FDCPA Commercial Debt Collection Bill Back on Capitol Hill

The House Financial Services Committee will review the bill that would expand the FDCPA to small businesses and commercial debt collection in a markup hearing June 14.

06/11/2022 8:30 A.M.

2 minute read

Editor’s note: The House Financial Services Committee sent a notice Tuesday that the markup has been postponed until further notice. 

Review of legislation to expand the Fair Debt Collection Practices Act to cover commercial collections returns to Capitol Hill Tuesday in a markup hearing by the House Financial Services Committee.

The movement first started when U.S. Rep. Al Lawson, D-Fla., introduced H.R. 6814, the Small Business Fair Debt Collection Protection Act, in February 2022.

The bill would expand the FDCPA to small businesses and would apply to debts collected from businesses where the obligation is less than $5 million. This would supposedly give debt collectors “guardrails” on what they can and cannot do to collect those debts.

Sarah Auchterlonie and Leah Dempsey, shareholders with Brownstein Hyatt Farber Schreck, wrote in a recent article for members that altering the FDCPA to cover commercial collections would require “a statutory change through Congress and a signature from the president to enact this change into law. The Small Business Fair Debt Collection Protection Act aims to make this change statutorily.”

The legislation was pulled from the House Financial Services Committee markup hearing in March when the focus switched to Ukraine relief bills, but it could still see movement in the U.S. House of Representatives this year after the June 14 hearing.

ACA International has opposed the bill and sent a letter to the House Financial Services Committee before the cancelled March markup and Tuesday’s hearing.

Lawson’s bill disregards the significant difference between consumer debt and commercial debt and aims to stretch a statute that was created in the 1970s from consumers to various businesses and creditors, said ACA CEO Scott Purcell in the letter to U.S. Rep. Maxine Waters, D-Calif., chairwoman of the committee, and ranking member U.S. Rep. Patrick McHenry, R-N.C.

“Moreover, there are several practical considerations, such as the fact that many small businesses are also creditors that are trying to collect the debts owed to them,” Purcell said. “The vast majority of ACA members are small-business owners, and like other small-business owners, they are sophisticated entrepreneurs that understand the gravity of legal agreements that they enter into, and the impact of collection efforts associated with nonpayment on accounts.”

The CFPB

In its annual report on the Fair Debt Collection Practices Act to Congress, the Consumer Financial Protection Bureau also explored language in the FDCPA pertaining to collection issues for small businesses as well as servicing practices.

According to the report, small businesses in collections should be protected under the FDCPA, ACA previously reported.

“Although the FDCPA generally does not cover the collection of small business debt, the CFPB is concerned about abuses pertaining to collections and servicing practices associated with financing for small business. It is in the public interest, especially in light of the increased vulnerabilities of small-business owners during the pandemic, that they receive adequate protections,” the report states.

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