House Committee Meets Today to Consider Change to FDCPA

Today the House Subcommittee on Financial Institutions and Consumer Credit will hold a hearing entitled “Legislative Proposals for a More Efficient Federal Financial Regulatory Regime.” One of the bills to be addressed would amend the Fair Debt Collection Practices Act.

The hearing will address six legislative proposals, including:

1. R. 1849 (Trott), the Practice of Law Technical Clarification Act of 2017
2. R. 2359 (Loudermilk), the FCRA Liability Harmonization Act
3. R. 3312 (Luetkemeyer), the Systemic Risk Designation Improvement Act of 2017
4. R. XXXX (Royce), the Facilitating Access to Credit Act
5. R. XXXX, (Tenney), the Community Institution Mortgage Relief Act of 2017
6. R. XXXX, (Hill), the TRID Improvement Act of 2017

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The Practice of Law Technical Clarification Act of 2017 amends the Fair Debt Collection Practices Act to exclude from the definition of "debt collector" any law firm or licensed attorney: (1) serving, filing, or conveying formal legal pleadings, discovery requests, or other documents pursuant to the applicable rules of civil procedure; or (2) communicating in, or at the direction of, a court of law or in depositions or settlement conferences, in connection with a pending legal action to collect a debt on behalf of a client.

This bill also amends the Consumer Financial Protection Act of 2010 to clarify that the Consumer Financial Protection Bureau (CFPB) may not exercise supervisory or enforcement authority with respect to attorneys engaged in the practice of law and not offering or providing consumer financial products or services.

The hearing will include the following witnesses:

• Anne Fortney, Partner Emerita, Hudson Cook LLP
• Charles Tuggle, Executive Vice President and General Counsel, First Horizon National Corporation
• Thomas Quaadman, Executive Vice President, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce
• Chi Chi Wu, Staff Attorney, National Consumer Law Center

insideARM Perspective

The CFPB has been especially aggressive in taking action against collection law firms. This began in 2014 with their investigation of Frederick J. Hanna & Associates P.C. That ended after 18 months with a consent order against the firm. insideARM wrote extensively about this case. You can read the final chapter here, including comments from the Hanna firm and also NARCA, the National Creditors Bar Association.

On December 28, 2015 insideARM published an article by Joann Needleman where she discussed the significance of the Hanna order and predicted continued oversight by the CFPB over the practice of law in the collection arena.

She was right.

On April 26, 2016 the CFPB announced the filing of a consent order with the New Jersey debt collection law firm, Pressler & Pressler LLP. You can read the insideARM coverage of that story here.

On April 17, 2017 the CFPB filed suit against the law firm of Weltman, Weinberg & Reis Co, L.P.A. (WWR). Read our story here.

Both Pressler & Pressler and WWR argued that they did not violate any federal or state laws, and suggested that the CFPB is making rules through enforcement activity. 

Once the CFPB brings an enforcement action, the challenge for any law firm is the cost and resources necessary to defend themselves against the bureau's unlimited resources.