Bill would Ease GLBA Pressure on Debt Buyers

A bill pending in the U.S. House of Representatives would reverse a requirement that debt buyers send an annual update to debtors detailing what financial information they are sharing with third parties.

The bill, H.R. 1967, was introduced in April of last year by Rep. Peter Roskam, a Republican from Illinois, and is co-sponsored by a Democrat, Rep. Jim Marshall of Georgia. The bill was referred to the House Committee on Financial Services last year.

Debt buying trade group DBA International has been drumming up support for the bill in the House to reverse what it says is unnecessary and redundant regulation.

Debt buyers are currently obligated to send annual notices under financial privacy rules in the Gramm-Leach-Bliley Act. The GLBA requires debt purchasers to send notices that explain the information collected about the consumer, where it is shared, how it is used, and how the information is protected.

Barbara Sinsley, general counsel for DBA International, explained that debt buyers are already restricted from engaging in the activity covered by the privacy provision of the GLBA. “Debt purchasers must also adhere to the Fair Debt Collection Practices Act,” said Sinsley, “and under that law, they cannot share consumer information with a third party.”

Sinsley explained that the annual cost of sending the GLBA notices is very high. Given that it is unnecessary to begin with, DBA International is encouraging support for a bill that would amend the GLBA to provide an exemption for debt buyers.

The CEO of a major debt purchaser told insideARM that his firm never gets any response from its GLBA letters. "It's just a requirement," he said, "so we send it out."

H.R. 1967 currently has 16 co-sponsors across party lines, with the most recent sponsor – Democrat Melissa Bean of Illinois – coming on board a couple of weeks ago. The bipartisan support does not surprise Bob Belair, founding partner of Washington law firm Oldaker, Biden and Belair which represents DBA on Capitol Hill. “It’s not that controversial of a bill,” said Belair.

But the bill still must navigate a committee that is currently under pressure. The House Committee on Financial Services is busy considering legislative fixes to the subprime mortgage meltdown and trouble in the banking sector.

Still, Belair says that the bill could see its day in the committee. “I’m reasonably optimistic about the bill in the House,” Belair told insideARM.