CFPB Oversight of Practice of Law is Back in the Spotlight

The Practice of Law Technical Clarification Act of 2018 (formerly of 2017) is back on the agenda of the House Committee on Financial Services. This had been on the list to be addressed in January, but had been postponed. It appeared again today on the schedule for this week.

The law is proposed as an amendment to the Fair Debt Collection Practices Act (FDCPA) to exclude law firms and licensed attorneys who are engaged in activities related to legal proceedings from the definition of a debt collector, to amend the Consumer Financial Protection Act of 2010 to prevent the Bureau of Consumer Financial Protection (CFPB) from exercising supervisory or enforcement authority with respect to attorneys when undertaking certain actions related to legal proceedings, and for other purposes. 

Late last year insideARM published an article addressing this topic, titled Why states should have primary oversight of attorneys’ activities in debt-collection litigation, by Thomas Pahl and Matthew Wilshire. Pahl is the Acting Director of the Bureau of Consumer Protection at the Federal Trade Commission, and Mathew J. Wilshire is a Senior Attorney in the Division of Financial Practices at the FTC.

This Act was originally proposed on April 20, 2017 as H.R. 1849 by Rep. Dave Trott (R-MI). Later it became known as H.R. 4550. It is now H.R. 5082 and was introduced on February 23, 2018 by Rep. Alex Mooney (R-WVa) and Rep. Vicente Gonzalez (D-TX). The name of the Act has not changed, but two additional definitions have been added that were not in the 4550 version:

“(F) any law firm or licensed attorney, to the extent that –

“(III) any other activities engaged in as part of the practice of law, under the laws of a State in which the attorney is licensed, that relate to the legal action; and

“(ii) such legal action is served on the defendant debtor, or service is attempted, in accordance with the applicable statute or rules of civil procedure;”

insideARM will report on any developments, should the Bill actually be discussed (it is listed near the end of a fairly long list). 

insideARM Perspective

This legislation would have real impact.

In September 2017 we noted that the CFPB (under then Director Richard Cordray) had been especially aggressive in taking action against collection law firms. This started with their 18-month investigation of Frederick J. Hanna & Associates P.C., which began in 2014 and ended with a consent order. The Bureau subsequently filed a consent order against Pressler & Pressler LLP (2016), and filed suit against Weltman, Weinberg & Reis Co, L.P.A. (WWR) in April 2017. 

A mediation conference was conducted in the WWR matter on March 8, 2018 by United States Magistrate Judge William H. Baughman, Jr. The Order outlining the expectations for that conference can be downloaded here.

insideARM just learned that the case is going to trial next month. We will follow it and keep you posted.