[House Report 116-658]
[From the U.S. Government Publishing Office]


116th Congress    }                                    {        Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                    {       116-658

======================================================================



 
              DEBT COLLECTION PRACTICES HARMONIZATION ACT

                                _______
                                

 December 16, 2020.--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. 3948]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 3948) to amend the Fair Debt Collection 
Practices Act to extend the provisions of that Act to cover a 
debt collector who is collecting debt owed to a State or local 
government, to index award amounts under such Act for 
inflation, to provide for civil injunctive relief for 
violations of such Act, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Debt Collection Practices 
Harmonization Act''.

SEC. 2. PREVENTING DECEPTIVE AND HARASSING PRACTICES WHEN COLLECTING 
                    DEBT OWED TO A STATE OR LOCAL GOVERNMENT.

  Section 803(5) of the Fair Debt Collection Practices Act (15 U.S.C. 
1692a(5)) is amended--
          (1) by striking ``money arising out'' and inserting the 
        following: ``money--
                  ``(A) arising out'';
          (2) by striking ``judgment.'' and inserting ``judgment; or''; 
        and
          (3) by adding at the end the following:
                  ``(B) owed to a State.''.

SEC. 3. 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 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) 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 
        Act.
  (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. 4. 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 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.''.

                          Purpose and Summary

    On July 24, 2019, Congressman Gregory Meeks (D-NY), 
Chairman of the Subcommittee on Consumer Protection and 
Financial Institutions, introduced H.R. 3948, the ``Debt 
Collection Practices Harmonization Act,'' which amends the Fair 
Dept Collection Practices Act (FDCPA) to clarify that private 
debt collectors who pursue debts such as municipal utility 
bills, tolls, traffic tickets, and court debts are subject to 
the FDCPA.

                  Background and Need for Legislation

    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, which 
also includes the original debt owed.
    This legislation would ensure robust consumer protections 
still apply, even if the debt is owed to a state or local 
government agency. Additionally, the ANS 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 devastating 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.
    The National Consumer Law Center, Center for Responsible 
Lending, NAACP, and the National Urban League have endorsed 
this bill.

                      Section-by-Section Analysis


Section 1. Short title

    This section provides that H.R. 3948 may be cited as the 
``Debt Collection Practices Harmonization Act''.

Section 2. Award of damages

    Section 2 amends Section 803(5) of the Fair Debt Collection 
Practices Act to expand the definition of ``debt'' to include 
any obligation or alleged obligation of a consumer to pay money 
``owed to a state''.

Section 3. Exclusion for employees affected by a shutdown

    Section 3 amends Section 813 of the Fair Debt Collection 
Practices Act by addressing inflation. It provides 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.

Section 4. Prohibition on the Referral of Emergency Individual 
        Assistance Debt

    Section 4 adds a new section 334 at the end of subchapter 
II of Chapter 3 of title 31, United States Code, entitled, 
``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.

                                Hearings

    For the purposes of section 103(i) of H. Res. 6 for the 
116th Congress, 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'' to discuss three bills, of 
which H.R. 3948 was one, and seven discussion drafts. This 
single-panel hearing included the following witnesses: 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.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
November 13, 2019, and ordered H.R. 3948 to be reported 
favorably to the House as amended in the nature of a substitute 
by a recorded vote of 31 yeas and 23 neas, 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. 3948:


	[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. 3948 are to expand 
the definition of debt covered under the FDCPA, adjust monetary 
penalties for inflation, and clarify that courts can award 
injunctive relief, as well as add protections to consumers 
affected by national disasters.

               New Budget Authority and CBO Cost Estimate

    Pursuant to 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, the Committee has requested an estimate for H.R. 3948 
from the Director of the Congressional Budget Office. CBO was 
unable to provide an estimate in a timely manner.

                        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. 3948. After 
careful review, including discussions with CBO, the Committee 
estimates that this legislation may have a significant effect 
on spending, and the Committee therefore adopts as its own the 
forthcoming estimate prepared by the Director of the 
Congressional Budget Office.

                       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 estimate of federal mandates regarding 
H.R. 3948, 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. 3948, 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. 3948 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. 3948 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. 3948, 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):

                   FAIR DEBT COLLECTION PRACTICES ACT

TITLE VIII--DEBT COLLECTION PRACTICES

           *       *       *       *       *       *       *


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.
          (5) The term ``debt'' means any obligation or alleged 
        obligation of a consumer to pay [money arising out] 
        money--
                  (A) 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.] judgment; or
                  (B) owed to a State.
          (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--
                  (A) any officer or employee of a creditor 
                while, in the name of the creditor, collecting 
                debts for such creditor;
                  (B) 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) any officer or employee of the United 
                States or any State to the extent that 
                collecting or attempting to collect any debt is 
                in the performance of his official duties;
                  (D) any person while serving or attempting to 
                serve legal process on any other person in 
                connection with the judicial enforcement of any 
                debt;
                  (E) 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.
          (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.

           *       *       *       *       *       *       *


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
          (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
          (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 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 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).

           *       *       *       *       *       *       *

                              ----------                              


                      TITLE 31, UNITED STATES CODE



           *       *       *       *       *       *       *
SUBTITLE I--GENERAL

           *       *       *       *       *       *       *


CHAPTER 3--DEPARTMENT OF THE TREASURY

           *       *       *       *       *       *       *


                      SUBCHAPTER II--ADMINISTRATIVE

Sec.
321. General authority of the Secretary.
     * * * * * * *
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 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

    Committee Republicans believe consumers should not be 
subjected to harassment and predatory practices. To that end, 
Committee Republicans supported extending the Fair Debt 
Collection Practices Act (FDCPA) to debt collected by the 
federal government in a separate bill considered by the 
Financial Services Committee, H.R. 4403, the Stop Debt 
Collection Abuse Act, introduced by Rep. Cleaver and Rep. Hill.
    Unlike H.R. 4403, which was ordered reported by the 
Committee by a unanimous vote, H.R. 3948 creates a different 
paradigm for debt collected by state and local governments.
    Instead of simply including debt owed to state and local 
governments within the scope of the FDCPA like H.R. 4403, this 
bill also increases the size of monetary awards, adds 
duplicative injunctive relief, and prohibits the Secretary of 
the Treasury from referring emergency individual assistance 
debt to a debt collector. While these additions may be 
meaningful, there was no Committee discussion on the importance 
of their inclusion nor the reasoning for two different 
standards.
    Rep. Riggleman (R-VA) offered an amendment to H.R. 4403 
during markup that would have provided all consumers with the 
same protections under the FDCPA regardless of whether their 
debt is owed to a private entity, the federal government, or a 
state or local government. Rep. Riggleman ultimately withdrew 
his amendment to H.R. 4403 with the understanding that he would 
work with the bill's sponsor to ensure there is a single 
approach.
    Committee Republicans believe such uniform treatment would 
provide clear rules of the road to debt collectors and urge the 
inclusion of Rep. Riggleman's amendment to H.R. 4403 prior to 
floor consideration. However, Committee Republicans remain 
opposed to H.R. 3948.
                                   Alexander X. Mooney.
                                   David Kustoff.
                                   Lance Gooden.
                                   William R. Timmons.
                                   Ted Budd.
                                   J. French Hill.
                                   Max Rose.
                                   Anthony Gonzalez (OH).
                                   Andy Barr.
                                   Ann Wagner.
                                   Blaine Luetkemeyer.
                                   Steve Stivers.
                                   Patrick McHenry.
                                   Warren Davidson.
                                   Barry Loudermilk.
                                   Tom Emmer.
                                   Scott R. Tipton.
                                   Roger Williams.
                                   Bryan Steil.
                                   Trey Hollingsworth.
                                   Denver Riggleman.
                                   Lee M. Zeldin.
                                   Frank D. Lucas.
                                   Bill Huizenga.
                                   Bill Posey.

                                  [all]