Today the Practice of Law Technical Clarification Act of 2017, along with a list of other proposed legislation, will be considered by the Committee on Financial Services. 

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 from exercising supervisory or enforcement authority with respect to attorneys when undertaking certain actions related to legal proceedings, and for other purposes. 

On December 14, 2017 insideARM published an article on this topic by Thomas B. Pahl (Acting Director of the Bureau of Consumer Protection at the Federal Trade Commission) and Mathew J. Wilshire (a Senior Attorney in the Division of Financial Practices at the FTC), supporting the concept in the proposed legislations. Note: the views represented were their own and not necessarily the position of the FTC. 

Originally proposed as H.R. 1849 by Rep. Dave Trott (R-MI) on April 20, 2017, the House Subcommittee on Financial Institutions and Consumer Credit held a hearing entitled “Legislative Proposals for a More Efficient Federal Financial Regulatory Regime,” in part to consider this bill. Vicente Gonzalez (D-TX) and Rep. Alexander Mooney (R-WVa) have subsequently signed on as co-sponsors. The bill is now known as H.R. 4550; the name has not changed from the original.

Testimony at that hearing included remarks by Anne P. Fortney, partner emerita with the law firm of Hudson Cook, LLP. In addition to her former practice as partner with Hudson Cook, Fortney served as Associate Director for Credit Practices at the Federal Trade Commission, as in-house counsel at a retail creditor, and as a practitioner counseling clients on compliance with consumer protection laws. insideARM summarized her relevant testimony to H.R. 1849 here.

NARCA, the National Creditors Bar Association, has published a release in support of the bill (see it here), as has the American Bar Association (see it here).

Yesterday, three law professors co-authored an editorial published in a Texas newspaper opposing the bill, saying it is likely to lead to: 

  • More lawsuits as attorneys rush to litigation to immunize their conduct in an already overburdened court-system.
  • Less informal resolution of consumer debt as lawsuits become preferred method of collection.
  • More use of unfair litigation tactics, all now covered by the FDCPA, including:
    • Lawsuits against consumers in distant courts.
    • Lawsuits to collect zombie debt.
    • Lawsuits to collect amounts not owed.
  • More judgments obtained through unfair means with long-lasting and devastating consequences to consumers.

insideARM Perspective

The insideARM Perspective on the September 2017 hearing noted that 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 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. 

In 2015 insideARM published an extensive discussion by attorney Don Maurice of the Heintz v. Jenkins Supreme Court decision, which is about this same topic.

Now that there is new leadership at the CFPB it will be interesting to see whether this focus on debt collection law firms recedes. As for Congress, that's another matter. The bill (now H.R. 4550) is in the very early stages; there is a long way to go.


Correction note: An earlier version of this story listed Mike Bishop (R-MI) as the author of H.R. 1849. insideARM regrets the error.

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