------------------------
In March 2021, the Committee held a hearing on the need for
robust consumer protection as a result of this unprecedented
COVID-19 pandemic, during which one witness testified that the
private student loan market now stands at almost $130 billion
and has been growing quickly over the last five years after a
decline following the Great Recession.\13\ The witness further
testified that ``[p]rivate student loans are generally risky
and inferior from a consumer protection standpoint compared to
federal student loans. Private student loan borrowers are
unable to access such options as guaranteed income-based
repayment and loan forgiveness plans, assistance for getting
out of default and discharges for disability or death.''\14\
---------------------------------------------------------------------------
\13\Subcommittee on Consumer Protection and Financial Institutions,
Slipping Through the Cracks: Policy Options to Help America's Consumer
During the Pandemic, 117th Cong. (Mar. 11, 2021).
\14\Id.
---------------------------------------------------------------------------
To provide greater protections for private student loan
borrowers, this title would bring private student loans in line
with federal student loans by amending TILA to include a
required discharge of private student loans in the case of
permanent and total disability of the borrower. Additionally,
this title would allow cosigners to be discharged in the case
of the borrower's permanent disability, and it would require
private lenders who are notified that the federal government
has discharged the federal student loans of a borrower to
discharge the private student loans of that same borrower.
Finally, this title would authorize the CFPB to issue rules to
implement these changes. This bill uses the same definition for
total and permanent disability as the standard for discharging
federal student loans.
This title is substantially similar to H.R. 2498, the
Private Loan Disability Discharge Act, introduced by Rep. Dean.
This title is also similar to H.R. 4545 in the 116th Congress,
sponsored by Rep. Dean and passed out of Committee on December
11, 2019 by a recorded vote of 32 yeas and 22 nays. This title
is supported by the National Council on Independent Living,
National Consumer Law Center (on behalf of its low-income
clients), Center for Responsible Lending, and The Institute for
College Access and Success (TICAS).
Protecting Consumers With Medical Debt
Title IV of H.R. 2547, which is designated as the Consumer
Protection for Medical Debt Collections Act, would amend FDCPA
and FCRA to provide consumer protections for medical debts.
Debt collectors increasingly contact individuals for their
medical bills in relation to other forms of debt. The costs of
treating illnesses and other medical conditions can cause
consumers to avoid healthcare services and rely on over-the-
counter drugs rather than seeing a medical provider.\15\
Medical bills can be expensive for households, and the
delinquency of payments can lead to individuals falling into
bankruptcy and hurting their credit report.\16\ The American
Journal of Public Health conducted a survey of bankruptcy
filers between 2013 and 2016 and found that 59% of respondents
agreed that medical debt played a role in their bankruptcy.\17\
The CFPB has also found that the medical pricing, billing, and
reimbursement processes lack transparency and are prone to
consumer confusion, which can result in consumers delaying or
withholding payments until they have adequate time to clarify
or resolve disputes with their insurance companies or medical
service providers about what they actually owe. With the COVID-
19 pandemic affecting the health of over 30 million infected
Americans, many of whom have and will take on medical debt to
pay for their care, consumer protections associated with
medical debts are badly needed.
---------------------------------------------------------------------------
\15\See, e.g., Kaiser Family Foundation, Data Note: Americans'
Challenges with Health Care Costs (Jun. 11, 2019).
\16\See, e.g., House Committee on Financial Services, Testimony of
Chi Chi Wu, Who's Keeping Score? Holding Credit Bureaus Accountable and
Repairing a Broken System, 116th Cong., (Feb. 26, 2019); and House
Committee on Financial Services, Testimony of April Kuehnhoff,
Examining Legislation to Protect Consumers and Small Business Owners
from Abusive Debt Collection Practices, 116th Cong., (Sept. 26, 2019).
\17\National Consumer Law Center, Medical Debt Collection (accessed
Apr. 10, 2021).
---------------------------------------------------------------------------
Title IV would bar entities from collecting medical debt or
reporting it to a consumer reporting agency without giving a
consumer notice about their rights under FDCPA and FCRA,
including a minimum one-year delay before adverse information
is reported and a two-year delay before collection attempts
after the date that the first payment is due. This title also
bans the reporting of medical debt arising from medically
necessary procedures.
This title is substantially similar to H.R. 2537, the
Consumer Protection for Medical Debt Collections Act,
introduced by Rep. Rashida Tlaib (D-MI). This title is also
similar to H.R. 5330 in the 116th Congress, which was also
sponsored by Rep. Tlaib and passed out of Committee on December
11, 2019 by a recorded vote of 31 yeas and 24 nays. This title
is supported by Americans for Financial Reform, Center for
Responsible Lending, Consumer Action, Consumer Federation of
America, Consumer Reports, National Association of Consumer
Advocates, National Consumer Law Center (on behalf of its low
income clients), and U.S. PIRG.
Protecting Consumers Against Debt Collection Harassment
Title V of H.R. 2547, which is designated as the Ending
Debt Collection Harassment Act, would amend the Consumer
Financial Protection Act of 2010 and the FDCPA to prohibit a
debt collector from contacting a consumer by email or text
message without a consumer's consent and provide other defenses
against harassing communications.
In May 2019, the CFPB released a notice of proposed
rulemaking to establish guidelines on how communication may
take place between debt collectors and consumers. The proposed
rule would prohibit debt collectors from providing information
to credit score furnishers without informing the debtor first.
The proposed rule also permits up to seven collection calls a
week, per debt,\18\ and would allow debt collectors to use
other methods of communication to contact consumers, including
unlimited email or text messages.\19\ Consumer groups have
argued that the rule does not go far enough to protect
consumers against predatory debt collection practices.\20\ This
rule was finalized in October 2020, and in 2021 the interim
leadership of the CFPB proposed a delay in the effective date
of the rule, along with a delay in a disclosure-focused debt
collection rule that was finalized in November 2020.
---------------------------------------------------------------------------
\18\See Debt Collection Practices (Regulation F), 12 C.F.R. part
1006 (proposed May 6, 2019) (to be codified at 12 C.F.R. part 1006).
\19\Id.
\20\See, e.g., House Committee on Financial Services, Testimony of
April Kuehnhoff, Examining Legislation to Protect Consumers and Small
Business Owners from Abusive Debt Collection Practices, 116th Cong.
(Sept. 26, 2019).
---------------------------------------------------------------------------
Title V would prohibit a debt collector from contacting a
consumer by email or text message without a consumer's consent
to be contacted electronically. It would also prohibit the CFPB
from issuing any future rules implementing FDCPA that allows a
debt collector to send unlimited email and text messages to a
consumer. Furthermore, the bill would require the CFPB to
analyze and annually report on the impact of electronic
communications utilized by debt collectors, and would require
CFPB to include in its Semi-Annual Report to Congress an
analysis of consumer complaints, including a state-by-state
breakdown of such complaints, and a list of recent enforcement
actions taken against debt collectors.
This title is substantially similar to H.R. 1657, the
Ending Debt Collection Harassment Act, introduced by Rep.
Ayanna Pressley (D-MA). This title is also similar to H.R. 5021
in the 116th Congress, sponsored by Rep. Pressley and passed
out of Committee on November 13, 2019 by a recorded vote of 31
yeas and 23 nays. This title is supported by Americans for
Financial Reform, Center for Responsible Lending, Consumer
Action, Consumer Federation of America, Consumer Reports,
National Association of Consumer Advocates, National Consumer
Law Center (on behalf of its low income clients), and U.S.
PIRG.
Protecting Consumers With Government-Owned Debts
Title VI of H.R. 2547, which is designated as the Stop Debt
Collection Abuse Act, would, among other things, extend the
protections in the FDCPA as it relates to debt owed to a
federal, state, territory, District of Columbia, and local
government agency and limit the fees debt collectors can
charge.
Currently, the FDCPA makes it illegal for debt collectors
to use abusive, unfair, or deceptive practices when collecting
debts from consumers. As discussed at a September 2019
Committee hearing on debt collection practices, the FDCPA
currently does not apply to debt collectors hired by federal
government entities. At the hearing, one consumer advocate
testified that extending FDCPA to debt collectors hired by
federal government entities is important because, ``collection
by, or on behalf of, the government is already unusually
coercive as a result of the government's police power and other
means of seizing citizens' assets.''\21\
---------------------------------------------------------------------------
\21\Id. at 38.
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To address these issues, this title makes clear that
overpayment, fines, penalties, and fees owed by private
individuals to federal, state, territory, D.C., and local
government entities would be considered ``consumer debts'' that
fall under the FDCPA's protections. This title also prevents
private debt collectors from charging exorbitant and unfair
fees, and it would ensure that fees from debt collectors
working on behalf of federal, state, territory, D.C., or local
government entities are reasonable. This title also confirms
that debt buyers are debt collectors for the purposes of the
FDCPA, and it sets forth requirements that would prevent debt
collectors from taking aggressive action until 90 days after a
debt has allegedly gone unpaid. Finally, this title would
require the GAO to conduct a study into the use of third-party
debt collectors by federal, state, and local government
agencies.
This title is similar to H.R. 2572, the Stop Debt
Collection Abuse Act, introduced by Rep. Emanuel Cleaver (D-
MO). This title is also similar to H.R. 4403 in the 116th
Congress, sponsored by Rep. Cleaver and unanimously passed out
of Committee on November 13, 2019 by a recorded vote of 54 yeas
and 0 nays. It is also similar to the bipartisan H.R. 864, from
the 115th Congress, sponsored by former Reps. Mia Love and
Keith Ellison as well as Reps. Cleaver and Hill. Furthermore,
this title is supported by over twenty civil rights and
consumer rights groups, including Americans for Financial
Reform, Allied Progress, California Reinvestment Coalition,
Consumer Action, Consumer Federation of America, Consumer
Reports, Florida Alliance for Consumer Protection, Illinois
Asset Building Group, Legal Services of New Jersey, Maryland
Consumer Rights Coalition, NAACP, National Association of
Consumer Advocates, National Center for Law and Economic
Justice, National Consumer Law Center, Public Citizen, Public
Justice Center, Public Law Center, Statewide Poverty Action
Network, and Tennessee Citizen Action.
Additionally, while this title's expansion of FDCPA to
cover federal government agency debts originated from H.R.
2572, the title's proposed FDCPA expansion to cover state,
territory, D.C., and local government agency debts is similar
to H.R. 2628, the Debt Collection Practices Harmonization Act,
introduced by Rep. Gregory Meeks (D-NY). Other provisions
similar to H.R. 2628 are included in Title VII as described
below.
Protecting Consumers From Egregious Debt Collection Fees
Title VII of H.R. 2547, which is designated as the Debt
Collection Practices Harmonization Act, would amend the FDCPA
to tie damages for violations to inflation and allow for
injunctive relief.
Enacted in 1977, Congress passed the FDCPA to protect
consumers from unfair, deceptive, and abusive practices
conducted by debt collectors. However, as discussed at a
September 2019 Committee hearing on abusive debt collection
practices, the FDCPA currently does not apply to debt
collectors hired by state or local government entities.
Furthermore, state and local governments faced with widening
budget shortfalls are increasingly outsourcing the collection
of fines and penalties to private debt collection firms.
Private debt collection firms have been found to charge
consumers large fees, including interest and penalties.
To address these issues, this title would adjust monetary
penalties for inflation and clarify that courts can award
injunctive relief. Additionally, this title would prohibit the
Treasury Department from hiring a third-party debt collector to
recoup any Federal Emergency Management Agency (FEMA)
assistance awarded to victims of natural disasters like
Hurricanes Irma and Maria because of an overpayment, unless the
overpayment occurred because of fraud or deceit and the
recipient of such assistance knew or should have known about
such fraud or deceit.
This title is similar to H.R. 2628, the Debt Collection
Practices Harmonization Act, introduced by Rep. Meeks. This
title is also similar to H.R. 3498 in the 116th Congress,
sponsored by Rep. Meeks and passed out of Committee on November
13, 2019 by a recorded vote of 31 yeas and 23 nays. The
National Consumer Law Center, Center for Responsible Lending,
NAACP, and the National Urban League have endorsed this title.
Protecting Consumers Facing Non-Judicial Foreclosure
Title VIII of H.R. 2547, which is designated as the Non-
Judicial Foreclosure Debt Collection Clarification Act, would
reverse the recent Supreme Court decision in Obduskey v.
McCarthy and Holthus LLP by amending the FDCPA to clarify that
entities in non-judicial foreclosure proceedings are covered by
the law.
In March 2019, the Supreme Court held in Obduskey v.
McCarthy & Holthus LLP that businesses engaged in non-judicial
foreclosure do not qualify as debt collectors under the FDCPA.
In that case, a homeowner in Colorado, which is a non-judicial
foreclosure state, went through foreclosure proceedings, but
the mortgage servicer's law firm refused to follow the FDCPA as
it disputed that it was covered as a ``debt collector'' under
the FDCPA. In its decision, although the Supreme Court
acknowledged that non-judicial foreclosure would otherwise fit
within the law's primary definition of ``debt collector,'' it
held that the secondary definition of ``debt collector,'' which
applies to the collection of a security interest, suggested
that Congress intended for non-judicial foreclosure to be
excluded from the broader definition.
However, in a concurrence, Justice Sotomayor noted that it
was ``too close a case for [her] to feel certain that Congress
recognized that this complex statute would be interpreted the
way that the Court does today'' and that Congress could clarify
the statute if the Court got it wrong. Justice Sotomayor also
highlighted the majority's acknowledgement that nothing in the
Court's opinion ``suggest[s] that pursuing nonjudicial
foreclosure is a license to engage in abusive debt collection
practices like repetitive nighttime phone calls; enforcing a
security interest does not grant an actor blanket immunity from
the Act.''\22\
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\22\Obduskey v. McCarthy & Holthus LLP, 586 U.S._, (2019)
(concurrence by Justice Sotomayor).
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This title would clarify the FDCPA to state that parties
bringing proceedings against consumers in non-judicial
foreclosure are covered by FDCPA as debt collectors. As
consumers face the end of mortgage and other payment
moratoriums offered to help consumers during the COVID-19
pandemic, families will need these necessary protections.
This title is substantially similar to H.R. 2458, the Non-
Judicial Foreclosure Debt Collection Clarification Act,
introduced by Rep. Jacob Auchincloss (D-MA). This title is also
similar to H.R. 5001 in the 116th Congress, sponsored by then-
Rep. Clay and passed out of Committee on November 13, 2019 by a
recorded vote of 31 yeas and 23 nays. This title is supported
by over twenty consumer, civil rights, labor, and community
organizations, including Americans for Financial Reform,
Consumer Federation of America, NAACP, National Association of
Consumer Advocates, National Consumer Law Center, and Public
Citizen.
Conclusion
Abusive debt collection practices and inadequate federal
oversight have long plagued consumers. The COVID-19 pandemic
and its devastating health and economic ramifications have
highlighted the precarious position millions of U.S. consumers
and small businesses are in with respect to unscrupulous
collectors. It is critical that Congress immediately enhance
and expand protections to ensure borrowers are not subjected to
the wide range of abuse and harassment by predatory debt
collectors. H.R. 2547 is supported by a coalition of consumer
groups, including the Americans for Financial Reform, Center
for Responsible Lending, Consumer Action, Consumer Federation
of America, Consumer Reports, National Association of Consumer
Advocates, National Consumer Law Center (on behalf of its low
income clients), Public Citizen, and U.S. PIRG.
Section-by-Section Analysis
Section 1. Short title
This section states that the title of the bill is the
Comprehensive Debt Collection Improvement Act.
TITLE I--SMALL BUSINESS LENDING FAIRNESS ACT
Sec. 101. Short title
This section states that the short title of Title I is the
``Small Business Lending Fairness Act.''
Sec. 102. Obligor transactions
This section amends Chapter 2 of the Truth in Lending Act
(15 U.S.C. 1631 et seq.) by prohibiting any person--including
consumers and small businesses--from directly or indirectly
taking or receiving from another person--including lenders and
merchant cash advance companies--an obligation that constitutes
or contains a cognovit or confession of judgment, warrant of
attorney, or other waiver of the right to notice and the
opportunity to be heard in the event of a lawsuit or judicial
process.
Sec. 103. Enforcement of security interests
This section amends Section 103 of TILA (15 U.S.C. 1602) by
clarifying the definition of ``debt'' as ``any obligation of a
person to pay to another person money.'' This definition would
apply regardless of whether the obligation is absolute or
contingent. This definition includes the right of the person
providing the money to an equitable remedy for breach of
performance if the breach gives rise to a right to payment.
This definition would also apply regardless of whether the
obligation or right to an equitable remedy has been reduced to
judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, recourse, nonrecourse, secured, or unsecured.
TITLE II--FAIR DEBT COLLECTION PRACTICES FOR SERVICEMEMBERS ACT
Sec. 201. Short title
This section states that the short title of Title II is the
``Fair Debt Collection Practices for Servicemembers Act.''
Sec. 202. Enhanced protection against debt collector harassment of
servicemembers
This section prohibits debt collectors from threatening a
servicemember with reducing their rank, having their security
clearance revoked, or prosecuting them under the Uniform Code
of Military Justice regarding an outstanding debt. This section
also clarifies these actions are an unfair practice under the
FDCPA. In addition to active servemembers, this section also
covers an individual who has separated, discharged, or released
from duty in the previous year.
Sec. 203. GAO study and report
This section directs the Government Accountability Office
(GAO) to conduct a study and submit a report to Congress within
one year identifying the types of false, deceptive, misleading,
unfair, abusive, and harassing debt collection practices
experienced by servicemembers and making recommendations to
eliminate these practices; identifying collection practices of
creditors and debt collectors experienced by covered members;
analyzing the effect of these practices on military readiness
and any national security implications.
TITLE III--PRIVATE LOAN DISABILITY DISCHARGE ACT
Sec. 301. Short title
This section states that the short title of Title III is
the ``Private Loan Disability Discharge Act of 2021.''
Sec. 302. Protections for obligors and cosigners in case of death or
total and permanent disability
This section amends Section 140(g) of TILA to include a
required discharge of private student loans in the case of
permanent and total disability of the borrower. It adds the
cosigner discharge in the case of the borrower's permanent
disability. It requires private lenders who are notified that
the federal government has discharged the federal student loans
of a borrower to discharge the private student loans of that
same borrower. This section gives the CFPB Director the power
to issue rules to implement these changes. This section uses
the same definition for total and permanent disability as the
standard for discharging federal student loans.
TITLE IV--CONSUMER PROTECTION FOR MEDICAL DEBT COLLECTIONS ACT
Sec. 401. Short title
This section states that the short title of Title IV is the
``Consumer Protection for Medical Debt Collections Act.''
Sec. 402. Amendments to the Fair Debt Collection Practices Act
This section amends Sections 803 and 808 of the Fair Debt
Collection Practices Act. Susbsection (a) amends section 803 by
adding a definition for medical debt.
Subsection (b) makes it an unfair practice under the FDCPA
for debt collectors to collect or attempt to collect medical
debt owed before two years after the first payment is due.
Sec. 403. Prohibition on consumer reporting agencies reporting certain
medical debt
This section amends sections 603 and 605(a) of the Fair
Credit Reporting Act. Subsection (a) amends section 603 by
adding a definition of medical debt and a medically necessary
procedure.
Subsection (b) bans an entity from reporting information
related to a debt arising from a medically necessary procedure.
It also requires a minimum one-year delay before adverse
information is reported on any other medical debt.
Sec. 404. Requirements for furnishers of medical debt information
This section amends section 623 of the Fair Credit
Reporting Act to require that the entity reporting the medical
debt of a consumer to a consumer reporting agency will, prior
to reporting the debt, send the consumer a disclosure that
informs the consumer that medical debt may not be reported to a
CRA until the end of the one year period of the medical debt
statement or the last day a consumer made a payment on the
medical debt and that the debt may never be reported if it
arises from a medically necessary procedure. The entity must
also send a notification to the consumer that says if the debt
is paid or settled by the consumer or insurance company before
the end of the one year period described above, the debt may
not be reported to a CRA and that the consumer has the right to
contact their insurance agency to determine debt coverage.
TITLE V--ENDING DEBT COLLECTION HARASSMENT ACT
Sec. 501. Short title
This section states that the short title of Title V is the
``Ending Debt Collection Harassment Act of 2021.''
Sec. 502. Consumer protections relating to debt collection practices
This section amends the Consumer Financial Protection Act
of 2010 and FDCPA. Subsection (a)(1) amends section 1016(c) of
the Consumer Financial Protection Act of 2010 (12 U.S.C. 5496)
by requiring the CFPB's semi-annual report to Congress to
include an analysis of debt collection consumer complaints
received by the Bureau, including a state-by-state breakdown of
such complaints, and a list of enforcement actions taken
against debt collectors during the preceding year.
Subsection (a)(2) amends section 815(a) of FDCPA (15 U.S.C.
1692m) by requiring the CFPB's annual report to Congress to
include an analysis of the impact of electronic communications
by debt collectors on consumer experiences with debt
collection, including a consideration of consumer complaints
about the use of electronic communications in debt collection.
Subsection (b) amends section 1022 of the Consumer
Financial Protection Act of 2010 (12 U.S.C. 5512) by
prohibiting the CFPB Director from issuing any rule with
respect to debt collection that allows a debt collector to send
unlimited email and text messages to a consumer.
Subsection (c) amends section 806 of the Fair Debt
Collection Practices Act (15 U.S.C. 1692d) by prohibiting debt
collectors from contacting consumers electronically, including
by email or text message, without consent of the consumer,
after such consent has been withdrawn, or more frequently than
the consumer consents to be contacted.
Subsection (d) amends section 809(a) of FDCPA (15 U.S.C.
1692g(a)) by ensuring that consumers receive notice of debt
collection protections, regardless of whether that information
is contained in the initial communication or the consumer has
paid the debt.
Subsection (e) amends section 814(d) of FDCPA (15 U.S.C.
1692l(d)) by prohibiting CFPB from prescribing rules that allow
a debt collector to send unlimited electronic communications to
a consumer. This amendment also requires CFPB to prescribe
rules that require debt collectors to obtain consent directly
from consumers before contacting them using a method other than
by postal mail or by phone. Under the amendments made by this
subsection, the CFPB is prohibited from waiving the
requirements of the Electronic Signatures in Global and
National Commerce Act. The amendments made by this section also
require the CFPB to prescribe rules that allow consumers to opt
out of any method of communication that the debt collector uses
to communicate with consumers, including a method for which
such consumer had given prior consent.
TITLE VI--STOP DEBT COLLECTION ABUSE ACT
Sec. 601. Short title
This section states that the title of Title VI is the
``Stop Debt Collection Abuse Act of 2021.''
Sec. 602. Definitions
This section amends Section 803 of FDCPA to make certain
technical edits, and to include, as part of the definition of
debt, any obligation or alleged obligation by a consumer to pay
a loan, an overpayment, a fine, a penalty, a restitution, a
fee, or other money currently or originally owed to a Federal,
State, territory, D.C. or local government, including any
courts or agencies and includes, as part of the definition of
debt collector, any person who regularly collects debts
currently or originally owed to a government agency or court.
Sec. 603. Debt collection practices for debt collectors hired by
Federal agencies
This section amends the FDCPA to place a limitation on
Federal agencies that are creditors to sell or transfer a debt
covered by this legislation for a certain period of time. This
section also requires the Federal agency to notify the consumer
not fewer than 3 times when a debt is transferred or sold and
requires these notices to not be sent out less than 30 days
apart.
Sec. 604. Unfair practices
This section amends Section 808 of the FDCPA to require
that collections of any covered account can only occur when
expressly authorized by the agreement creating the debt or
permitted by law. Furthermore, when the amount is charged by
the debt collector, this section, among other things, requires
that the charge is reasonable in relation to the actual costs
of the collection and authorized by a contract between the debt
collector and a Federal, State, territory, D.C. or local
government.
Sec. 605. GAO study and report
This section requires GAO to conduct a study on the use of
debt collectors by Federal, State, and local government
agencies, and submit, within one year of enactment of this
legislation, a report to Congress on the completed study.
TITLE VII--DEBT COLLECTION PRACTICES HARMONIZATION ACT
Sec. 701. Short title
This section states that the title of Title VII is the
``Debt Collection Practices Harmonization Act.''
Sec. 702. Award of damages
This section amends Section 813 of FDCPA to provide annual
adjustments for inflation for the amount of damages that a debt
collector who fails to comply with the provisions in the Act
must pay. This section also allows for a court to award
injunctive relief in a civil action alleging a violation of
this title.
Sec. 703. Prohibition on the referral of emergency individual
assistance debt.
This section adds a section at the end of subchapter II of
Chapter 3 of title 31, United States Code, ``Prohibition on the
referral of emergency individual assistance debt.'' This
section prohibits the Secretary of Treasury from contracting
with any debt collector or other private party to collect
overpayment of FEMA assistance, unless the overpayment occurred
because of fraud or deceit that the recipient should have known
about.
TITLE VIII--NON-JUDICIAL FORECLOSURE DEBT COLLECTION CLARIFICATION ACT
Sec. 801. Short title
This section states that the title of Title VIII is the
``Non-Judicial Foreclosure Debt Collection Clarification Act.''
Sec. 802. Enforcement of security interests
This section amends Section 803(6) of FDCPA (15 U.S.C.
1692a(6)) by clarifying the definition of ``debt collector'' to
not include ``any person who uses any instrumentality of
interstate commerce or the mails in any business the principal
purpose of which is the enforcement of security interests.''
TITLE IX--EFFECTIVE DATE
Sec. 901. Effective date
This section states that the amendments of this bill shall
take effect 180 days after the date of enactment.
Hearings
For the purposes of section 3(c)(6) of House Rule XIII, the
following hearing was used to consider H.R. 2547:
(1) On March 11, 2021, the Subcommittee on Consumer
Protection and Financial Institutions held a hearing entitled,
``Slipping Through the Cracks: Policy Options to Help America's
Consumers During the Pandemic,'' which considered a number of
measures that assembled into H.R. 2547. The witnesses at this
subcommittee hearing consisted of Ashley Harrington, Federal
Advocacy Director and Senior Counsel, Center for Responsible
Lending (CRL); Robert E. James, II, President, Carver
Development CDE, and Chairman, National Bankers Association;
Carla Sanchez-Adams, Attorney, Team Manager of Survivor-
Centered Economic Advocacy Team, Texas RioGrande Legal Aid;
Valarie Shultz-Wilson, Managing Partner, Shultz&Co Non-Profit
Management Consultants; and Joel Griffith, Research Fellow,
Financial Regulations, The Roe Institute for Economic Policy
Studies, The Heritage Foundation.
(2) During the 116th Congress, the following hearings
considered issues that would be addressed by H.R. 2547:
a. On September 26, 2019, the Committee on Financial
Services held a hearing entitled, ``Examining
Legislation to Protect Consumers and Small Business
Owners from Abusive Debt Collection Practices,'' which
considered H.R. 3490, the ``Small Business Lending
Fairness Act,'' H.R. 4403, the ``Stop Debt Collection
Abuse Act,'' H.R. 3948, the ``Debt Collection Practices
Harmonization Act,'' the ``Non-Judicial Foreclosure
Debt Collection Clarification Act,'' the ``Fair Debt
Collection Practices for Servicemembers Act,'' and the
``Consumer Protections for Medical Debt Collections
Act.'' The witnesses at this hearing consisted of: the
Honorable Rohit Chopra, Commissioner, Federal Trade
Commission; Rev. Dr. Cassandra Gould, Pastor, Quinn
Chapel A.M.E. Church and Executive Director, Missouri
Faith Voices; Ms. Bhairavi Desai, Executive Director,
New York Taxi Workers Alliance; Ms. April Kuehnhoff,
Staff Attorney, National Consumer Law Center; Professor
Dalie Jimenez, Professor of Law, University of
California, Irvine School of Law; Ms. Sarah
Auchterlonie, Shareholder, Brownstein Hyatt Farber
Shreck; and Mr. John H. Bedard, Jr., Owner, Bedard Law
Group, P.C..
b. On September 10, 2019, the Committee on Financial
Services held a hearing entitled, ``A $1.5 Trillion
Crisis: Protecting Student Borrowers and Holding
Student Loan Servicers Accountable,'' which considered
the ``Private Loan Disability Discharge Act.'' The
witnesses at this hearing consisted of Seth Frotman,
Executive Director, Student Borrower Protection Center;
Persis Yu, Staff Attorney, National Consumer Law
Center; Ashley Harrington, Senior Policy Counsel,
Center for Responsible Lending; Hasan Minhaj, Writer,
Producer, and Host; and Jason Delisle, Resident Fellow,
American Enterprise Institute.
c. On February 26, 2019, the Committee on Financial
Services held a hearing entitled, ``Who's Keeping
Score? Holding Credit Bureaus Accountable and Repairing
a Broken System,'' which considered the ``Comprehensive
Consumer Credit Reporting Reform Act of 2019.'' The
witnesses at this hearing consisted of Mark Begor, CEO,
Equifax; James M. Peck, President and CEO, TransUnion;
Craig Boundy, CEO, Experian North America; Lisa Rice,
President and CEO, National Fair Housing Alliance
(NFHA); Chi Chi Wu, Staff Attorney, National Consumer
Law Center (NCLC); Jennifer Brown, Associate Director,
Economic Policy, UnidosUS; Edmund Mierzwinksi, Consumer
Program Director, U.S. Public Interest Research Group
(PIRG); and Thomas P. Brown, Partner, Paul Hastings.
d. On July 27, 2020, the Committee on Financial
Services held a hearing entitled, ``Protecting
Consumers During the Pandemic? An Examination of the
Consumer Financial Protection Bureau,'' which discussed
the findings from the CFPB's semi-annual report,
including debt collection issues.
e. On February 6, 2020, the Committee on Financial
Services held a hearing entitled ``Protecting Consumers
or Allowing Consumer Abuse? A Semi-Annual Review of the
Consumer Financial Protection Bureau,'' which discussed
the findings from the CFPB's semi-annual report,
including debt collection issues.
f. On October 16, 2019, the Committee on Financial
Services held a hearing entitled ``Who is Standing Up
for Consumers? A Semi-Annual Review of the Consumer
Financial Protection Bureau,'' which discussed the
findings from the CFPB's semi-annual report, including
debt collection issues.
g. On March 7, 2019, the Committee on Financial
Services held a hearing entitled ``Putting Consumers
First? A Semi-Annual Review of the Consumer Financial
Protection Bureau,'' which discussed the findings from
the CFPB's semi-annual report, including debt
collection issues.
Committee Consideration
The Committee on Financial Services met in open session on
April 21, 2021, and ordered H.R. 2547 to be reported favorably
to the House with an amendment in the nature of a substitute by
a vote of 30 yeas and 23 nays, a quorum being present.
Committee Votes and Roll Call Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following roll call votes occurred during the Committee's
consideration of H.R. 2547.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the descriptive portions of this report.
Statement of Performance Goals and Objectives
Pursuant to clause (3)(c) of rule XIII of the Rules of the
House of Representatives, the goals of H.R. 2547 are to ensure
increased protections for small businesses, servicemembers,
students, and other consumers against the mistreatment and
harassment of certain debt collectors.
New Budget Authority and CBO Cost Estimate
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives and section 308(a) of the Congressional Budget
Act of 1974, and pursuant to clause 3(c)(3) of rule XIII of the
Rules of the House of Representatives and section 402 of the
Congressional Budget Act of 1974, provide that the
Congressional Budget Office's estimate of H.R. 2547 be
submitted along with the Committee Report. However, the
Committee has requested but has not received a timely estimate
for H.R. 2547 from the Director of the Congressional Budget
Office. The Committee expects an estimate prior to any
consideration of H.R. 2547 by the House of Representatives.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 2547.
However, clause 3(d)(2)(B) of that rule provides that this
requirement does not apply when a cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget Act has been
submitted. The Committee expects the Congressional Budget Act
to submit such an estimate prior to any consideration of H.R.
2547 by the House of Representatives, and adopts that estimate.
Based on informal consultations with the Congressional Budget
Office, the Committee estimates that certain provisions of the
bill will have insignificant increases in direct spending.
Unfunded Mandate Statement
Pursuant to Section 423 of the Congressional Budget and
Impoundment Control Act (as amended by Section 101(a)(2) of the
Unfunded Mandates Reform Act, Pub. L. 104-4), the Committee
adopts as its own the forthcoming estimate of federal mandates
regarding H.R. 2547, as amended, prepared by the Director of
the Congressional Budget Office.
Advisory Committee
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Application of Law to the Legislative Branch
Pursuant to section 102(b)(3) of the Congressional
Accountability Act, Pub. L. No. 104-1, H.R. 2547, as amended,
does not apply to terms and conditions of employment or to
access to public services or accommodations within the
legislative branch.
Earmark Statement
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 2547 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as described in clauses 9(e), 9(f), and 9(g) of rule
XXI.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of H.R. 2547 establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
federal program, a program that was included in any report from
the Government Accountability Office to Congress pursuant to
section 21 of Public Law 111-139, or a program related to a
program identified in the most recent Catalog of Federal
Domestic Assistance.
Changes to Existing Law
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, H.R. 2547, as reported, are shown as follows:
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
TRUTH IN LENDING ACT
TITLE I--CONSUMER CREDIT COST DISCLOSURE
* * * * * * *
CHAPTER 1--GENERAL PROVISIONS
* * * * * * *
Sec. 103. Definitions and rules of construction
(a) The definitions and rules of construction set forth in
this section are applicable for the purposes of this title.
(b) Bureau.--The term ``Bureau'' means the Bureau of Consumer
Financial Protection.
(c) The term ``Bureau'' refers to the Bureau of Governors of
the Federal Reserve System.
(d) The term ``organization'' means a corporation, government
or governmental subdivision or agency, trust, estate,
partnership, cooperative, or association.
(e) The term ``person'' means a natural person or an
organization.
(f) The term ``credit'' means the right granted by a creditor
to a debtor to defer payment of debt or to incur debt and defer
its payment.
(g) The term ``creditor'' refers only to a person who both
(1) regularly extends, whether in connection with loans, sales
of property or services, or otherwise, consumer credit which is
payable by agreement in more than four installments or for
which the payment of a finance charge is or may be required,
and (2) is the person to whom the debt arising from the
consumer credit transaction is initially payable on the face of
the evidence of indebtedness or, if there is no such evidence
of indebtedness, by agreement. Notwithstanding the preceding
sentence, in the case of an open-end credit plan involving a
credit card, the card issuer and any person who honors the
credit card and offers a discount which is a finance charge are
creditors. For the purpose of the requirements imposed under
chapter 4 and sections 127(a)(5), 127(a)(6), 127(a)(7),
127(b)(1), 127(b)(2), 127(b)(3), 127(b)(8), and 127(b)(10) of
chapter 2 of this title, the term ``creditor'' shall also
include card issuers whether or not the amount due is payable
by agreement in more than four installments or the payment of a
finance charge is or may be required, and the Bureau shall, by
regulation, apply these requirements to such card issuers, to
the extent appropriate, even though the requirements are by
their terms applicable only to creditors offering open-end
credit plans. Any person who originates 2 or more mortgages
referred to in subsection (aa) in any 12-month period or any
person who originates 1 or more such mortgages through a
mortgage broker shall be considered to be a creditor for
purposes of this title. The term ``creditor'' includes a
private educational lender (as that term is defined in section
140) for purposes of this title.
(h) The term ``credit sale'' refers to any sale in which the
seller is a creditor. The term includes any contract in the
form of a bailment or lease if the bailee or lessee contracts
to pay as compensation for use a sum substantially equivalent
to or in excess of the aggregate value of the property and
services involved and it is agreed that the bailee or lessee
will become, or for no other or a nominal consideration has the
option to become, the owner of the property upon full
compliance with his obligations under the contract.
(i) The adjective ``consumer'', used with reference to a
credit transaction, characterizes the transaction as one in
which the party to whom credit is offered or extended is a
natural person, and the money, property, or services which are
the subject of the transaction are primarily for personal,
family, or household purposes.
(j) The terms ``open end credit plan'' and ``open end
consumer credit plan'' mean a plan under which the creditor
reasonably contemplates repeated transactions, which prescribes
the terms of such transactions, and which provides for a
finance charge which may be computed from time to time on the
outstanding unpaid balance. A credit plan or open end consumer
credit plan which is an open end credit plan or open end
consumer credit plan within the meaning of the preceding
sentence is an open end credit plan or open end consumer credit
plan even if credit information is verified from time to time.
(k) The term ``adequate notice'', as used in section 133,
means a printed notice to a cardholder which sets forth the
pertinent facts clearly and conspicuously so that a person
against whom it is to operate could reasonably be expected to
have noticed it and understood its meaning. Such notice may be
given to a cardholder by printing the notice on any credit
card, or on each periodic statement of account, issued to the
cardholder, or by any other means reasonably assuring the
receipt thereof by the cardholder.
(l) The term ``credit card'' means any card, plate, coupon
book or other credit device existing for the purpose of
obtaining money, property, labor, or services on credit.
(m) The term ``accepted credit card'' means any credit card
which the cardholder has requested and received or has signed
or has used, or authorized another to use, for the purpose of
obtaining money, property, labor, or services on credit.
(n) The term ``cardholder'' means any person to whom a credit
card is issued or any person who has agreed with the card
issuer to pay obligations arising from the issuance of a credit
card to another person.
(o) The term ``card issuer'' means any person who issues a
credit card, or the agent of such person with respect to such
card.
(p) The term ``unauthorized use'', as used in section 133,
means a use of a credit card by a person other than the
cardholder who does not have actual, implied, or apparent
authority for such use and from which the cardholder receives
no benefit.
(q) The term ``discount'' as used in section 167 means a
reduction made from the regular price. The term ``discount'' as
used in section 167 shall not mean a surcharge.
(r) The term ``surcharge'' as used in section 103 and section
167 means any means of increasing the regular price to a
cardholder which is not imposed upon customers paying by cash,
check, or similar means.
(s) The term ``State'' refers to any State, the Commonwealth
of Puerto Rico, the District of Columbia, and any territory or
possession of the United States.
(t) The term ``agricultural purposes'' includes the
production, harvest, exhibition, marketing, transportation,
processing, or manufacture of agricultural products by a
natural person who cultivates, plants, propagates, or nurtures
those agricultural products, including but not limited to the
acquisition of farmland, real property with a farm residence,
and personal property and services used primarily in farming.
(u) The term ``agricultural products'' includes agricultural,
horticultural, viticultural, and dairy products, livestock,
wildlife, poultry, bees, forest products, fish and shellfish,
and any products thereof, including processed and manufactured
products, and any and all products raised or produced on farms
and any processed or manufactured products thereof.
(v) The term ``material disclosures'' means the disclosure,
as required by this title, of the annual percentage rate, the
method of determining the finance charge and the balance upon
which a finance charge will be imposed, the amount of the
finance charge, the amount to be financed, the total of
payments, the number and amount of payments, the due dates or
periods of payments scheduled to repay the indebtedness, and
the disclosures required by section 129(a).
(w) The term ``dwelling'' means a residential structure or
mobile home which contains one to four family housing units, or
individual units of condominiums or cooperatives.
(x) The term ``residential mortgage transaction'' means a
transaction in which a mortgage, deed of trust, purchase money
security interest arising under an installment sales contract,
or equivalent consensual security interest is created or
retained against the consumer's dwelling to finance the
acquisition or initial construction of such dwelling.
(y) As used in this section and section 167, the term
``regular price'' means the tag or posted price charged for the
property or service if a single price is tagged or posted, or
the price charged for the property or service when payment is
made by use of an open-end credit plan or a credit card if
either (1) no price is tagged or posted, or (2) two prices are
tagged or posted, one of which is charged when payment is made
by use of an open-end credit plan or a credit card and the
other when payment is made by use of cash, check, or similar
means. For purposes of this definition, payment by check,
draft, or other negotiable instrument which may result in the
debiting of an open-end credit plan or a credit cardholder's
open-end account shall not be considered payment made by use of
the plan or the account.
(z) Any reference to any requirement imposed under this title
or any provision thereof includes reference to the regulations
of the Bureau under this title or the provision thereof in
question.
(aa) The disclosure of an amount or percentage which is
greater than the amount or percentage required to be disclosed
under this title does not in itself constitute a violation of
this title.
(bb) High-cost Mortgage.--
(1) Definition.--
(A) In general.--The term ``high-cost
mortgage'', and a mortgage referred to in this
subsection, means a consumer credit transaction
that is secured by the consumer's principal
dwelling, other than a reverse mortgage
transaction, if--
(i) in the case of a credit
transaction secured--
(I) by a first mortgage on
the consumer's principal
dwelling, the annual percentage
rate at consummation of the
transaction will exceed by more
than 6.5 percentage points (8.5
percentage points, if the
dwelling is personal property
and the transaction is for less
than $50,000) the average prime
offer rate, as defined in
section 129C(b)(2)(B), for a
comparable transaction; or
(II) by a subordinate or
junior mortgage on the
consumer's principal dwelling,
the annual percentage rate at
consummation of the transaction
will exceed by more than 8.5
percentage points the average
prime offer rate, as defined in
section 129C(b)(2)(B), for a
comparable transaction;
(ii) the total points and fees
payable in connection with the
transaction, other than bona fide third
party charges not retained by the
mortgage originator, creditor, or an
affiliate of the creditor or mortgage
originator, exceed--
(I) in the case of a
transaction for $20,000 or
more, 5 percent of the total
transaction amount; or
(II) in the case of a
transaction for less than
$20,000, the lesser of 8
percent of the total
transaction amount or $1,000
(or such other dollar amount as
the Bureau shall prescribe by
regulation); or
(iii) the credit transaction
documents permit the creditor to charge
or collect prepayment fees or penalties
more than 36 months after the
transaction closing or such fees or
penalties exceed, in the aggregate,
more than 2 percent of the amount
prepaid.
(B) Introductory rates taken into account.--
For purposes of subparagraph (A)(i), the annual
percentage rate of interest shall be determined
based on the following interest rate:
(i) In the case of a fixed-rate
transaction in which the annual
percentage rate will not vary during
the term of the loan, the interest rate
in effect on the date of consummation
of the transaction.
(ii) In the case of a transaction in
which the rate of interest varies
solely in accordance with an index, the
interest rate determined by adding the
index rate in effect on the date of
consummation of the transaction to the
maximum margin permitted at any time
during the loan agreement.
(iii) In the case of any other
transaction in which the rate may vary
at any time during the term of the loan
for any reason, the interest charged on
the transaction at the maximum rate
that may be charged during the term of
the loan.
(C) Mortgage insurance.--For the purposes of
computing the total points and fees under
paragraph (4), the total points and fees shall
exclude--
(i) any premium provided by an agency
of the Federal Government or an agency
of a State;
(ii) any amount that is not in excess
of the amount payable under policies in
effect at the time of origination under
section 203(c)(2)(A) of the National
Housing Act (12 U.S.C. 1709(c)(2)(A)),
provided that the premium, charge, or
fee is required to be refundable on a
pro-rated basis and the refund is
automatically issued upon notification
of the satisfaction of the underlying
mortgage loan; and
(iii) any premium paid by the
consumer after closing.
(2)(A) After the 2-year period beginning on the effective
date of the regulations promulgated under section 155 of the
Riegle Community Development and Regulatory Improvement Act of
1994, and no more frequently than biennially after the first
increase or decrease under this subparagraph, the Bureau may by
regulation increase or decrease the number of percentage points
specified in paragraph (1)(A), if the Bureau determines that
the increase or decrease is--
(i) consistent with the consumer protections against
abusive lending provided by the amendments made by
subtitle B of title I of the Riegle Community
Development and Regulatory Improvement Act of 1994; and
(ii) warranted by the need for credit.
(B) An increase or decrease under subparagraph (A)--
(i) may not result in the number of
percentage points referred to in paragraph
(1)(A)(i)(I) being less than 6 percentage
points or greater than 10 percentage points;
and
(ii) may not result in the number of
percentage points referred to in paragraph
(1)(A)(i)(II) being less than 8 percentage
points or greater than 12 percentage points.
(C) In determining whether to increase or decrease the number
of percentage points referred to in subparagraph (A), the
Bureau shall consult with representatives of consumers,
including low-income consumers, and lenders.
(3) The amount specified in paragraph (1)(B)(ii) shall be
adjusted annually on January 1 by the annual percentage change
in the Consumer Price Index, as reported on June 1 of the year
preceding such adjustment.
(4) For purposes of paragraph (1)(B), points and fees shall
include--
(A) all items included in the finance charge, except
interest or the time-price differential;
(B) all compensation paid directly or indirectly by a
consumer or creditor to a mortgage originator from any
source, including a mortgage originator that is also
the creditor in a table-funded transaction;
(C) each of the charges listed in section 106(e)
(except an escrow for future payment of taxes),
unless--
(i) the charge is reasonable;
(ii) the creditor receives no direct or
indirect compensation; and
(iii) the charge is paid to a third party
unaffiliated with the creditor; and
(D) premiums or other charges payable at or before
closing for any credit life, credit disability, credit
unemployment, or credit property insurance, or any
other accident, loss-of-income, life or health
insurance, or any payments directly or indirectly for
any debt cancellation or suspension agreement or
contract, except that insurance premiums or debt
cancellation or suspension fees calculated and paid in
full on a monthly basis shall not be considered
financed by the creditor;
(E) the maximum prepayment fees and penalties which
may be charged or collected under the terms of the
credit transaction;
(F) all prepayment fees or penalties that are
incurred by the consumer if the loan refinances a
previous loan made or currently held by the same
creditor or an affiliate of the creditor; and
(G) such other charges as the Bureau determines to be
appropriate.
(5) Calculation of points and fees for open-end
consumer credit plans.--In the case of open-end
consumer credit plans, points and fees shall be
calculated, for purposes of this section and section
129, by adding the total points and fees known at or
before closing, including the maximum prepayment
penalties which may be charged or collected under the
terms of the credit transaction, plus the minimum
additional fees the consumer would be required to pay
to draw down an amount equal to the total credit line.
(6) This subsection shall not be construed to limit the rate
of interest or the finance charge that a person may charge a
consumer for any extension of credit.
(cc) The term ``reverse mortgage transaction'' means a
nonrecourse transaction in which a mortgage, deed of trust, or
equivalent consensual security interest is created against the
consumer's principal dwelling--
(1) securing one or more advances; and
(2) with respect to which the payment of any
principal, interest, and shared appreciation or equity
is due and payable (other than in the case of default)
only after--
(A) the transfer of the dwelling;
(B) the consumer ceases to occupy the
dwelling as a principal dwelling; or
(C) the death of the consumer.
(dd) Definitions Relating to Mortgage Origination and
Residential Mortgage Loans.--
(1) Commission.--Unless otherwise specified, the term
``Commission'' means the Federal Trade Commission.
(2) Mortgage originator.--The term ``mortgage
originator''--
(A) means any person who, for direct or
indirect compensation or gain, or in the
expectation of direct or indirect compensation
or gain--
(i) takes a residential mortgage loan
application;
(ii) assists a consumer in obtaining
or applying to obtain a residential
mortgage loan; or
(iii) offers or negotiates terms of a
residential mortgage loan;
(B) includes any person who represents to the
public, through advertising or other means of
communicating or providing information
(including the use of business cards,
stationery, brochures, signs, rate lists, or
other promotional items), that such person can
or will provide any of the services or perform
any of the activities described in subparagraph
(A);
(C) does not include any person who is--
(i) not otherwise described in
subparagraph (A) or (B) and who
performs purely administrative or
clerical tasks on behalf of a person
who is described in any such
subparagraph; or
(ii) a retailer of manufactured or
modular homes or an employee of the
retailer if the retailer or employee,
as applicable--
(I) does not receive
compensation or gain for
engaging in activities
described in subparagraph (A)
that is in excess of any
compensation or gain received
in a comparable cash
transaction;
(II) discloses to the
consumer--
(aa) in writing any
corporate affiliation
with any creditor; and
(bb) if the retailer
has a corporate
affiliation with any
creditor, at least 1
unaffiliated creditor;
and
(III) does not directly
negotiate with the consumer or
lender on loan terms (including
rates, fees, and other costs).
(D) does not include a person or entity that
only performs real estate brokerage activities
and is licensed or registered in accordance
with applicable State law, unless such person
or entity is compensated by a lender, a
mortgage broker, or other mortgage originator
or by any agent of such lender, mortgage
broker, or other mortgage originator;
(E) does not include, with respect to a
residential mortgage loan, a person, estate, or
trust that provides mortgage financing for the
sale of 3 properties in any 12-month period to
purchasers of such properties, each of which is
owned by such person, estate, or trust and
serves as security for the loan, provided that
such loan--
(i) is not made by a person, estate,
or trust that has constructed, or acted
as a contractor for the construction
of, a residence on the property in the
ordinary course of business of such
person, estate, or trust;
(ii) is fully amortizing;
(iii) is with respect to a sale for
which the seller determines in good
faith and documents that the buyer has
a reasonable ability to repay the loan;
(iv) has a fixed rate or an
adjustable rate that is adjustable
after 5 or more years, subject to
reasonable annual and lifetime
limitations on interest rate increases;
and
(v) meets any other criteria the
Bureau may prescribe;
(F) does not include the creditor (except the
creditor in a table-funded transaction) under
paragraph (1), (2), or (4) of section 129B(c);
and
(G) does not include a servicer or servicer
employees, agents and contractors, including
but not limited to those who offer or negotiate
terms of a residential mortgage loan for
purposes of renegotiating, modifying, replacing
and subordinating principal of existing
mortgages where borrowers are behind in their
payments, in default or have a reasonable
likelihood of being in default or falling
behind.
(3) Nationwide mortgage licensing system and
registry.--The term ``Nationwide Mortgage Licensing
System and Registry'' has the same meaning as in the
Secure and Fair Enforcement for Mortgage Licensing Act
of 2008.
(4) Other definitions relating to mortgage
originator.--For purposes of this subsection, a person
``assists a consumer in obtaining or applying to obtain
a residential mortgage loan'' by, among other things,
advising on residential mortgage loan terms (including
rates, fees, and other costs), preparing residential
mortgage loan packages, or collecting information on
behalf of the consumer with regard to a residential
mortgage loan.
(5) Residential mortgage loan.--The term
``residential mortgage loan'' means any consumer credit
transaction that is secured by a mortgage, deed of
trust, or other equivalent consensual security interest
on a dwelling or on residential real property that
includes a dwelling, other than a consumer credit
transaction under an open end credit plan or, for
purposes of sections 129B and 129C and section 128(a)
(16), (17), (18), and (19), and sections 128(f) and
130(k), and any regulations promulgated thereunder, an
extension of credit relating to a plan described in
section 101(53D) of title 11, United States Code.
(6) Secretary.--The term ``Secretary'', when used in
connection with any transaction or person involved with
a residential mortgage loan, means the Secretary of
Housing and Urban Development.
(7) Servicer.--The term ``servicer'' has the same
meaning as in section 6(i)(2) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C.
2605(i)(2)).
(ee) Bona Fide Discount Points and Prepayment Penalties.--For
the purposes of determining the amount of points and fees for
purposes of subsection (aa), either the amounts described in
paragraph (1) or (2) of the following paragraphs, but not both,
shall be excluded:
(1) Up to and including 2 bona fide discount points
payable by the consumer in connection with the
mortgage, but only if the interest rate from which the
mortgage's interest rate will be discounted does not
exceed by more than 1 percentage point--
(A) the average prime offer rate, as defined
in section 129C; or
(B) if secured by a personal property loan,
the average rate on a loan in connection with
which insurance is provided under title I of
the National Housing Act (12 U.S.C. 1702 et
seq.).
(2) Unless 2 bona fide discount points have been
excluded under paragraph (1), up to and including 1
bona fide discount point payable by the consumer in
connection with the mortgage, but only if the interest
rate from which the mortgage's interest rate will be
discounted does not exceed by more than 2 percentage
points--
(A) the average prime offer rate, as defined
in section 129C; or
(B) if secured by a personal property loan,
the average rate on a loan in connection with
which insurance is provided under title I of
the National Housing Act (12 U.S.C. 1702 et
seq.).
(3) For purposes of paragraph (1), the term ``bona
fide discount points'' means loan discount points which
are knowingly paid by the consumer for the purpose of
reducing, and which in fact result in a bona fide
reduction of, the interest rate or time-price
differential applicable to the mortgage.
(4) Paragraphs (1) and (2) shall not apply to
discount points used to purchase an interest rate
reduction unless the amount of the interest rate
reduction purchased is reasonably consistent with
established industry norms and practices for secondary
mortgage market transactions.
(ff) The term ``debt'' means any obligation of a person to
pay to another person money--
(1) regardless of whether such obligation is absolute
or contingent;
(2) that includes the right of the person providing
the money to an equitable remedy for breach of
performance if the breach gives rise to a right to
payment; and
(3) regardless of whether the obligation or right to
an equitable remedy described in paragraph (2) has been
reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, recourse, nonrecourse,
secured, or unsecured.
* * * * * * *
CHAPTER 2--CREDIT TRANSACTIONS
Sec.
121. General requirement of disclosure.
* * * * * * *
140B. Unfair credit practices.
* * * * * * *
Sec. 130. Civil liability
(a) Except as otherwise provided in this section, any
creditor who fails to comply with any requirement imposed under
this chapter, including any requirement under section 125,
subsection (f) or (g) of section 131, or chapter 4 or 5 of this
title with respect to any person is liable to such person in an
amount equal to the sum of--
(1) any actual damage sustained by such person as a
result of the failure;
(2)(A)(i) in the case of an individual action twice
the amount of any finance charge in connection with the
transaction, (ii) in the case of an individual action
relating to a consumer lease under chapter 5 of this
title, 25 per centum of the total amount of monthly
payments under the lease, except that the liability
under this subparagraph shall not be less than $200 nor
greater than $2,000, (iii) in the case of an individual
action relating to an open end consumer credit plan
that is not secured by real property or a dwelling,
twice the amount of any finance charge in connection
with the transaction, with a minimum of $500 and a
maximum of $5,000, or such higher amount as may be
appropriate in the case of an established pattern or
practice of such failures; or (iv) in the case of an
individual action relating to a credit transaction not
under an open end credit plan that is secured by real
property or a dwelling, not less than $400 or greater
than $4,000; or
(B) in the case of a class action, such amount as the
court may allow, except that as to each member of the
class no minimum recovery shall be applicable, and the
total recovery under this subparagraph in any class
action or series of class actions arising out of the
same failure to comply by the same creditor shall not
be more than the lesser of $1,000,000 or 1 per centum
of the net worth of the creditor;
(3) in the case of any successful action to enforce
the foregoing liability or in any action in which a
person is determined to have a right of rescission
under section 125 or 128(e)(7), the costs of the
action, together with a reasonable attorney's fee as
determined by the court; and
(4) in the case of a failure to comply with any
requirement under section 129, paragraph (1) or (2) of
section 129B(c), or section 129C(a), an amount equal to
the sum of all finance charges and fees paid by the
consumer, unless the creditor demonstrates that the
failure to comply is not material.
In determining the amount of award in any class action, the
court shall consider, among other relevant factors, the amount
of any actual damages awarded, the frequency and persistence of
failures of compliance by the creditor, the resources of the
creditor, the number of persons adversely affected, and the
extent to which the creditor's failure of compliance was
intentional. In connection with the disclosures referred to in
subsections (a) and (b) of section 127, a creditor shall have a
liability determined under paragraph (2) only for failing to
comply with the requirements of section 125, 127(a), or any of
paragraphs (4) through (13) of section 127(b), or for failing
to comply with disclosure requirements under State law for any
term or item that the Bureau has determined to be substantially
the same in meaning under section 111(a)(2) as any of the terms
or items referred to in section 127(a), or any of paragraphs
(4) through (13) of section 127(b). In connection with the
disclosures referred to in subsection (c) or (d) of section
127, a card issuer shall have a liability under this section
only to a cardholder who pays a fee described in section
127(c)(1)(A)(ii)(I) or section 127(c)(4)(A)(i) or who uses the
credit card or charge card. In connection with the disclosures
referred to in section 128, a creditor shall have a liability
determined under paragraph (2) only for failing to comply with
the requirements of section 125, of paragraph (2) (insofar as
it requires a disclosure of the ``amount financed''), (3), (4),
(5), (6), or (9) of section 128(a), or section
128(b)(2)(C)(ii), of subparagraphs (A), (B), (D), (F), or (J)
of section 128(e)(2) (for purposes of paragraph (2) or (4) of
section 128(e)), or paragraph (4)(C), (6), (7), or (8) of
section 128(e), or for failing to comply with disclosure
requirements under State law for any term which the Bureau has
determined to be substantially the same in meaning under
section 111(a)(2) as any of the terms referred to in any of
those paragraphs of section 128(a) or section 128(b)(2)(C)(ii).
With respect to any failure to make disclosures required under
this chapter or chapter 4 or 5 of this title, liability shall
be imposed only upon the creditor required to make disclosure,
except as provided in section 131.
(b) A creditor or assignee has no liability under this
section or section 108 or section 112 for any failure to comply
with any requirement imposed under this chapter or chapter 5,
if within sixty days after discovering an error, whether
pursuant to a final written examination report or notice issued
under section 108(e)(1) or through the creditor's or assignee's
own procedures, and prior to the institution of an action under
this section or the receipt of written notice of the error from
the obligor, the creditor or assignee notifies the person
concerned of the error and makes whatever adjustments in the
appropriate account are necessary to assure that the person
will not be required to pay an amount in excess of the charge
actually disclosed, or the dollar equivalent of the annual
percentage rate actually disclosed, whichever is lower.
(c) A creditor or assignee may not be held liable in any
action brought under this section or section 125 for a
violation of this title if the creditor or assignee shows by a
preponderance of evidence that the violation was not
intentional and resulted from a bona fide error notwithstanding
the maintenance of procedures reasonably adapted to avoid any
such error. Examples of a bona fide error include, but are not
limited to, clerical, calculation, computer malfunction and
programing, and printing errors, except that an error of legal
judgment with respect to a person's obligations under this
title is not a bona fide error.
(d) When there are multiple obligors in a consumer credit
transaction or consumer lease, there shall be no more than one
recovery of damages under subsection (a)(2) for a violation of
this title.
(e) Except as provided in the subsequent sentence, any action
under this section may be brought in any United States district
court, or in any other court of competent jurisdiction, within
one year from the date of the occurrence of the violation or,
in the case of a violation involving a private education loan
(as that term is defined in section 140(a)), 1 year from the
date on which the first regular payment of principal is due
under the loan. Any action under this section with respect to
any violation of section 129, 129B, or 129C may be brought in
any United States district court, or in any other court of
competent jurisdiction, before the end of the 3-year period
beginning on the date of the occurrence of the violation. This
subsection does not bar a person from asserting a violation of
this title in an action to collect the debt which was brought
more than one year from the date of the occurrence of the
violation as a matter of defense by recoupment or set-off in
such action, except as otherwise provided by State law. An
action to enforce a violation of section 129, 129B, 129C, 129D,
129E, 129F, 129G, or 129H of this Act may also be brought by
the appropriate State attorney general in any appropriate
United States district court, or any other court of competent
jurisdiction, not later than 3 years after the date on which
the violation occurs. The State attorney general shall provide
prior written notice of any such civil action to the Federal
agency responsible for enforcement under section 108 and shall
provide the agency with a copy of the complaint. If prior
notice is not feasible, the State attorney general shall
provide notice to such agency immediately upon instituting the
action. The Federal agency may--
(1) intervene in the action;
(2) upon intervening--
(A) remove the action to the appropriate
United States district court, if it was not
originally brought there; and
(B) be heard on all matters arising in the
action; and
(3) file a petition for appeal.
(f) No provision of this section, section 108(b), section
108(c), section 108(e), or section 112 imposing any liability
shall apply to any act done or omitted in good faith in
conformity with any rule, regulation, or interpretation thereof
by the Bureau or in conformity with any interpretation or
approval by an official or employee of the Federal Reserve
System duly authorized by the Bureau to issue such
interpretations or approvals under such procedures as the
Bureau may prescribe therefor, notwithstanding that after such
act or omission has occurred, such rule, regulation,
interpretation, or approval is amended, rescinded, or
determined by judicial or other authority to be invalid for any
reason.
(g) The multiple failure to disclose to any person any
information required under this chapter or chapter 4 or 5 of
this title to be disclosed in connection with a single account
under an open end consumer credit plan, other single consumer
credit sale, consumer loan, consumer lease, or other extension
of consumer credit, shall entitle the person to a single
recovery under this section but continued failure to disclose
after a recovery has been granted shall give rise to rights to
additional recoveries. This subsection does not bar any remedy
permitted by section 125.
(h) A person may not take any action to offset any amount for
which a creditor or assignee is potentially liable to such
person under subsection (a)(2) against any amount owed by such
person, unless the amount of the creditor's or assignee's
liability under this title has been determined by judgment of a
court of competent jurisdiction in an action of which such
person was a party. This subsection does not bar a consumer
then in default on the obligation from asserting a violation of
this title as an original action, or as a defense or
counterclaim to an action to collect amounts owed by the
consumer brought by a person liable under this title.
(i) Class Action Moratorium.--
(1) In general.--During the period beginning on the
date of the enactment of the Truth in Lending Class
Action Relief Act of 1995 and ending on October 1,
1995, no court may enter any order certifying any class
in any action under this title--
(A) which is brought in connection with any
credit transaction not under an open end credit
plan which is secured by a first lien on real
property or a dwelling and constitutes a
refinancing or consolidation of an existing
extension of credit; and
(B) which is based on the alleged failure of
a creditor--
(i) to include a charge actually
incurred (in connection with the
transaction) in the finance charge
disclosed pursuant to section 128;
(ii) to properly make any other
disclosure required under section 128
as a result of the failure described in
clause (i); or
(iii) to provide proper notice of
rescission rights under section 125(a)
due to the selection by the creditor of
the incorrect form from among the model
forms prescribed by the Bureau or from
among forms based on such model forms.
(2) Exceptions for certain alleged violations.--
Paragraph (1) shall not apply with respect to any
action--
(A) described in clause (i) or (ii) of
paragraph (1)(B), if the amount disclosed as
the finance charge results in an annual
percentage rate that exceeds the tolerance
provided in section 107(c); or
(B) described in paragraph (1)(B)(iii), if--
(i) no notice relating to rescission
rights under section 125(a) was
provided in any form; or
(ii) proper notice was not provided
for any reason other than the reason
described in such paragraph.
(j) Private Educational Lender.--A private educational lender
(as that term is defined in section 140(a)) has no liability
under this section for failure to comply with section
128(e)(3)).
(k) Defense to Foreclosure.--
(1) In general.--Notwithstanding any other provision
of law, when a creditor, assignee, or other holder of a
residential mortgage loan or anyone acting on behalf of
such creditor, assignee, or holder, initiates a
judicial or nonjudicial foreclosure of the residential
mortgage loan, or any other action to collect the debt
in connection with such loan, a consumer may assert a
violation by a creditor of paragraph (1) or (2) of
section 129B(c), or of section 129C(a), as a matter of
defense by recoupment or set off without regard for the
time limit on a private action for damages under
subsection (e).
(2) Amount of recoupment or setoff.--
(A) In general.--The amount of recoupment or
set-off under paragraph (1) shall equal the
amount to which the consumer would be entitled
under subsection (a) for damages for a valid
claim brought in an original action against the
creditor, plus the costs to the consumer of the
action, including a reasonable attorney's fee.
(B) Special rule.--Where such judgment is
rendered after the expiration of the applicable
time limit on a private action for damages
under subsection (e), the amount of recoupment
or set-off under paragraph (1) derived from
damages under subsection (a)(4) shall not
exceed the amount to which the consumer would
have been entitled under subsection (a)(4) for
damages computed up to the day preceding the
expiration of the applicable time limit.
(l) Exemption From Liability and Rescission in Case of
Borrower Fraud or Deception.--In addition to any other remedy
available by law or contract, no creditor or assignee shall be
liable to an obligor under this section, if such obligor, or
co-obligor has been convicted of obtaining by actual fraud such
residential mortgage loan.
(m) Creditor.--In this section, the term ``creditor'' refers
to any person charged with compliance that is not the obligor.
* * * * * * *
Sec. 140. Preventing unfair and deceptive private educational lending
practices and eliminating conflicts of interest
(a) Definitions.--As used in this section--
(1) the term ``cosigner''--
(A) means any individual who is liable for
the obligation of another without compensation,
regardless of how designated in the contract or
instrument with respect to that obligation,
other than an obligation under a private
education loan extended to consolidate a
consumer's pre-existing private education
loans;
(B) includes any person the signature of
which is requested as condition to grant credit
or to forbear on collection; and
(C) does not include a spouse of an
individual described in subparagraph (A), the
signature of whom is needed to perfect the
security interest in a loan.
(2) the term ``covered educational institution''--
(A) means any educational institution that
offers a postsecondary educational degree,
certificate, or program of study (including any
institution of higher education); and
(B) includes an agent, officer, or employee
of the educational institution;
(3) the term ``gift''--
(A)(i) means any gratuity, favor, discount,
entertainment, hospitality, loan, or other item
having more than a de minimis monetary value,
including services, transportation, lodging, or
meals, whether provided in kind, by purchase of
a ticket, payment in advance, or reimbursement
after the expense has been incurred; and
(ii) includes an item described in clause (i)
provided to a family member of an officer,
employee, or agent of a covered educational
institution, or to any other individual based
on that individual's relationship with the
officer, employee, or agent, if--
(I) the item is provided with the
knowledge and acquiescence of the
officer, employee, or agent; and
(II) the officer, employee, or agent
has reason to believe the item was
provided because of the official
position of the officer, employee, or
agent; and
(B) does not include--
(i) standard informational material
related to a loan, default aversion,
default prevention, or financial
literacy;
(ii) food, refreshments, training, or
informational material furnished to an
officer, employee, or agent of a
covered educational institution, as an
integral part of a training session or
through participation in an advisory
council that is designed to improve the
service of the private educational
lender to the covered educational
institution, if such training or
participation contributes to the
professional development of the
officer, employee, or agent of the
covered educational institution;
(iii) favorable terms, conditions,
and borrower benefits on a private
education loan provided to a student
employed by the covered educational
institution, if such terms, conditions,
or benefits are not provided because of
the student's employment with the
covered educational institution;
(iv) the provision of financial
literacy counseling or services,
including counseling or services
provided in coordination with a covered
educational institution, to the extent
that such counseling or services are
not undertaken to secure--
(I) applications for private
education loans or private
education loan volume;
(II) applications or loan
volume for any loan made,
insured, or guaranteed under
title IV of the Higher
Education Act of 1965 (20
U.S.C. 1070 et seq.); or
(III) the purchase of a
product or service of a
specific private educational
lender;
(v) philanthropic contributions to a
covered educational institution from a
private educational lender that are
unrelated to private education loans
and are not made in exchange for any
advantage related to private education
loans; or
(vi) State education grants,
scholarships, or financial aid funds
administered by or on behalf of a
State;
(4) the term ``institution of higher education'' has
the same meaning as in section 102 of the Higher
Education Act of 1965 (20 U.S.C. 1002);
(5) the term ``postsecondary educational expenses''
means any of the expenses that are included as part of
the cost of attendance of a student, as defined under
section 472 of the Higher Education Act of 1965 (20
U.S.C. 1087ll);
(6) the term ``preferred lender arrangement'' has the
same meaning as in section 151 of the Higher Education
Act of 1965;
(7) the term ``private educational lender'' means--
(A) a financial institution, as defined in
section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813) that solicits, makes, or
extends private education loans;
(B) a Federal credit union, as defined in
section 101 of the Federal Credit Union Act (12
U.S.C. 1752) that solicits, makes, or extends
private education loans; and
(C) any other person engaged in the business
of soliciting, making, or extending private
education loans;
(8) the term ``private education loan''--
(A) means a loan provided by a private
educational lender that--
(i) is not made, insured, or
guaranteed under of title IV of the
Higher Education Act of 1965 (20 U.S.C.
1070 et seq.); and
(ii) is issued expressly for
postsecondary educational expenses to a
borrower, regardless of whether the
loan is provided through the
educational institution that the
subject student attends or directly to
the borrower from the private
educational lender; and
(B) does not include an extension of credit
under an open end consumer credit plan, a
reverse mortgage transaction, a residential
mortgage transaction, or any other loan that is
secured by real property or a dwelling; and
(9) the term ``revenue sharing'' means an arrangement
between a covered educational institution and a private
educational lender under which--
(A) a private educational lender provides or
issues private education loans with respect to
students attending the covered educational
institution;
(B) the covered educational institution
recommends to students or others the private
educational lender or the private education
loans of the private educational lender; and
(C) the private educational lender pays a fee
or provides other material benefits, including
profit sharing, to the covered educational
institution in connection with the private
education loans provided to students attending
the covered educational institution or a
borrower acting on behalf of a student.
(b) Prohibition on Certain Gifts and Arrangements.--A private
educational lender may not, directly or indirectly--
(1) offer or provide any gift to a covered
educational institution in exchange for any advantage
or consideration provided to such private educational
lender related to its private education loan
activities; or
(2) engage in revenue sharing with a covered
educational institution.
(c) Prohibition on Co-Branding.--A private educational lender
may not use the name, emblem, mascot, or logo of the covered
educational institution, or other words, pictures, or symbols
readily identified with the covered educational institution, in
the marketing of private education loans in any way that
implies that the covered educational institution endorses the
private education loans offered by the private educational
lender.
(d) Advisory Board Compensation.--Any person who is employed
in the financial aid office of a covered educational
institution, or who otherwise has responsibilities with respect
to private education loans or other financial aid of the
institution, and who serves on an advisory board, commission,
or group established by a private educational lender or group
of such lenders shall be prohibited from receiving anything of
value from the private educational lender or group of lenders.
Nothing in this subsection prohibits the reimbursement of
reasonable expenses incurred by an employee of a covered
educational institution as part of their service on an advisory
board, commission, or group described in this subsection.
(e) Prohibition on Prepayment or Repayment Fees or Penalty.--
It shall be unlawful for any private educational lender to
impose a fee or penalty on a borrower for early repayment or
prepayment of any private education loan.
(f) Credit Card Protections for College Students.--
(1) Disclosure required.--An institution of higher
education shall publicly disclose any contract or other
agreement made with a card issuer or creditor for the
purpose of marketing a credit card.
(2) Inducements prohibited.--No card issuer or
creditor may offer to a student at an institution of
higher education any tangible item to induce such
student to apply for or participate in an open end
consumer credit plan offered by such card issuer or
creditor, if such offer is made--
(A) on the campus of an institution of higher
education;
(B) near the campus of an institution of
higher education, as determined by rule of the
Bureau; or
(C) at an event sponsored by or related to an
institution of higher education.
(3) Sense of the congress.--It is the sense of the
Congress that each institution of higher education
should consider adopting the following policies
relating to credit cards:
(A) That any card issuer that markets a
credit card on the campus of such institution
notify the institution of the location at which
such marketing will take place.
(B) That the number of locations on the
campus of such institution at which the
marketing of credit cards takes place be
limited.
(C) That credit card and debt education and
counseling sessions be offered as a regular
part of any orientation program for new
students of such institution.
(g) Additional Protections Relating to Borrower or Cosigner
of a Private Education Loan.--
(1) Prohibition on automatic default in case of death
or bankruptcy of non-student obligor.--With respect to
a private education loan involving a student obligor
and 1 or more cosigners, the creditor shall not declare
a default or accelerate the debt against the student
obligor on the sole basis of a bankruptcy or death of a
cosigner.
(2) Cosigner release [in case of death of
borrower].--
(A) Release of cosigner.--The holder of a
private education loan, when notified of the
death or total and permanent disability of a
student obligor, shall release within a
reasonable timeframe any cosigner from the
obligations of the cosigner under the private
education loan.
(B) Notification of release.--A holder or
servicer of a private education loan, as
applicable, shall within a reasonable time-
frame notify any cosigners for the private
education loan if a cosigner is released from
the obligations of the cosigner for the private
education loan under this paragraph.
(C) Designation of individual to act on
behalf of the borrower.--Any lender that
extends a private education loan shall provide
the student obligor an option to designate an
individual to have the legal authority to act
on behalf of the student obligor with respect
to the private education loan in the event of
the death or total and permanent disability of
the student obligor.
(3) Discharge in case of death or total and permanent
disability of borrower.--The holder of a private
education loan shall, when notified of the death or
total and permanent disability of a student obligor,
discharge the liability of the student obligor on the
loan and may not, after such notification--
(A) attempt to collect on the outstanding
liability of the student obligor; and
(B) in the case of total and permanent
disability, monitor the disability status of
the student obligor at any point after the date
of discharge.
(4) Private discharge in cases of certain discharge
for death or disability.--The holder of a private
education loan shall, when notified of the discharge of
liability of a student obligor on a loan described
under section 108(f)(5)(A) of the Internal Revenue Code
of 1986, discharge any liability of the student obligor
(and any cosigner) on any private education loan which
the private education loan holder holds and may not,
after such notification--
(A) attempt to collect on the outstanding
liability of the student obligor; and
(B) in the case of total and permanent
disability, monitor the disability status of
the student obligor at any point after the date
of discharge.
(5) Total and permanent disability defined.--For the
purposes of this subsection and with respect to an
individual, the term ``total and permanent disability''
means the individual is totally and permanently
disabled, as such term is defined in section 685.102(b)
of title 34, Code of Federal Regulations.
* * * * * * *
Sec. 140B. Unfair credit practices
(a) In General.--In connection with the extension of credit
or creation of debt in or affecting commerce, as defined in
section 4 of the Federal Trade Commission Act (15 U.S.C. 44),
including any advance of funds or sale or assignment of future
income or receivables that may or may not be credit, no person
may directly or indirectly take or receive from another person
or seek to enforce an obligation that constitutes or contains a
cognovit or confession of judgment (for purposes other than
executory process in the State of Louisiana), warrant of
attorney, or other waiver of the right to notice and the
opportunity to be heard in the event of suit or process
thereon.
(b) Exemption.--The exemptions described in section 104 shall
not apply to this section.
* * * * * * *
----------
FAIR DEBT COLLECTION PRACTICES ACT
TITLE VIII--DEBT COLLECTION PRACTICES
Sec.
801. Short title.
* * * * * * *
812A. Debt collection practices for debt collectors hired by Federal
agencies.
* * * * * * *
Sec. 803. Definitions
As used in this title--
(1) The term ``Bureau'' means the Bureau of Consumer
Financial Protection.
(2) The term ``communication'' means the conveying of
information regarding a debt directly or indirectly to
any person through any medium.
(3) The term ``consumer'' means any natural person
obligated or allegedly obligated to pay any debt.
(4) The term ``creditor'' means any person who offers
or extends credit creating a debt or to whom a debt is
owed, but such term does not include any person to the
extent that he receives an assignment or transfer of a
debt in default solely for the purpose of [facilitating
collection of such debt for another] collection of such
debt.
[(5) The term ``debt'' means any obligation or
alleged obligation of a consumer to pay money arising
out of a transaction in which the money, property,
insurance, or services which are the subject of the
transaction are primarily for personal, family, or
household purposes, whether or not such obligation has
been reduced to judgment.]
(5) The term ``debt'' means any obligation or alleged
obligation of a consumer--
(A) to pay money arising out of a transaction
in which the money, property, insurance or
services which are the subject of the
transaction are primarily for personal, family,
or household purposes, whether or not such
obligation has been reduced to judgment;
(B) to pay a loan, overpayment, fine,
penalty, restitution, fee, or other money
currently or originally owed to or guaranteed
by a Federal or State government, including any
courts or agencies; or
(C) which is secured by real or personal
property that is used or was obtained primarily
for personal, family, or household purposes,
where such property is subject to forfeiture or
repossession upon nonpayment of the obligation
or alleged obligation.
[(6) The term ``debt collector'' means any person who
uses any instrumentality of interstate commerce or the
mails in any business the principal purpose of which is
the collection of any debts, or who regularly collects
or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another.
Notwithstanding the exclusion provided by clause (F) of
the last sentence of this paragraph, the term includes
any creditor who, in the process of collecting his own
debts, uses any name other than his own which would
indicate that a third person is collecting or
attempting to collect such debts. For the purpose of
section 808(6), such term also includes any person who
uses any instrumentality of interstate commerce or the
mails in any business the principal purpose of which is
the enforcement of security interests. The term does
not
include--]
(6)(A) The term ``debt collector'' means--
(i) any person who uses any instrumentality
of interstate commerce or the mails in any
business the principal purpose of which is the
collection of any debts;
(ii) any person who regularly collects or
attempts to collect, directly or indirectly, by
the person's own means or by hiring another
debt collector, debts owed or due or asserted
to be owed or due another or that have been
obtained by assignment or transfer from
another;
(iii) any person who regularly collects debts
currently or originally owed or allegedly owed
to a Federal or State agency or court; or
(iv) notwithstanding subparagraph (B)(vi),
any creditor who in the process of collecting
debts of such creditor, uses another name that
would indicate that a third person is
collecting or attempting to collect such debts.
(B) The term does not include--
[(A)] (i) any officer or employee of a
creditor while, in the name of the creditor,
collecting debts for such creditor;
[(B)] (ii) any person while acting as a debt
collector for another person, both of whom are
related by common ownership or affiliated by
corporate control, if the person acting as a
debt collector does so only for persons to whom
it is so related or affilated and if the
principal business of such person is not the
collection of debts;
[(C)] (iii) any officer or employee of the
United States or any State (not including an
independent contractor) to the extent that
collecting or attempting to collect any debt is
in the performance of his official duties;
[(D)] (iv) any person while serving or
attempting to serve legal process on any other
person in connection with the judicial
enforcement of any debt;
[(E)] (v) any nonprofit organization which,
at the request of consumers, performs bona fide
consumer credit counseling and assists
consumers in the liquidation of their debts by
receiving payments from such consumers and
distributing such amounts to creditors;
[(F) any person collecting or attempting to
collect any debt owed or due or asserted to be
owed or due another to the extent such activity
(i) is incidental to a bona fide fiduciary
obligation or a bona fide escrow arrangement;
(ii) concerns a debt which was originated by
such person; (iii) concerns a debt which was
not in default at the time it was obtained by
such person; or (iv) concerns a debt obtained
by such person as a secured party in a
commercial credit transaction involving the
creditor.]
(vi) any person collecting or attempting to
collect any debt owed or due or asserted to be
owed or due another to the extent such
activity--
(I) is incidental to a bona fide
fiduciary obligation or a bona fide
escrow arrangement;
(II) concerns a debt which was
originated by such person;
(III) concerns a debt which was not
in default at the time it was obtained
by such person; or
(IV) concerns a debt obtained by such
person as a secured party in a
commercial credit transaction involving
the creditor.
(7) The term ``location information'' means a
consumer's place of abode and his telephone number at
such place, or his place of employment.
(8) The term ``State'' means any State, territory, or
possession of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, or any
political subdivision of any of the foregoing.
(9) The term ``medical debt'' means a debt arising
from the receipt of medical services, products, or
devices.
* * * * * * *
Sec. 805. Communication in connection with debt collection
(a) Communication With the Consumer Generally.--Without the
prior consent of the consumer given directly to the debt
collector or the express permission of a court of competent
jurisdiction, a debt collector may not communicate with a
consumer in connection with the collection of any debt--
(1) at any unusual time or place or a time or place
known or which should be known to be inconvenient to
the consumer. In the absence of knowledge of
circumstances to the contrary, a debt collector shall
assume that the convenient time for communicating with
a consumer is after 8 o'clock antimeridian and before 9
o'clock postmeridian, local time at the consumer's
location;
(2) if the debt collector knows the consumer is
represented by an attorney with respect to such debt
and has knowledge of, or can readily ascertain, such
attorney's name and address, unless the attorney fails
to respond within a reasonable period of time to a
communication from the debt collector or unless the
attorney consents to direct communication with the
consumer; or
(3) at the consumer's place of employment if the debt
collector knows or has reason to know that the
consumer's employer prohibits the consumer from
receiving such communication.
(b) Communication With Third Parties.--Except as provided in
section 804, without the prior consent of the consumer given
directly to the debt collector, or the express permission of a
court of competent jurisdiction, or as reasonably necessary to
effectuate a post judgment judicial remedy, a debt collector
may not communicate, in connection with the collection of any
debt, with any person other than the consumer, his attorney, a
consumer reporting agency if otherwise permitted by law, the
creditor, the attorney of the creditor, or the attorney of the
debt collector.
(c) Ceasing Communication.--If a consumer notifies a debt
collector in writing that the consumer refuses to pay a debt or
that the consumer wishes the debt collector to cease further
communication with the consumer, the debt collector shall not
communicate further with the consumer with respect to such
debt, except--
(1) to advise the consumer that the debt collector's
further efforts are being terminated:
(2) to notify the consumer that the debt collector or
creditor may invoke specified remedies which are
ordinarily invoked by such debt collector or creditor;
or
(3) where applicable, to notify the consumer that the
debt collector or creditor intends to invoke a
specified remedy.
If such notice from the consumer is made by mail, notification
shall be complete upon receipt.
(d) For the purpose of this section, the term ``consumer''
includes the consumer's spouse, parent (if the consumer is a
minor), guardian, executor, or administrator.
(e) Communications Concerning Servicemember Debts.--
(1) Definition.--In this subsection, the term
``covered member'' means--
(A) a covered member or a dependent as
defined in section 987(i) of title 10, United
States Code; and
(B)(i) an individual who was separated,
discharged, or released from duty described in
such section 987(i)(1), but only during the
365-day period beginning on the date of
separation, discharge, or release; or
(ii) a person, with respect to an individual
described in clause (i), described in
subparagraph (A), (D), (E), or (I) of section
1072(2) of title 10, United States Code.
(2) Prohibitions.--A debt collector may not, in
connection with the collection of any debt of a covered
member--
(A) threaten to have the covered member
reduced in rank;
(B) threaten to have the covered member's
security clearance revoked; or
(C) threaten to have the covered member
prosecuted under chapter 47 of title 10, United
States Code (the Uniform Code of Military
Justice).
Sec. 806. Harassment or abuse
A debt collector may not engage in any conduct the natural
consequence of which is to harass, oppress, or abuse any person
in connection with the collection of a debt. Without limiting
the general application of the foregoing, the following conduct
is a violation of this section:
(1) The use or threat of use of violence or other
criminal means to harm the physical person, reputation,
or property of any person.
(2) The use of obscene or profane language or
language the natural consequence of which is to abuse
the hearer or reader.
(3) The publication of a list of consumers who
allegedly refuse to pay debts, except to a consumer
reporting agency or to persons meeting the requirements
of section 603(f) or 604(3) of this Act.
(4) The advertisement for sale of any debt to coerce
payment of the debt.
(5) Causing a telephone to ring or engaging any
person in telephone conversation repeatedly or
continuously with intent to annoy, abuse, or harass any
person at the called number.
(6) Except as provided in section 804, the placement
of telephone calls without meaningful disclosure of the
caller's identity.
(7) Contacting the consumer electronically (including
by email or text message) without consent of the
consumer to communicate via that method, after such
consent has been withdrawn, or more frequently than the
consumer consents to be contacted.
* * * * * * *
Sec. 808. Unfair practices
A debt collector may not use unfair or unconscionable means
to collect or attempt to collect any debt. Without limiting the
general application of the foregoing, the following conduct is
a violation of this section:
[(1) The collection of any amount (including any
interest, fee, charge, or expense incidental to the
principal obligation) unless such amount is expressly
authorized by the agreement creating the debt or
permitted by law.]
(1) The collection of any amount (including any
interest, fee, charge, or expense incidental to the
principal obligation) unless--
(A) such amount is expressly authorized by
the agreement creating the debt or permitted by
law; and
(B) in the case of any amount charged by a
debt collector collecting a debt described in
section 803(5)(B), such amount is--
(i) reasonable in relation to the
actual costs of the collection;
(ii) authorized by a contract between
the debt collector and the Federal or
State government; and
(iii) not greater than 10 percent of
the amount collected by the debt
collector.
(2) The acceptance by a debt collector from any
person of a check or other payment instrument postdated
by more than five days unless such person is notified
in writing of the debt collector's intent to deposit
such check or instrument not more than ten nor less
than three business days prior to such deposit.
(3) The solicitation by a debt collector of any
postdated check or other postdated payment instrument
for the purpose of threatening or instituting criminal
prosecution.
(4) Depositing or threatening to deposit any
postdated check or other postdated payment instrument
prior to the date on such check or instrument.
(5) Causing charges to be made to any person for
communications by concealment of the true purpose of
the communication. Such charges include, but are not
limited to, collect telephone calls and telegram fees.
(6) Taking or threatening to take any nonjudicial
action to effect dispossession or disablement of
property if--
(A) there is no present right to possession
of the property claimed as collateral through
an enforceable security interest;
(B) there is no present intention to take
possession of the property; or
(C) the property is exempt by law from such
dispossession or disablement.
(7) Communicating with a consumer regarding a debt by
post card.
(8) Using any language or symbol, other than the debt
collector's address, on any envelope when communicating
with a consumer by use of the mails or by telegram,
except that a debt collector may use his business name
if such name does not indicate that he is in the debt
collection business.
(9) The representation to any covered member (as
defined under section 805(e)(1)) that failure to
cooperate with a debt collector will result in--
(A) a reduction in rank of the covered
member;
(B) a revocation of the covered member's
security clearance; or
(C) prosecution under chapter 47 of title 10,
United States Code (the Uniform Code of
Military Justice).
(10) Engaging in activities to collect or attempting
to collect a medical debt owed or due or asserted to be
owed or due by a consumer, before the end of the 2-year
period beginning on the date that the first payment
with respect to such medical debt is due.
Sec. 809. Validation of debts
(a) [Within five days after the initial communication with a
consumer in connection with the collection of any debt,] Notice
of Debt; Contents._Within five days after the initial
communication with a consumer in connection with the collection
of any debt, a debt collector shall[, unless the following
information is contained in the initial communication or the
consumer has paid the debt,] send the consumer a written notice
containing--
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is
owed;
(3) a statement that unless the consumer, within
thirty days after receipt of the notice, disputes the
validity of the debt, or any portion thereof, the debt
will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the
debt collector in writing within the thirty-day period
that the debt, or any portion thereof, is disputed, the
debt collector will obtain verification of the debt or
a copy of a judgment against the consumer and a copy of
such verification or judgment will be mailed to the
consumer by the debt collector; and
(5) a statement that, upon the consumer's written
request within the thirty-day period, the debt
collector will provide the consumer with the name and
address of the original creditor, if different from the
current creditor.
(b) If the consumer notifies the debt collector in writing
within the thirty-day period described in subsection (a) that
the debt, or any portion thereof, is disputed, or that the
consumer requests the name and address of the original
creditor, the debt collector shall cease collection of the
debt, or any disputed portion thereof, until the debt collector
obtains verification of the debt or a copy of a judgment, or
the name and address of the original creditor, and a copy of
such verification or judgment, or name and address of the
original creditor, is mailed to the consumer by the debt
collector. Collection activities and communications that do not
otherwise violate this title may continue during the 30-day
period referred to in subsection (a) unless the consumer has
notified the debt collector in writing that the debt, or any
portion of the debt, is disputed or that the consumer requests
the name and address of the original creditor. Any collection
activities and communication during the 30-day period may not
overshadow or be inconsistent with the disclosure of the
consumer's right to dispute the debt or request the name and
address of the original creditor.
(c) The failure of a consumer to dispute the validity of a
debt under this section may not be construed by any court as an
admission of liability by the consumer.
(d) Legal Pleadings.--A communication in the form of a formal
pleading in a civil action shall not be treated as an initial
communication for purposes of subsection (a).
(e) Notice Provisions.--The sending or delivery of any form
or notice which does not relate to the collection of a debt and
is expressly required by the Internal Revenue Code of 1986,
title V of Gramm-Leach-Bliley Act, or any provision of Federal
or State law relating to notice of data security breach or
privacy, or any regulation prescribed under any such provision
of law, shall not be treated as an initial communication in
connection with debt collection for purposes of this section.
* * * * * * *
Sec. 812A. Debt collection practices for debt collectors hired by
Federal agencies
(a) Limitation on Time To Turn Debt Over to Debt Collector.--
A Federal agency that is a creditor may sell or transfer a debt
described in section 803(5)(B) to a debt collector not earlier
than 90 days after the date on which the obligation or alleged
obligation becomes delinquent or defaults.
(b) Required Notice.--
(1) In general.--Before transferring or selling a
debt described in section 803(5)(B) to a debt collector
or contracting with a debt collector to collect such a
debt, a Federal agency shall notify the consumer not
fewer than 3 times that the Federal agency will take
such action.
(2) Frequency of notifications.--The second and third
notifications described in paragraph (1) shall be made
not less than 30 days after the date on which the
previous notification is made.
Sec. 813. Civil liability
(a) Except as otherwise provided by this section, any debt
collector who fails to comply with any provision of this title
with respect to any person is liable to such person in an
amount equal to the sum of--
(1) any actual damage sustained by such person as a
result of such failure;
(2)(A) in the case of any action by an individual,
such additional damages as the court may allow, but not
exceeding $1,000[; or] with respect to any one action
taken by a debt collector in violation of this
subchapter; or
(B) in the case of a class action, (i) such amount
for each named plaintiff as could be recovered under
subparagraph (A), and (ii) such amount as the court may
allow for all other class members, without regard to a
minimum individual recovery, not to exceed the lesser
of $500,000 [or 1 per centum of the net worth of the
debt collector; and] or 5 percent of the gross annual
revenue of the debt collector; and
(3) in the case of any successful action to enforce
the foregoing liability, the costs of the action,
together with a reasonable attorney's fee as determined
by the court. On a finding by the court that an action
under this section was brought in bad faith and for the
purpose of harassment, the court may award to the
defendant attorney's fees reasonable in relation to the
work expended and costs.
(b) In determining the amount of liability in any action
under subsection (a), the court shall consider, among other
relevant factors--
(1) in any individual action under subsection
(a)(2)(A), the maximum amount of statutory damages at
the time of noncompliance, the frequency and
persistence of noncompliance by the debt collector, the
nature of such noncompliance, and the extent to which
such noncompliance was intentional; or
(2) in any class action under subsection (a)(2)(B),
the maximum amount of statutory damages at the time of
noncompliance, the frequency and persistence of
noncompliance by the debt collector, the nature of such
noncompliance, the resources of the debt collector, the
number of persons adversely affected, and the extent to
which the debt collector's noncompliance was
intentional.
(c) A debt collector may not be held liable in any action
brought under this title if the debt collector shows by a
preponderance of evidence that the violation was not
intentional and resulted from a bona fide error notwithstanding
the maintenance of procedures reasonably adapted to avoid any
such error.
(d) An action to enforce any liability created by this title
may be brought in any appropriate United States district court
without regard to the amount in controversy, or in any other
court of competent jurisdiction, within one year from the date
on which the violation occurs. In a civil action alleging a
violation of this title, the court may award appropriate
relief, including injunctive relief.
(e) No provision of this section imposing any liability shall
apply to any act done or omitted in good faith in conformity
with any advisory opinion of the Bureau, notwithstanding that
after such act or omission has occurred, such opinion is
amended, rescinded, or determined by judicial or other
authority to be invalid for any reason.
(f) Adjustment for Inflation.--
(1) Initial adjustment.--Not later than 90 days after
the date of the enactment of this subsection, the
Bureau shall provide a percentage increase (rounded to
the nearest multiple of $100 or $1,000, as applicable)
in the amounts set forth in this section equal to the
percentage by which--
(A) the Consumer Price Index for All Urban
Consumers (all items, United States city
average) for the 12-month period ending on the
June 30 preceding the date on which the
percentage increase is provided, exceeds
(B) the Consumer Price Index for the 12-month
period preceding January 1, 1978.
(2) Annual adjustments.--With respect to any fiscal
year beginning after the date of the increase provided
under paragraph (1), the Bureau shall provide a
percentage increase (rounded to the nearest multiple of
$100 or $1,000, as applicable) in the amounts set forth
in this section equal to the percentage by which--
(A) the Consumer Price Index for All Urban
Consumers (all items, United States city
average) for the 12-month period ending on the
June 30 preceding the beginning of the fiscal
year for which the increase is made, exceeds
(B) the Consumer Price Index for the 12-month
period preceding the 12-month period described
in subparagraph (A).
Sec. 814. Administrative enforcement
(a) Federal Trade Commission.--The Federal Trade Commission
shall be authorized to enforce compliance with this title,
except to the extent that enforcement of the requirements
imposed under this title is specifically committed to another
Government agency under any of paragraphs (1) through (5) of
subsection (b), subject to subtitle B of the Consumer Financial
Protection Act of 2010. For purpose of the exercise by the
Federal Trade Commission of its functions and powers under the
Federal Trade Commission Act (15 U.S.C. 41 et seq.), a
violation of this title shall be deemed an unfair or deceptive
act or practice in violation of that Act. All of the functions
and powers of the Federal Trade Commission under the Federal
Trade Commission Act are available to the Federal Trade
Commission to enforce compliance by any person with this title,
irrespective of whether that person is engaged in commerce or
meets any other jurisdictional tests under the Federal Trade
Commission Act, including the power to enforce the provisions
of this title, in the same manner as if the violation had been
a violation of a Federal Trade Commission trade regulation
rule.
(b) Subject to subtitle B of the Consumer Financial
Protection Act of 2010, compliance with any requirements
imposed under this title shall be enforced under--
(1) section 8 of the Federal Deposit Insurance Act,
by the appropriate Federal banking agency, as defined
in section 3(q) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(q)), with respect to--
(A) national banks, Federal savings
associations, and Federal branches and Federal
agencies of foreign banks;
(B) member banks of the Federal Reserve
System (other than national banks), branches
and agencies of foreign banks (other than
Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial
lending companies owned or controlled by
foreign banks, and organizations operating
under section 25 or 25A of the Federal Reserve
Act; and
(C) banks and State savings associations
insured by the Federal Deposit Insurance
Corporation (other than members of the Federal
Reserve System), and insured State branches of
foreign banks;
(2) the Federal Credit Union Act, by the
Administrator of the National Credit Union
Administration with respect to any Federal credit
union;
(3) the Acts to regulate commerce, by the Secretary
of Transportation, with respect to all carriers subject
to the jurisdiction of the Surface Transportation
Board;
(4) the Federal Aviation Act of 1958, by the
Secretary of Transportation with respect to any air
carrier or any foreign air carrier subject to that Act;
(5) the Packers and Stockyards Act, 1921 (except as
provided in section 406 of that Act), by the Secretary
of Agriculture with respect to any activities subject
to that Act; and
(6) subtitle E of the Consumer Financial Protection
Act of 2010, by the Bureau, with respect to any person
subject to this title.
The terms used in paragraph (1) that are not defined in this
title or otherwise defined in section 3(s) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the
meaning given to them in section 1(b) of the International
Banking Act of 1978 (12 U.S.C. 3101).
(c) For the purpose of the exercise by any agency referred to
in subsection (b) of its powers under any Act referred to in
that subsection, a violation of any requirement imposed under
this title shall be deemed to be a violation of a requirement
imposed under that Act. In addition to its powers under any
provision of law specifically referred to in subsection (b),
each of the agencies referred to in that subsection may
exercise, for the purpose of enforcing compliance with any
requirement imposed under this title any other authority
conferred on it by law, except as provided in subsection (d).
(d) Except as provided in section 1029(a) of the Consumer
Financial Protection Act of 2010, the Bureau may prescribe
rules with respect to the collection of debts by debt
collectors, as defined in this title. Such rules--
(1) may not allow a debt collector to send unlimited
electronic communications to a consumer;
(2) shall require debt collectors to obtain consent
directly from consumers before contacting them using a
method other than by postal mail or by phone;
(3) may not waive the requirements of the Electronic
Signatures in Global and National Commerce Act (15
U.S.C. 7001 et seq.); and
(4) shall allow consumers to opt out of any method of
communication that the debt collector uses to
communicate with consumers, including a method for
which such consumer had given prior consent.
Sec. 815. Reports to Congress by the Bureau
(a) Not later than one year after the effective date of this
title and at one-year intervals thereafter, the Bureau shall
make reports to the Congress concerning the administration of
its functions under this title, including such recommendations
as the Bureau deems necessary or appropriate. In addition, each
report of the Bureau shall include its assessment of the extent
to which compliance with this title is being achieved and a
summary of the enforcement actions taken by the Bureau under
section 814 of this title. Each such report shall also include
an analysis of the impact of electronic communications by debt
collectors on consumer experiences with debt collection,
including a consideration of consumer complaints about the use
of electronic communications in debt collection.
(b) In the exercise of its functions under this title, the
Bureau may obtain upon request the views of any other Federal
agency which exercises enforcement functions under section 814
of this title.
* * * * * * *
----------
FAIR CREDIT REPORTING ACT
TITLE VI--CONSUMER CREDIT REPORTING
* * * * * * *
Sec. 603. Definitions and rules of construction
(a) Definitions and rules of construction set forth in this
section are applicable for the purposes of this title.
(b) The term ``person'' means any individual, partnership,
corporation, trust, estate, cooperative, association,
government or governmental subdivision or agency, or other
entity.
(c) The term ``consumer'' means an individual.
(d) Consumer Report.--
(1) In general.--The term ``consumer report'' means
any written, oral, or other communication of any
information by a consumer reporting agency bearing on a
consumer's credit worthiness, credit standing, credit
capacity, character, general reputation, personal
characteristics, or mode of living which is used or
expected to be used or collected in whole or in part
for the purpose of serving as a factor in establishing
the consumer's eligibility for--
(A) credit or insurance to be used primarily
for personal, family, or household purposes;
(B) employment purposes; or
(C) any other purpose authorized under
section 604.
(2) Exclusions.--Except as provided in paragraph (3),
the term ``consumer report'' does not include--
(A) subject to section 624, any--
(i) report containing information
solely as to transactions or
experiences between the consumer and
the person making the report;
(ii) communication of that
information among persons related by
common ownership or affiliated by
corporate control; or
(iii) communication of other
information among persons related by
common ownership or affiliated by
corporate control, if it is clearly and
conspicuously disclosed to the consumer
that the information may be
communicated among such persons and the
consumer is given the opportunity,
before the time that the information is
initially communicated, to direct that
such information not be communicated
among such persons;
(B) any authorization or approval of a
specific extension of credit directly or
indirectly by the issuer of a credit card or
similar device;
(C) any report in which a person who has been
requested by a third party to make a specific
extension of credit directly or indirectly to a
consumer conveys his or her decision with
respect to such request, if the third party
advises the consumer of the name and address of
the person to whom the request was made, and
such person makes the disclosures to the
consumer required under section 615; or
(D) a communication described in subsection
(o) or (x).
(3) Restriction on sharing of medical information.--
Except for information or any communication of
information disclosed as provided in section 604(g)(3),
the exclusions in paragraph (2) shall not apply with
respect to information disclosed to any person related
by common ownership or affiliated by corporate control,
if the information is--
(A) medical information;
(B) an individualized list or description
based on the payment transactions of the
consumer for medical products or services; or
(C) an aggregate list of identified consumers
based on payment transactions for medical
products or services.
(e) The term ``investigative consumer report'' means a
consumer report or portion thereof in which information on a
consumer's character, general reputation, personal
characteristics, or mode of living is obtained through personal
interviews with neighbors, friends, or associates of the
consumer reported on or with others with whom he is acquainted
or who may have knowledge concerning any such items of
information. However, such information shall not include
specific factual information on a consumer's credit record
obtained directly from a creditor of the consumer or from a
consumer reporting agency when such information was obtained
directly from a creditor of the consumer or from the consumer.
(f) The term ``consumer reporting agency'' means any person
which, for monetary fees, dues, or on a cooperative nonprofit
basis, regularly engages in whole or in part in the practice of
assembling or evaluating consumer credit information or other
information on consumers for the purpose of furnishing consumer
reports to third parties, and which uses any means or facility
of interstate commerce for the purpose of preparing or
furnishing consumer reports.
(g) The term ``file'', when used in connection with
information on any consumer, means all of the information on
that consumer recorded and retained by a consumer reporting
agency regardless of how the information is stored.
(h) The term ``employment purposes'' when used in connection
with a consumer report means a report used for the purpose of
evaluating a consumer for employment, promotion, reassignment
or retention as an employee.
(i) Medical Information.--The term ``medical information''--
(1) means information or data, whether oral or
recorded, in any form or medium, created by or derived
from a health care provider or the consumer, that
relates to--
(A) the past, present, or future physical,
mental, or behavioral health or condition of an
individual;
(B) the provision of health care to an
individual; or
(C) the payment for the provision of health
care to an individual.
(2) does not include the age or gender of a consumer,
demographic information about the consumer, including a
consumer's residence address or e-mail address, or any
other information about a consumer that does not relate
to the physical, mental, or behavioral health or
condition of a consumer, including the existence or
value of any insurance policy.
(j) Definitions Relating to Child Support Obligations.--
(1) Overdue support.--The term ``overdue support''
has the meaning given to such term in section 466(e) of
the Social Security Act.
(2) State or local child support enforcement
agency.--The term ``State or local child support
enforcement agency'' means a State or local agency
which administers a State or local program for
establishing and enforcing child support obligations.
(k) Adverse Action.--
(1) Actions included.--The term ``adverse action''--
(A) has the same meaning as in section
701(d)(6) of the Equal Credit Opportunity Act;
and
(B) means--
(i) a denial or cancellation of, an
increase in any charge for, or a
reduction or other adverse or
unfavorable change in the terms of
coverage or amount of, any insurance,
existing or applied for, in connection
with the underwriting of insurance;
(ii) a denial of employment or any
other decision for employment purposes
that adversely affects any current or
prospective employee;
(iii) a denial or cancellation of, an
increase in any charge for, or any
other adverse or unfavorable change in
the terms of, any license or benefit
described in section 604(a)(3)(D); and
(iv) an action taken or determination
that is--
(I) made in connection with
an application that was made
by, or a transaction that was
initiated by, any consumer, or
in connection with a review of
an account under section
604(a)(3)(F)(ii); and
(II) adverse to the interests
of the consumer.
(2) Applicable findings, decisions, commentary, and
orders.--For purposes of any determination of whether
an action is an adverse action under paragraph (1)(A),
all appropriate final findings, decisions, commentary,
and orders issued under section 701(d)(6) of the Equal
Credit Opportunity Act by the Bureau or any court shall
apply.
(l) Firm Offer of Credit or Insurance.--The term ``firm offer
of credit or insurance'' means any offer of credit or insurance
to a consumer that will be honored if the consumer is
determined, based on information in a consumer report on the
consumer, to meet the specific criteria used to select the
consumer for the offer, except that the offer may be further
conditioned on one or more of the following:
(1) The consumer being determined, based on
information in the consumer's application for the
credit or insurance, to meet specific criteria bearing
on credit worthiness or insurability, as applicable,
that are established--
(A) before selection of the consumer for the
offer; and
(B) for the purpose of determining whether to
extend credit or insurance pursuant to the
offer.
(2) Verification--
(A) that the consumer continues to meet the
specific criteria used to select the consumer
for the offer, by using information in a
consumer report on the consumer, information in
the consumer's application for the credit or
insurance, or other information bearing on the
credit worthiness or insurability of the
consumer; or
(B) of the information in the consumer's
application for the credit or insurance, to
determine that the consumer meets the specific
criteria bearing on credit worthiness or
insurability.
(3) The consumer furnishing any collateral that is a
requirement for the extension of the credit or
insurance that was--
(A) established before selection of the
consumer for the offer of credit or insurance;
and
(B) disclosed to the consumer in the offer of
credit or insurance.
(m) Credit or Insurance Transaction That Is Not Initiated by
the Consumer.--The term ``credit or insurance transaction that
is not initiated by the consumer'' does not include the use of
a consumer report by a person with which the consumer has an
account or insurance policy, for purposes of--
(1) reviewing the account or insurance policy; or
(2) collecting the account.
(n) State.--The term ``State'' means any State, the
Commonwealth of Puerto Rico, the District of Columbia, and any
territory or possession of the United States.
(o) Excluded Communications.--A communication is described in
this subsection if it is a communication--
(1) that, but for subsection (d)(2)(D), would be an
investigative consumer report;
(2) that is made to a prospective employer for the
purpose of--
(A) procuring an employee for the employer;
or
(B) procuring an opportunity for a natural
person to work for the employer;
(3) that is made by a person who regularly performs
such procurement;
(4) that is not used by any person for any purpose
other than a purpose described in subparagraph (A) or
(B) of paragraph (2); and
(5) with respect to which--
(A) the consumer who is the subject of the
communication--
(i) consents orally or in writing to
the nature and scope of the
communication, before the collection of
any information for the purpose of
making the communication;
(ii) consents orally or in writing to
the making of the communication to a
prospective employer, before the making
of the communication; and
(iii) in the case of consent under
clause (i) or (ii) given orally, is
provided written confirmation of that
consent by the person making the
communication, not later than 3
business days after the receipt of the
consent by that person;
(B) the person who makes the communication
does not, for the purpose of making the
communication, make any inquiry that if made by
a prospective employer of the consumer who is
the subject of the communication would violate
any applicable Federal or State equal
employment opportunity law or regulation; and
(C) the person who makes the communication--
(i) discloses in writing to the
consumer who is the subject of the
communication, not later than 5
business days after receiving any
request from the consumer for such
disclosure, the nature and substance of
all information in the consumer's file
at the time of the request, except that
the sources of any information that is
acquired solely for use in making the
communication and is actually used for
no other purpose, need not be disclosed
other than under appropriate discovery
procedures in any court of competent
jurisdiction in which an action is
brought; and
(ii) notifies the consumer who is the
subject of the communication, in
writing, of the consumer's right to
request the information described in
clause (i).
(p) Consumer Reporting Agency That Compiles and Maintains
Files on Consumers on a Nationwide Basis.--The term ``consumer
reporting agency that compiles and maintains files on consumers
on a nationwide basis'' means a consumer reporting agency that
regularly engages in the practice of assembling or evaluating,
and maintaining, for the purpose of furnishing consumer reports
to third parties bearing on a consumer's credit worthiness,
credit standing, or credit capacity, each of the following
regarding consumers residing nationwide:
(1) Public record information.
(2) Credit account information from persons who
furnish that information regularly and in the ordinary
course of business.
(q) Definitions Relating to Fraud Alerts.--
(1) Active duty military consumer.--The term ``active
duty military consumer'' means a consumer in military
service who--
(A) is on active duty (as defined in section
101(d)(1) of title 10, United States Code) or
is a reservist performing duty under a call or
order to active duty under a provision of law
referred to in section 101(a)(13) of title 10,
United States Code; and
(B) is assigned to service away from the
usual duty station of the consumer.
(2) Fraud alert; active duty alert.--The terms
``fraud alert'' and ``active duty alert'' mean a
statement in the file of a consumer that--
(A) notifies all prospective users of a
consumer report relating to the consumer that
the consumer may be a victim of fraud,
including identity theft, or is an active duty
military consumer, as applicable; and
(B) is presented in a manner that facilitates
a clear and conspicuous view of the statement
described in subparagraph (A) by any person
requesting such consumer report.
(3) Identity theft.--The term ``identity theft''
means a fraud committed using the identifying
information of another person, subject to such further
definition as the Bureau may prescribe, by regulation.
(4) Identity theft report.--The term ``identity theft
report'' has the meaning given that term by rule of the
Bureau, and means, at a minimum, a report--
(A) that alleges an identity theft;
(B) that is a copy of an official, valid
report filed by a consumer with an appropriate
Federal, State, or local law enforcement
agency, including the United States Postal
Inspection Service, or such other government
agency deemed appropriate by the Bureau; and
(C) the filing of which subjects the person
filing the report to criminal penalties
relating to the filing of false information if,
in fact, the information in the report is
false.
(5) New credit plan.--The term ``new credit plan''
means a new account under an open end credit plan (as
defined in section 103(i) of the Truth in Lending Act)
or a new credit transaction not under an open end
credit plan.
(r) Credit and Debit Related Terms--
(1) Card issuer.--The term ``card issuer'' means--
(A) a credit card issuer, in the case of a
credit card; and
(B) a debit card issuer, in the case of a
debit card.
(2) Credit card.--The term ``credit card'' has the
same meaning as in section 103 of the Truth in Lending
Act.
(3) Debit card.--The term ``debit card'' means any
card issued by a financial institution to a consumer
for use in initiating an electronic fund transfer from
the account of the consumer at such financial
institution, for the purpose of transferring money
between accounts or obtaining money, property, labor,
or services.
(4) Account and electronic fund transfer.--The terms
``account'' and ``electronic fund transfer'' have the
same meanings as in section 903 of the Electronic Fund
Transfer Act.
(5) Credit and creditor.--The terms ``credit'' and
``creditor'' have the same meanings as in section 702
of the Equal Credit Opportunity Act.
(s) Federal Banking Agency.--The term ``Federal banking
agency'' has the same meaning as in section 3 of the Federal
Deposit Insurance Act.
(t) Financial Institution.--The term ``financial
institution'' means a State or National bank, a State or
Federal savings and loan association, a mutual savings bank, a
State or Federal credit union, or any other person that,
directly or indirectly, holds a transaction account (as defined
in section 19(b) of the Federal Reserve Act) belonging to a
consumer.
(u) Reseller.--The term ``reseller'' means a consumer
reporting agency that--
(1) assembles and merges information contained in the
database of another consumer reporting agency or
multiple consumer reporting agencies concerning any
consumer for purposes of furnishing such information to
any third party, to the extent of such activities; and
(2) does not maintain a database of the assembled or
merged information from which new consumer reports are
produced.
(v) Commission.--The term ``Commission'' means the Bureau.
(w) The term ``Bureau'' means the Bureau of Consumer
Financial Protection.
(x) Nationwide Specialty Consumer Reporting Agency.--The term
``nationwide specialty consumer reporting agency'' means a
consumer reporting agency that compiles and maintains files on
consumers on a nationwide basis relating to--
(1) medical records or payments;
(2) residential or tenant history;
(3) check writing history;
(4) employment history; or
(5) insurance claims.
(y) Exclusion of Certain Communications for Employee
Investigations.--
(1) Communications described in this subsection.--A
communication is described in this subsection if--
(A) but for subsection (d)(2)(D), the
communication would be a consumer report;
(B) the communication is made to an employer
in connection with an investigation of--
(i) suspected misconduct relating to
employment; or
(ii) compliance with Federal, State,
or local laws and regulations, the
rules of a self-regulatory
organization, or any preexisting
written policies of the employer;
(C) the communication is not made for the
purpose of investigating a consumer's credit
worthiness, credit standing, or credit
capacity; and
(D) the communication is not provided to any
person except--
(i) to the employer or an agent of
the employer;
(ii) to any Federal or State officer,
agency, or department, or any officer,
agency, or department of a unit of
general local government;
(iii) to any self-regulatory
organization with regulatory authority
over the activities of the employer or
employee;
(iv) as otherwise required by law; or
(v) pursuant to section 608.
(2) Subsequent disclosure.--After taking any adverse
action based in whole or in part on a communication
described in paragraph (1), the employer shall disclose
to the consumer a summary containing the nature and
substance of the communication upon which the adverse
action is based, except that the sources of information
acquired solely for use in preparing what would be but
for subsection (d)(2)(D) an investigative consumer
report need not be disclosed.
(3) Self-regulatory organization defined.--For
purposes of this subsection, the term ``self-regulatory
organization'' includes any self-regulatory
organization (as defined in section 3(a)(26) of the
Securities Exchange Act of 1934), any entity
established under title I of the Sarbanes-Oxley Act of
2002, any board of trade designated by the Commodity
Futures Trading Commission, and any futures association
registered with such Commission.
(z) Veteran.--The term ``veteran'' has the meaning given the
term in section 101 of title 38, United States Code.
(aa) Veteran's Medical Debt.--The term ``veteran's medical
debt''--
(1) means a medical collection debt of a veteran owed
to a non-Department of Veterans Affairs health care
provider that was submitted to the Department for
payment for health care authorized by the Department of
Veterans Affairs; and
(2) includes medical collection debt that the
Department of Veterans Affairs has wrongfully charged a
veteran.
(bb) Medical Debt.--The term ``medical debt'' means a debt
arising from the receipt of medical services, products, or
devices.
(cc) Medically Necessary Procedure.--The term ``medically
necessary procedure'' means--
(1) health care services or supplies needed to
diagnose or treat an illness, injury, condition,
disease, or its symptoms and that meet accepted
standards of medicine; and
(2) health care to prevent illness or detect illness
at an early stage, when treatment is likely to work
best (including preventive services such as pap tests,
flu shots, and screening mammograms).
* * * * * * *
Sec. 605. Requirements relating to information contained in consumer
reports
(a) Information Excluded From Consumer Reports.--Except as
authorized under subsection (b), no consumer reporting agency
may make any consumer report containing any of the following
items of information:
(1) Cases under title 11 of the United States Code or under
the Bankruptcy Act that, from the date of entry of the order
for relief or the date of adjudication, as the case may be,
antedate the report by more than 10 years.
(2) Civil suits, civil judgments, and records of arrest that,
from date of entry, antedate the report by more than seven
years or until the governing statute of limitations has
expired, whichever is the longer period.
(3) Paid tax liens which, from date of payment, antedate the
report by more than seven years.
(4) Accounts placed for collection or charged to profit and
loss which antedate the report by more than seven years.
(5) Any other adverse item of information, other than records
of convictions of crimes which antedates the report by more
than seven years.
(6) The name, address, and telephone number of any
medical information furnisher that has notified the
agency of its status, unless--
(A) such name, address, and telephone number
are restricted or reported using codes that do
not identify, or provide information sufficient
to infer, the specific provider or the nature
of such services, products, or devices to a
person other than the consumer; or
(B) the report is being provided to an
insurance company for a purpose relating to
engaging in the business of insurance other
than property and casualty insurance.
(7) With respect to a consumer reporting agency
described in section 603(p), any information related to
a veteran's medical debt if the date on which the
hospital care, medical services, or extended care
services was rendered relating to the debt antedates
the report by less than 1 year if the consumer
reporting agency has actual knowledge that the
information is related to a veteran's medical debt and
the consumer reporting agency is in compliance with its
obligation under section 302(c)(5) of the Economic
Growth, Regulatory Relief, and Consumer Protection Act.
(8) With respect to a consumer reporting agency
described in section 603(p), any information related to
a fully paid or settled veteran's medical debt that had
been characterized as delinquent, charged off, or in
collection if the consumer reporting agency has actual
knowledge that the information is related to a
veteran's medical debt and the consumer reporting
agency is in compliance with its obligation under
section 302(c)(5) of the Economic Growth, Regulatory
Relief, and Consumer Protection Act.
(9) Any information related to a debt arising from a
medically necessary procedure.
(10) Any information related to a medical debt, if
the date on which such debt was placed for collection,
charged to profit or loss, or subjected to any similar
action antedates the report by less than 365 calendar
days.
(b) The provisions of paragraphs (1) through (5) of
subsection (a) are not applicable in the case of any consumer
credit report to be used in connection with--
(1) a credit transaction involving, or which may
reasonably be expected to involve, a principal amount
of $150,000 or more;
(2) the underwriting of life insurance involving, or
which may reasonably be expected to involve, a face
amount of $150,000 or more; or
(3) the employment of any individual at an annual
salary which equals, or which may reasonably be
expected to equal $75,000, or more.
(c) Running of Reporting Period.--
(1) In general.--The 7-year period referred to in
paragraphs (4) and (6) of subsection (a) shall begin,
with respect to any delinquent account that is placed
for collection (internally or by referral to a third
party, whichever is earlier), charged to profit and
loss, or subjected to any similar action, upon the
expiration of the 180-day period beginning on the date
of the commencement of the delinquency which
immediately preceded the collection activity, charge to
profit and loss, or similar action.
(2) Effective date.--Paragraph (1) shall apply only
to items of information added to the file of a consumer
on or after the date that is 455 days after the date of
enactment of the Consumer Credit Reporting Reform Act
of 1996.
(d) Information Required To Be Disclosed.--
(1) Title 11 information.--Any consumer reporting
agency that furnishes a consumer report that contains
information regarding any case involving the consumer
that arises under title 11, United States Code, shall
include in the report an identification of the chapter
of such title 11 under which such case arises if
provided by the source of the information. If any case
arising or filed under title 11, United States Code, is
withdrawn by the consumer before a final judgment, the
consumer reporting agency shall include in the report
that such case or filing was withdrawn upon receipt of
documentation certifying such withdrawal.
(2) Key factor in credit score information.--Any
consumer reporting agency that furnishes a consumer
report that contains any credit score or any other risk
score or predictor on any consumer shall include in the
report a clear and conspicuous statement that a key
factor (as defined in section 609(f)(2)(B)) that
adversely affected such score or predictor was the
number of enquiries, if such a predictor was in fact a
key factor that adversely affected such score. This
paragraph shall not apply to a check services company,
acting as such, which issues authorizations for the
purpose of approving or processing negotiable
instruments, electronic fund transfers, or similar
methods of payments, but only to the extent that such
company is engaged in such activities.
(e) Indication of Closure of Account by Consumer.--If a
consumer reporting agency is notified pursuant to section
623(a)(4) that a credit account of a consumer was voluntarily
closed by the consumer, the agency shall indicate that fact in
any consumer report that includes information related to the
account.
(f) Indication of Dispute by Consumer.--If a consumer
reporting agency is notified pursuant to section 623(a)(3) that
information regarding a consumer who was furnished to the
agency is disputed by the consumer, the agency shall indicate
that fact in each consumer report that includes the disputed
information.
(g) Truncation of Credit Card and Debit Card Numbers.--
(1) In general.--Except as otherwise provided in this
subsection, no person that accepts credit cards or
debit cards for the transaction of business shall print
more than the last 5 digits of the card number or the
expiration date upon any receipt provided to the
cardholder at the point of the sale or transaction.
(2) Limitation.--This subsection shall apply only to
receipts that are electronically printed, and shall not
apply to transactions in which the sole means of
recording a credit card or debit card account number is
by handwriting or by an imprint or copy of the card.
(3) Effective date.--This subsection shall become
effective--
(A) 3 years after the date of enactment of
this subsection, with respect to any cash
register or other machine or device that
electronically prints receipts for credit card
or debit card transactions that is in use
before January 1, 2005; and
(B) 1 year after the date of enactment of
this subsection, with respect to any cash
register or other machine or device that
electronically prints receipts for credit card
or debit card transactions that is first put
into use on or after January 1, 2005.
(h) Notice of Discrepancy in Address.--
(1) In general.--If a person has requested a consumer
report relating to a consumer from a consumer reporting
agency described in section 603(p), the request
includes an address for the consumer that substantially
differs from the addresses in the file of the consumer,
and the agency provides a consumer report in response
to the request, the consumer reporting agency shall
notify the requester of the existence of the
discrepancy.
(2) Regulations.--
(A) Regulations required.--The Bureau shall,,
in consultation with the Federal banking
agencies, the National Credit Union
Administration, and the Federal Trade
Commission,, prescribe regulations providing
guidance regarding reasonable policies and
procedures that a user of a consumer report
should employ when such user has received a
notice of discrepancy under paragraph (1).
(B) Policies and procedures to be included.--
The regulations prescribed under subparagraph
(A) shall describe reasonable policies and
procedures for use by a user of a consumer
report--
(i) to form a reasonable belief that
the user knows the identity of the
person to whom the consumer report
pertains; and
(ii) if the user establishes a
continuing relationship with the
consumer, and the user regularly and in
the ordinary course of business
furnishes information to the consumer
reporting agency from which the notice
of discrepancy pertaining to the
consumer was obtained, to reconcile the
address of the consumer with the
consumer reporting agency by furnishing
such address to such consumer reporting
agency as part of information regularly
furnished by the user for the period in
which the relationship is established.
* * * * * * *
SEC. 623. RESPONSIBILITIES OF FURNISHERS OF INFORMATION TO CONSUMER
REPORTING AGENCIES.
(a) Duty of Furnishers of Information To Provide Accurate
Information.--
(1) Prohibition.--
(A) Reporting information with actual
knowledge of errors.--A person shall not
furnish any information relating to a consumer
to any consumer reporting agency if the person
knows or has reasonable cause to believe that
the information is inaccurate.
(B) Reporting information after notice and
confirmation of errors.--A person shall not
furnish information relating to a consumer to
any consumer reporting agency if--
(i) the person has been notified by
the consumer, at the address specified
by the person for such notices, that
specific information is inaccurate; and
(ii) the information is, in fact,
inaccurate.
(C) No address requirement.--A person who
clearly and conspicuously specifies to the
consumer an address for notices referred to in
subparagraph (B) shall not be subject to
subparagraph (A); however, nothing in
subparagraph (B) shall require a person to
specify such an address.
(D) Definition.--For purposes of subparagraph
(A), the term ``reasonable cause to believe
that the information is inaccurate'' means
having specific knowledge, other than solely
allegations by the consumer, that would cause a
reasonable person to have substantial doubts
about the accuracy of the information.
(E) Rehabilitation of private education
loans.--
(i) In general.--Notwithstanding any
other provision of this section, a
consumer may request a financial
institution to remove from a consumer
report a reported default regarding a
private education loan, and such
information shall not be considered
inaccurate, if--
(I) the financial institution
chooses to offer a loan
rehabilitation program which
includes, without limitation, a
requirement of the consumer to
make consecutive on-time
monthly payments in a number
that demonstrates, in the
assessment of the financial
institution offering the loan
rehabilitation program, a
renewed ability and willingness
to repay the loan; and
(II) the requirements of the
loan rehabilitation program
described in subclause (I) are
successfully met.
(ii) Banking agencies.--
(I) In general.--If a
financial institution is
supervised by a Federal banking
agency, the financial
institution shall seek written
approval concerning the terms
and conditions of the loan
rehabilitation program
described in clause (i) from
the appropriate Federal banking
agency.
(II) Feedback.--An
appropriate Federal banking
agency shall provide feedback
to a financial institution
within 120 days of a request
for approval under subclause
(I).
(iii) Limitation.--
(I) In general.--A consumer
may obtain the benefits
available under this subsection
with respect to rehabilitating
a loan only 1 time per loan.
(II) Rule of construction.--
Nothing in this subparagraph
may be construed to require a
financial institution to offer
a loan rehabilitation program
or to remove any reported
default from a consumer report
as a consideration of a loan
rehabilitation program, except
as described in clause (i).
(iv) Definitions.--For purposes of
this subparagraph--
(I) the term ``appropriate
Federal banking agency'' has
the meaning given the term in
section 3 of the Federal
Deposit Insurance Act (12
U.S.C. 1813); and
(II) the term ``private
education loan'' has the
meaning given the term in
section 140(a) of the Truth in
Lending Act (15 U.S.C.
1650(a)).
(F) Reporting information during covid-19
pandemic.--
(i) Definitions.--In this subsection:
(I) Accommodation.--The term
``accommodation'' includes an
agreement to defer 1 or more
payments, make a partial
payment, forbear any delinquent
amounts, modify a loan or
contract, or any other
assistance or relief granted to
a consumer who is affected by
the coronavirus disease 2019
(COVID-19) pandemic during the
covered period.
(II) Covered period.--The
term ``covered period'' means
the period beginning on January
31, 2020 and ending on the
later of--
(aa) 120 days after
the date of enactment
of this subparagraph;
or
(bb) 120 days after
the date on which the
national emergency
concerning the novel
coronavirus disease
(COVID-19) outbreak
declared by the
President on March 13,
2020 under the National
Emergencies Act (50
U.S.C. 1601 et seq.)
terminates.
(ii) Reporting.--Except as provided
in clause (iii), if a furnisher makes
an accommodation with respect to 1 or
more payments on a credit obligation or
account of a consumer, and the consumer
makes the payments or is not required
to make 1 or more payments pursuant to
the accommodation, the furnisher
shall--
(I) report the credit
obligation or account as
current; or
(II) if the credit obligation
or account was delinquent
before the accommodation--
(aa) maintain the
delinquent status
during the period in
which the accommodation
is in effect; and
(bb) if the consumer
brings the credit
obligation or account
current during the
period described in
item (aa), report the
credit obligation or
account as current.
(iii) Exception.--Clause (ii) shall
not apply with respect to a credit
obligation or account of a consumer
that has been charged-off.
(2) Duty to correct and update information.--A person
who--
(A) regularly and in the ordinary course of
business furnishes information to one or more
consumer reporting agencies about the person's
transactions or experiences with any consumer;
and
(B) has furnished to a consumer reporting
agency information that the person determines
is not complete or accurate,
shall promptly notify the consumer reporting agency of
that determination and provide to the agency any
corrections to that information, or any additional
information, that is necessary to make the information
provided by the person to the agency complete and
accurate, and shall not thereafter furnish to the
agency any of the information that remains not complete
or accurate.
(3) Duty to provide notice of dispute.--If the
completeness or accuracy of any information furnished
by any person to any consumer reporting agency is
disputed to such person by a consumer, the person may
not furnish the information to any consumer reporting
agency without notice that such information is disputed
by the consumer.
(4) Duty to provide notice of closed accounts.--A
person who regularly and in the ordinary course of
business furnishes information to a consumer reporting
agency regarding a consumer who has a credit account
with that person shall notify the agency of the
voluntary closure of the account by the consumer, in
information regularly furnished for the period in which
the account is closed.
(5) Duty to provide notice of delinquency of
accounts.--(A) In general.--A person who furnishes
information to a consumer reporting agency regarding a
delinquent account being placed for collection, charged
to profit or loss, or subjected to any similar action
shall, not later than 90 days after furnishing the
information, notify the agency of the date of
delinquency on the account, which shall be the month
and year of the commencement of the delinquency on the
account that immediately preceded the action.
(B) Rule of construction.--For purposes of
this paragraph only, and provided that the
consumer does not dispute the information, a
person that furnishes information on a
delinquent account that is placed for
collection, charged for profit or loss, or
subjected to any similar action, complies with
this paragraph, if--
(i) the person reports the same date
of delinquency as that provided by the
creditor to which the account was owed
at the time at which the commencement
of the delinquency occurred, if the
creditor previously reported that date
of delinquency to a consumer reporting
agency;
(ii) the creditor did not previously
report the date of delinquency to a
consumer reporting agency, and the
person establishes and follows
reasonable procedures to obtain the
date of delinquency from the creditor
or another reliable source and reports
that date to a consumer reporting
agency as the date of delinquency; or
(iii) the creditor did not previously
report the date of delinquency to a
consumer reporting agency and the date
of delinquency cannot be reasonably
obtained as provided in clause (ii),
the person establishes and follows
reasonable procedures to ensure the
date reported as the date of
delinquency precedes the date on which
the account is placed for collection,
charged to profit or loss, or subjected
to any similar action, and reports such
date to the credit reporting agency.
(6) Duties of furnishers upon notice of identity
theft-related information.--
(A) Reasonable procedures.--A person that
furnishes information to any consumer reporting
agency shall have in place reasonable
procedures to respond to any notification that
it receives from a consumer reporting agency
under section 605B relating to information
resulting from identity theft, to prevent that
person from refurnishing such blocked
information.
(B) Information alleged to result from
identity theft.--If a consumer submits an
identity theft report to a person who furnishes
information to a consumer reporting agency at
the address specified by that person for
receiving such reports stating that information
maintained by such person that purports to
relate to the consumer resulted from identity
theft, the person may not furnish such
information that purports to relate to the
consumer to any consumer reporting agency,
unless the person subsequently knows or is
informed by the consumer that the information
is correct.
(7) Negative information.--
(A) Notice to consumer required.--
(i) In general.--If any financial
institution that extends credit and
regularly and in the ordinary course of
business furnishes information to a
consumer reporting agency described in
section 603(p) furnishes negative
information to such an agency regarding
credit extended to a customer, the
financial institution shall provide a
notice of such furnishing of negative
information, in writing, to the
customer.
(ii) Notice effective for subsequent
submissions.--After providing such
notice, the financial institution may
submit additional negative information
to a consumer reporting agency
described in section 603(p) with
respect to the same transaction,
extension of credit, account, or
customer without providing additional
notice to the customer.
(B) Time of notice.--
(i) In general.--The notice required
under subparagraph (A) shall be
provided to the customer prior to, or
no later than 30 days after, furnishing
the negative information to a consumer
reporting agency described in section
603(p).
(ii) Coordination with new account
disclosures.--If the notice is provided
to the customer prior to furnishing the
negative information to a consumer
reporting agency, the notice may not be
included in the initial disclosures
provided under section 127(a) of the
Truth in Lending Act.
(C) Coordination with other disclosures.--The
notice required under subparagraph (A)--
(i) may be included on or with any
notice of default, any billing
statement, or any other materials
provided to the customer; and
(ii) must be clear and conspicuous.
(D) Model disclosure.--
(i) Duty of bureau.--The Bureau shall
prescribe a brief model disclosure that
a financial institution may use to
comply with subparagraph (A), which
shall not exceed 30 words.
(ii) Use of model not required.--No
provision of this paragraph may be
construed to require a financial
institution to use any such model form
prescribed by the Bureau.
(iii) Compliance using model.--A
financial institution shall be deemed
to be in compliance with subparagraph
(A) if the financial institution uses
any model form prescribed by the Bureau
under this subparagraph, or the
financial institution uses any such
model form and rearranges its format.
(E) Use of notice without submitting negative
information.--No provision of this paragraph
shall be construed as requiring a financial
institution that has provided a customer with a
notice described in subparagraph (A) to furnish
negative information about the customer to a
consumer reporting agency.
(F) Safe harbor.--A financial institution
shall not be liable for failure to perform the
duties required by this paragraph if, at the
time of the failure, the financial institution
maintained reasonable policies and procedures
to comply with this paragraph or the financial
institution reasonably believed that the
institution is prohibited, by law, from
contacting the consumer.
(G) Definitions.--For purposes of this
paragraph, the following definitions shall
apply:
(i) Negative information.--The term
``negative information'' means
information concerning a customer's
delinquencies, late payments,
insolvency, or any form of default.
(ii) Customer; financial
institution.--The terms ``customer''and
``financial institution'' have the same
meanings as in section 509 Public Law
106-102.
(8) Ability of consumer to dispute information
directly with furnisher.--
(A) In general.--The Bureau shall, in
consultation with the Federal Trade Commission,
the Federal banking agencies, and the National
Credit Union Administration, prescribe
regulations that shall identify the
circumstances under which a furnisher shall be
required to reinvestigate a dispute concerning
the accuracy of information contained in a
consumer report on the consumer, based on a
direct request of a consumer.
(B) Considerations.--In prescribing
regulations under subparagraph (A), the
agencies shall weigh--
(i) the benefits to consumers with
the costs on furnishers and the credit
reporting system;
(ii) the impact on the overall
accuracy and integrity of consumer
reports of any such requirements;
(iii) whether direct contact by the
consumer with the furnisher would
likely result in the most expeditious
resolution of any such dispute; and
(iv) the potential impact on the
credit reporting process if credit
repair organizations, as defined in
section 403(3), including entities that
would be a credit repair organization,
but for section 403(3)(B)(i), are able
to circumvent the prohibition in
subparagraph (G).
(C) Applicability.--Subparagraphs (D) through
(G) shall apply in any circumstance identified
under the regulations promulgated under
subparagraph (A).
(D) Submitting a notice of dispute.--A
consumer who seeks to dispute the accuracy of
information shall provide a dispute notice
directly to such person at the address
specified by the person for such notices that--
(i) identifies the specific
information that is being disputed;
(ii) explains the basis for the
dispute; and
(iii) includes all supporting
documentation required by the furnisher
to substantiate the basis of the
dispute.
(E) Duty of person after receiving notice of
dispute.--After receiving a notice of dispute
from a consumer pursuant to subparagraph (D),
the person that provided the information in
dispute to a consumer reporting agency shall--
(i) conduct an investigation with
respect to the disputed information;
(ii) review all relevant information
provided by the consumer with the
notice;
(iii) complete such person's
investigation of the dispute and report
the results of the investigation to the
consumer before the expiration of the
period under section 611(a)(1) within
which a consumer reporting agency would
be required to complete its action if
the consumer had elected to dispute the
information under that section; and
(iv) if the investigation finds that
the information reported was
inaccurate, promptly notify each
consumer reporting agency to which the
person furnished the inaccurate
information of that determination and
provide to the agency any correction to
that information that is necessary to
make the information provided by the
person accurate.
(F) Frivolous or irrelevant dispute.--
(i) In general.--This paragraph shall
not apply if the person receiving a
notice of a dispute from a consumer
reasonably determines that the dispute
is frivolous or irrelevant, including--
(I) by reason of the failure
of a consumer to provide
sufficient information to
investigate the disputed
information; or
(II) the submission by a
consumer of a dispute that is
substantially the same as a
dispute previously submitted by
or for the consumer, either
directly to the person or
through a consumer reporting
agency under subsection (b),
with respect to which the
person has already performed
the person's duties under this
paragraph or subsection (b), as
applicable.
(ii) Notice of determination.--Upon
making any determination under clause
(i) that a dispute is frivolous or
irrelevant, the person shall notify the
consumer of such determination not
later than 5 business days after making
such determination, by mail or, if
authorized by the consumer for that
purpose, by any other means available
to the person.
(iii) Contents of notice.--A notice
under clause (ii) shall include--
(I) the reasons for the
determination under clause (i);
and
(II) identification of any
information required to
investigate the disputed
information, which may consist
of a standardized form
describing the general nature
of such information.
(G) Exclusion of credit repair
organizations.--This paragraph shall not apply
if the notice of the dispute is submitted by,
is prepared on behalf of the consumer by, or is
submitted on a form supplied to the consumer
by, a credit repair organization, as defined in
section 403(3), or an entity that would be a
credit repair organization, but for section
403(3)(B)(i).
(9) Duty to provide notice of status as medical
information furnisher.--A person whose primary business
is providing medical services, products, or devices, or
the person's agent or assignee, who furnishes
information to a consumer reporting agency on a
consumer shall be considered a medical information
furnisher for purposes of this title, and shall notify
the agency of such status.
(b) Duties of Furnishers of Information Upon Notice of
Dispute.--
(1) In general.--After receiving notice pursuant to
section 611(a)(2) of a dispute with regard to the
completeness or accuracy of any information provided by
a person to a consumer reporting agency, the person
shall--
(A) conduct an investigation with respect to
the disputed information;
(B) review all relevant information provided
by the consumer reporting agency pursuant to
section 611(a)(2);
(C) report the results of the investigation
to the consumer reporting agency;
(D) if the investigation finds that the
information is incomplete or inaccurate, report
those results to all other consumer reporting
agencies to which the person furnished the
information and that compile and maintain files
on consumers on a nationwide basis; and
(E) if an item of information disputed by a
consumer is found to be inaccurate or
incomplete or cannot be verified after any
reinvestigation under paragraph (1), for
purposes of reporting to a consumer reporting
agency only, as appropriate, based on the
results of the reinvestigation promptly--
(i) modify that item of information;
(ii) delete that item of information;
or
(iii) permanently block the reporting
of that item of information.
(2) Deadline.--A person shall complete all
investigations, reviews, and reports required under
paragraph (1) regarding information provided by the
person to a consumer reporting agency, before the
expiration of the period under section 611(a)(1) within
which the consumer reporting agency is required to
complete actions required by that section regarding
that information.
(c) Limitation on Liability.--Except as provided in section
621(c)(1)(B), sections 616 and 617 do not apply to any
violation of--
(1) subsection (a) of this section, including any
regulations issued thereunder;
(2) subsection (e) of this section, except that
nothing in this paragraph shall limit, expand, or
otherwise affect liability under section 616 or 617, as
applicable, for violations of subsection (b) of this
section; or
(3) subsection (e) of section 615.
(d) Limitation on Enforcement.--The provisions of law
described in paragraphs (1) through (3) of subsection (c)
(other than with respect to the exception described in
paragraph (2) of subsection (c)) shall be enforced exclusively
as provided under section 621 by the Federal agencies and
officials and the State officials identified in section 621.
(e) Accuracy Guidelines and Regulations Required.--
(1) Guidelines.--The Bureau shall, with respect to
persons or entities that are subject to the enforcement
authority of the Bureau under section 621--
(A) establish and maintain guidelines for use
by each person that furnishes information to a
consumer reporting agency regarding the
accuracy and integrity of the information
relating to consumers that such entities
furnish to consumer reporting agencies, and
update such guidelines as often as necessary;
and
(B) prescribe regulations requiring each
person that furnishes information to a consumer
reporting agency to establish reasonable
policies and procedures for implementing the
guidelines established pursuant to subparagraph
(A).
(2) Criteria.--In developing the guidelines required
by paragraph (1)(A), the Bureau shall--
(A) identify patterns, practices, and
specific forms of activity that can compromise
the accuracy and integrity of information
furnished to consumer reporting agencies;
(B) review the methods (including
technological means) used to furnish
information relating to consumers to consumer
reporting agencies;
(C) determine whether persons that furnish
information to consumer reporting agencies
maintain and enforce policies to ensure the
accuracy and integrity of information furnished
to consumer reporting agencies; and
(D) examine the policies and processes that
persons that furnish information to consumer
reporting agencies employ to conduct
reinvestigations and correct inaccurate
information relating to consumers that has been
furnished to consumer reporting agencies.
(f) Additional Notice Requirements for Medical Debt.--Before
furnishing information regarding a medical debt of a consumer
to a consumer reporting agency, the person furnishing the
information shall send a statement to the consumer that
includes the following:
(1) A notification that the medical debt--
(A) may not be included on a consumer report
made by a consumer reporting agency until the
later of the date that is 365 days after--
(i) the date on which the person
sends the statement;
(ii) with respect to the medical debt
of a borrower demonstrating hardship, a
date determined by the Director of the
Bureau; or
(iii) the date described under
section 605(a)(10); and
(B) may not ever be included on a consumer
report made by a consumer reporting agency, if
the medical debt arises from a medically
necessary procedure.
(2) A notification that, if the debt is settled or
paid by the consumer or an insurance company before the
end of the period described under paragraph (1)(A), the
debt may not be reported to a consumer reporting
agency.
(3) A notification that the consumer may--
(A) communicate with an insurance company to
determine coverage for the debt; or
(B) apply for financial assistance.
(g) Furnishing of Medical Debt Information.--
(1) Prohibition on reporting debt related to
medically necessary procedures.--No person shall
furnish any information to a consumer reporting agency
regarding a debt arising from a medically necessary
procedure.
(2) Treatment of other medical debt information.--
With respect to a medical debt not described under
paragraph (1), no person shall furnish any information
to a consumer reporting agency regarding such debt
before the end of the 365-day period beginning on the
later of--
(A) the date on which the person sends the
statement described under subsection (f) to the
consumer;
(B) with respect to the medical debt of a
borrower demonstrating hardship, a date
determined by the Director of the Bureau; or
(C) the date described in section 605(a)(10).
(3) Treatment of settled or paid medical debt.--With
respect to a medical debt not described under paragraph
(1), no person shall furnish any information to a
consumer reporting agency regarding such debt if the
debt is settled or paid by the consumer or an insurance
company before the end of the 365-day period described
under paragraph (2).
(4) Borrower demonstrating hardship defined.--In this
subsection, and with respect to a medical debt, the
term ``borrower demonstrating hardship'' means a
borrower or a class of borrowers who, as determined by
the Director of the Bureau, is facing or has
experienced extenuating life circumstances or events
that result in severe financial or personal barriers
such that the borrower or class of borrowers does not
have the capacity to repay the medical debt.
* * * * * * *
----------
CONSUMER FINANCIAL PROTECTION ACT OF 2010
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
SEC. 1001. SHORT TITLE.
This title may be cited as the ``Consumer Financial
Protection Act of 2010''.
* * * * * * *
Subtitle A--Bureau of Consumer Financial Protection
* * * * * * *
SEC. 1016. APPEARANCES BEFORE AND REPORTS TO CONGRESS.
(a) Appearances Before Congress.--The Director of the Bureau
shall appear before the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services and the Committee on Energy and Commerce of the House
of Representatives at semi-annual hearings regarding the
reports required under subsection (b).
(b) Reports Required.--The Bureau shall, concurrent with each
semi-annual hearing referred to in subsection (a), prepare and
submit to the President and to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services and the Committee on Energy and Commerce of
the House of Representatives, a report, beginning with the
session following the designated transfer date. The Bureau may
also submit such report to the Committee on Commerce, Science,
and Transportation of the Senate.
(c) Contents.--The reports required by subsection (b) shall
include--
(1) a discussion of the significant problems faced by
consumers in shopping for or obtaining consumer
financial products or services;
(2) a justification of the budget request of the
previous year;
(3) a list of the significant rules and orders
adopted by the Bureau, as well as other significant
initiatives conducted by the Bureau, during the
preceding year and the plan of the Bureau for rules,
orders, or other initiatives to be undertaken during
the upcoming period;
(4) an analysis of complaints about consumer
financial products or services that the Bureau has
received and collected in its central database on
complaints during the preceding year;
(5) a list, with a brief statement of the issues, of
the public supervisory and enforcement actions to which
the Bureau was a party during the preceding year;
(6) the actions taken regarding rules, orders, and
supervisory actions with respect to covered persons
which are not credit unions or depository institutions;
(7) an assessment of significant actions by State
attorneys general or State regulators relating to
Federal consumer financial law;
(8) an analysis of the efforts of the Bureau to
fulfill the fair lending mission of the Bureau; [and]
(9) an analysis of the efforts of the Bureau to
increase workforce and contracting diversity consistent
with the procedures established by the Office of
Minority and Women Inclusion[.];
(10) an analysis of the consumer complaints received
by the Bureau with respect to debt collection,
including a State-by-State breakdown of such
complaints; and
(11) a list of enforcement actions taken against debt
collectors during the preceding year.
* * * * * * *
Subtitle B--General Powers of the Bureau
* * * * * * *
SEC. 1022. RULEMAKING AUTHORITY.
(a) In General.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law to administer,
enforce, and otherwise implement the provisions of Federal
consumer financial law.
(b) Rulemaking, Orders, and Guidance.--
(1) General authority.--The Director may prescribe
rules and issue orders and guidance, as may be
necessary or appropriate to enable the Bureau to
administer and carry out the purposes and objectives of
the Federal consumer financial laws, and to prevent
evasions thereof.
(2) Standards for rulemaking.--In prescribing a rule
under the Federal consumer financial laws--
(A) the Bureau shall consider--
(i) the potential benefits and costs
to consumers and covered persons,
including the potential reduction of
access by consumers to consumer
financial products or services
resulting from such rule; and
(ii) the impact of proposed rules on
covered persons, as described in
section 1026, and the impact on
consumers in rural areas;
(B) the Bureau shall consult with the
appropriate prudential regulators or other
Federal agencies prior to proposing a rule and
during the comment process regarding
consistency with prudential, market, or
systemic objectives administered by such
agencies; and
(C) if, during the consultation process
described in subparagraph (B), a prudential
regulator provides the Bureau with a written
objection to the proposed rule of the Bureau or
a portion thereof, the Bureau shall include in
the adopting release a description of the
objection and the basis for the Bureau
decision, if any, regarding such objection,
except that nothing in this clause shall be
construed as altering or limiting the
procedures under section 1023 that may apply to
any rule prescribed by the Bureau.
(3) Exemptions.--
(A) In general.--The Bureau, by rule, may
conditionally or unconditionally exempt any
class of covered persons, service providers, or
consumer financial products or services, from
any provision of this title, or from any rule
issued under this title, as the Bureau
determines necessary or appropriate to carry
out the purposes and objectives of this title,
taking into consideration the factors in
subparagraph (B).
(B) Factors.--In issuing an exemption, as
permitted under subparagraph (A), the Bureau
shall, as appropriate, take into
consideration--
(i) the total assets of the class of
covered persons;
(ii) the volume of transactions
involving consumer financial products
or services in which the class of
covered persons engages; and
(iii) existing provisions of law
which are applicable to the consumer
financial product or service and the
extent to which such provisions provide
consumers with adequate protections.
(4) Exclusive rulemaking authority.--
(A) In general.--Notwithstanding any other
provisions of Federal law and except as
provided in section 1061(b)(5), to the extent
that a provision of Federal consumer financial
law authorizes the Bureau and another Federal
agency to issue regulations under that
provision of law for purposes of assuring
compliance with Federal consumer financial law
and any regulations thereunder, the Bureau
shall have the exclusive authority to prescribe
rules subject to those provisions of law.
(B) Deference.--Notwithstanding any power
granted to any Federal agency or to the Council
under this title, and subject to section
1061(b)(5)(E), the deference that a court
affords to the Bureau with respect to a
determination by the Bureau regarding the
meaning or interpretation of any provision of a
Federal consumer financial law shall be applied
as if the Bureau were the only agency
authorized to apply, enforce, interpret, or
administer the provisions of such Federal
consumer financial law.
(c) Monitoring.--
(1) In general.--In order to support its rulemaking
and other functions, the Bureau shall monitor for risks
to consumers in the offering or provision of consumer
financial products or services, including developments
in markets for such products or services.
(2) Considerations.--In allocating its resources to
perform the monitoring required by this section, the
Bureau may consider, among other factors--
(A) likely risks and costs to consumers
associated with buying or using a type of
consumer financial product or service;
(B) understanding by consumers of the risks
of a type of consumer financial product or
service;
(C) the legal protections applicable to the
offering or provision of a consumer financial
product or service, including the extent to
which the law is likely to adequately protect
consumers;
(D) rates of growth in the offering or
provision of a consumer financial product or
service;
(E) the extent, if any, to which the risks of
a consumer financial product or service may
disproportionately affect traditionally
underserved consumers; or
(F) the types, number, and other pertinent
characteristics of covered persons that offer
or provide the consumer financial product or
service.
(3) Significant findings.--
(A) In general.--The Bureau shall publish not
fewer than 1 report of significant findings of
its monitoring required by this subsection in
each calendar year, beginning with the first
calendar year that begins at least 1 year after
the designated transfer date.
(B) Confidential information.--The Bureau may
make public such information obtained by the
Bureau under this section as is in the public
interest, through aggregated reports or other
appropriate formats designed to protect
confidential information in accordance with
paragraphs (4), (6), (8), and (9).
(4) Collection of information.--
(A) In general.--In conducting any monitoring
or assessment required by this section, the
Bureau shall have the authority to gather
information from time to time regarding the
organization, business conduct, markets, and
activities of covered persons and service
providers.
(B) Methodology.--In order to gather
information described in subparagraph (A), the
Bureau may--
(i) gather and compile information
from a variety of sources, including
examination reports concerning covered
persons or service providers, consumer
complaints, voluntary surveys and
voluntary interviews of consumers,
surveys and interviews with covered
persons and service providers, and
review of available databases; and
(ii) require covered persons and
service providers participating in
consumer financial services markets to
file with the Bureau, under oath or
otherwise, in such form and within such
reasonable period of time as the Bureau
may prescribe by rule or order, annual
or special reports, or answers in
writing to specific questions,
furnishing information described in
paragraph (4), as necessary for the
Bureau to fulfill the monitoring,
assessment, and reporting
responsibilities imposed by Congress.
(C) Limitation.--The Bureau may not use its
authorities under this paragraph to obtain
records from covered persons and service
providers participating in consumer financial
services markets for purposes of gathering or
analyzing the personally identifiable financial
information of consumers.
(5) Limited information gathering.--In order to
assess whether a nondepository is a covered person, as
defined in section 1002, the Bureau may require such
nondepository to file with the Bureau, under oath or
otherwise, in such form and within such reasonable
period of time as the Bureau may prescribe by rule or
order, annual or special reports, or answers in writing
to specific questions.
(6) Confidentiality rules.--
(A) Rulemaking.--The Bureau shall prescribe
rules regarding the confidential treatment of
information obtained from persons in connection
with the exercise of its authorities under
Federal consumer financial law.
(B) Access by the bureau to reports of other
regulators.--
(i) Examination and financial
condition reports.--Upon providing
reasonable assurances of
confidentiality, the Bureau shall have
access to any report of examination or
financial condition made by a
prudential regulator or other Federal
agency having jurisdiction over a
covered person or service provider, and
to all revisions made to any such
report.
(ii) Provision of other reports to
the bureau.--In addition to the reports
described in clause (i), a prudential
regulator or other Federal agency
having jurisdiction over a covered
person or service provider may, in its
discretion, furnish to the Bureau any
other report or other confidential
supervisory information concerning any
insured depository institution, credit
union, or other entity examined by such
agency under authority of any provision
of Federal law.
(C) Access by other regulators to reports of
the bureau.--
(i) Examination reports.--Upon
providing reasonable assurances of
confidentiality, a prudential
regulator, a State regulator, or any
other Federal agency having
jurisdiction over a covered person or
service provider shall have access to
any report of examination made by the
Bureau with respect to such person, and
to all revisions made to any such
report.
(ii) Provision of other reports to
other regulators.--In addition to the
reports described in clause (i), the
Bureau may, in its discretion, furnish
to a prudential regulator or other
agency having jurisdiction over a
covered person or service provider any
other report or other confidential
supervisory information concerning such
person examined by the Bureau under the
authority of any other provision of
Federal law.
(7) Registration.--
(A) In general.--The Bureau may prescribe
rules regarding registration requirements
applicable to a covered person, other than an
insured depository institution, insured credit
union, or related person.
(B) Registration information.--Subject to
rules prescribed by the Bureau, the Bureau may
publicly disclose registration information to
facilitate the ability of consumers to identify
covered persons that are registered with the
Bureau.
(C) Consultation with state agencies.--In
developing and implementing registration
requirements under this paragraph, the Bureau
shall consult with State agencies regarding
requirements or systems (including coordinated
or combined systems for registration), where
appropriate.
(8) Privacy considerations.--In collecting
information from any person, publicly releasing
information held by the Bureau, or requiring covered
persons to publicly report information, the Bureau
shall take steps to ensure that proprietary, personal,
or confidential consumer information that is protected
from public disclosure under section 552(b) or 552a of
title 5, United States Code, or any other provision of
law, is not made public under this title.
(9) Consumer privacy.--
(A) In general.--The Bureau may not obtain
from a covered person or service provider any
personally identifiable financial information
about a consumer from the financial records of
the covered person or service provider,
except--
(i) if the financial records are
reasonably described in a request by
the Bureau and the consumer provides
written permission for the disclosure
of such information by the covered
person or service provider to the
Bureau; or
(ii) as may be specifically permitted
or required under other applicable
provisions of law and in accordance
with the Right to Financial Privacy Act
of 1978 (12 U.S.C. 3401 et seq.).
(B) Treatment of covered person or service
provider.--With respect to the application of
any provision of the Right to Financial Privacy
Act of 1978, to a disclosure by a covered
person or service provider subject to this
subsection, the covered person or service
provider shall be treated as if it were a
``financial institution'', as defined in
section 1101 of that Act (12 U.S.C. 3401).
(d) Assessment of Significant Rules.--
(1) In general.--The Bureau shall conduct an
assessment of each significant rule or order adopted by
the Bureau under Federal consumer financial law. The
assessment shall address, among other relevant factors,
the effectiveness of the rule or order in meeting the
purposes and objectives of this title and the specific
goals stated by the Bureau. The assessment shall
reflect available evidence and any data that the Bureau
reasonably may collect.
(2) Reports.--The Bureau shall publish a report of
its assessment under this subsection not later than 5
years after the effective date of the subject rule or
order.
(3) Public comment required.--Before publishing a
report of its assessment, the Bureau shall invite
public comment on recommendations for modifying,
expanding, or eliminating the newly adopted significant
rule or order.
(e) Limitation on Debt Collection Rules.--The Director may
not issue any rule with respect to debt collection that allows
a debt collector to send unlimited email and text messages to a
consumer.
* * * * * * *
----------
TITLE 31, UNITED STATES CODE
* * * * * * *
SUBTITLE I--GENERAL
* * * * * * *
CHAPTER 3--DEPARTMENT OF THE TREASURY
SUBCHAPTER I--ORGANIZATION
Sec.
301. Department of the Treasury.
* * * * * * *
SUBCHAPTER II--ADMINISTRATIVE
* * * * * * *
334. Prohibition on the referral of emergency individual assistance
debt.
* * * * * * *
SUBCHAPTER II--ADMINISTRATIVE
* * * * * * *
Sec. 334. Prohibition on the referral of emergency individual
assistance debt
With respect to any assistance provided by the Federal
Emergency Management Agency to an individual or household
pursuant to the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5122 et seq.), if the
Secretary of the Treasury seeks to recoup any amount of such
assistance because of an overpayment, the Secretary may not
contract with any debt collector as defined in section 803(6)
of the Fair Debt Collection Practices Act (15 U.S.C. 1692a(6))
or other private party to collect such amounts, unless the
overpayment occurred because of fraud or deceit and the
recipient of such assistance knew or should have known about
such fraud or deceit.
* * * * * * *
MINORITY VIEWS
Consumers should not be subject to harmful debt collection
practices. The Fair Debt Collection Practices Act (FDCPA)
ensures that consumers are protected from illegal practices
while at the same time ensures businesses are paid for services
rendered.
H.R. 2547 is a progressive retread of several bills from
the 116th Congress. If enacted, this bill will fundamentally
restructure the consumer credit market as well as how
businesses, most of whom are small businesses, are paid for
their services. As a result, credit will be more expensive for
all borrowers and may exclude the lowest income borrowers
entirely.
The bill prohibits the use of confession of judgment
provisions in all loan contracts, including all extensions of
credit, regardless of the nature of the loan or borrower.
Confessions of judgment are a tool for businesses to collect
from delinquent borrowers.
Recouping a loss is necessary for a credit-based
economy to function properly.
H.R. 2547 is another attempt by House Democrats to
expand the CFPB's authority to include commercial businesses.
The bill discharges private student loan debt if the
borrower dies or becomes permanently disabled.
Private student lenders and borrowers already have
an effective process in place to discharge debt in the event of
borrower death or permanent disability.
H.R. 2547 intervenes in private contracts
negotiated by lender and borrower.
The bill prohibits medical debt from being included on a
consumer credit report and prevents businesses from collecting
on medical debt for two years.
Removing predictive information from a credit
report has the potential to increase the cost of credit,
particularly for borrowers with limited credit histories.
Additionally, preventing businesses from recouping
payment for services provided makes healthcare more expensive,
weakens our credit markets, and raises safety and soundness
concerns for financial institutions and the financial system
more broadly.
The bill prevents businesses from contacting consumers by
email or text message to collect payment without explicit prior
consent from the consumer and prevents the Consumer Financial
Protection Bureau (CFPB) from issuing any final rule that
allows debt collectors to send unlimited emails and text
messages to consumers.
H.R. 2547 undermines the CFPB's October 2020 Final
Rule intended to modernize debt collection practices. The final
rule was the result of more than seven years of research and
analysis conducted by the CFPB. It sets forth clear rules of
the road for both consumers and debt collection agencies and
outlines acceptable communications.
H.R. 2547 ignores the fact that consumers have the
ability to opt-out of updated means of communications used by
consumers and debt collectors, including emails and text
messages.
The bill subjects debt owed to a federal agency or a state
and local government to the requirements of the FDCPA and sets
further restrictions beyond FDCPA requirements. The bill
prohibits a collector of debt owed to a federal agency from
collecting interest, fees, charges, or expenses. The bill also
prohibits the Secretary of the Treasury from referring disaster
aid debt to a third-party debt collector.
H.R. 2547 undermines the CFPB's October 2020 Final
Rule intended to modernize debt collection practices. In
promulgating its final rule, the CFPB acknowledged the unique
nature of certain types of debt and declined to extend the
definition of debt and debt collectors to include creditors,
debt buyers, or governments.
The bill interferes with the federal government's
ability to obtain payment owed to it, such as federal student
loan payments, including fees and interest.
This is outside this Committee's
jurisdiction and better addressed by the Committee on
Education and Labor.
Moreover, ensuring state and local governments can
efficiently collect payments owed is essential to these
economies.
The bill makes the U.S. Treasury Department
responsible for collecting overpayments made by the Federal
Emergency Management Agency (FEMA).
The bill prohibits the government from
contracting with a third-party business to collect the
debt.
The Department of Treasury has more
important responsibilities than collecting overpayments
made by FEMA.
The bill expands the definition of a debt collector to
include a person in a business that enforces security
interests.
H.R. 2547 rejects the U.S. Supreme Court's 2019
decision in Obduskey v. McCarthy and Holthus LLP which
recognized states' authority to regulate non-judicial
foreclosures.
H.R. 2547 is another attempt by the Democrats to
prevent individuals and small businesses from recouping
payments owed to them or to another.
Ranking Member Patrick McHenry (NC-10) offered an amendment
to replace the underlying bill with several targeted approaches
to improve and strengthen the debt collection and credit
reporting framework. This is a commonsense attempt to ensure
our financial system remains safe and sound while protecting
and introducing options for consumers. The amendment was
blocked by Committee Democrats by party line vote of 23-30.
Democrats continue to be emboldened by their ``one party
rule,'' refusing to work with Republicans to identify
bipartisan solutions that will help consumers who need it the
most. Republicans will continue to advocate for policies that
ensure Americans have access to affordable credit while
ensuring the financial system remains safe and sound. For these
reasons, Committee Republicans oppose H.R. 2547.
Patrick T. McHenry.
Bill Posey.
Bill Huizenga.
Ann Wagner.
Scott R. Tipton.
J. French Hill.
Lee M. Zeldin.
Alexander X. Mooney.
Ted Budd.
Trey Hollingsworth.
John W. Rose.
Lance Gooden (TX).
William R. Timmons IV.
Frank D. Lucas.
Blaine Luetkemeyer.
Steve Stivers.
Andy Barr.
Roger Williams (TX).
Tom Emmer.
Barry Loudermilk.
Warren Davidson.
David Kusoff.
Anthony Gonzalez (OH).
Bryan Steil.
Denver Riggleman.
Van Taylor.
[all]