Stop Debt Collection Abuse Act of 2021
Bill: H.R.2572 | Sponsor: Rep. Cleaver, Emanuel (D-MO)
Policy area: Finance and Financial Sector

Summary:
Stop Debt Collection Abuse Act of 2021
This bill applies certain consumer protections regarding debt collection to debt owed to a federal agency and to debt buyers.
A federal agency that is a creditor may not sell or transfer a debt to a debt collector until 90 days after the obligation becomes delinquent or defaults. Specified notice to the consumer of such a sale or transfer is required.
A collector of debt owed to a federal agency may not collect any interest, fee, charge, or expense that is (1) unreasonable in relation to actual costs, (2) not authorized by a contract between the debt collector and the federal agency, or (3) greater than 10% of the amount collected.
The Government Accountability Office must report on the use of debt collectors by federal, state, and local government agencies.

To amend the Fair Debt Collection Practices Act to restrict the debt 
            collection practices of certain debt collectors.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stop Debt Collection Abuse Act of 
2021''.

SEC. 2. DEFINITIONS.

    Section 803 of the Fair Debt Collection Practices Act (15 U.S.C. 
1692a) is amended--
            (1) in paragraph (4), by striking ``facilitating collection 
        of such debt for another'' and inserting ``collection of such 
        debt'';
            (2) by amending paragraph (5) to read as follows:
            ``(5) The term `debt' means--
                    ``(A) any obligation or alleged obligation of a 
                consumer to pay money 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; or
                    ``(B) any obligation or alleged obligation of a 
                consumer--
                            ``(i) to pay a loan, an overpayment, a 
                        fine, a penalty, a fee, or other money 
                        currently or originally owed to a Federal 
                        agency; and
                            ``(ii) that is not less than 180 days past 
                        due.''; and
            (3) in paragraph (6)--
                    (A) by striking the first sentence and inserting 
                the following: ``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; who 
                regularly collects or attempts to collect, directly or 
                indirectly, by the person's own means or by hiring 
                another debt collector, debts owed or due or asserted 
                to be owed or due another or that have been obtained by 
                assignment or transfer from another; or who regularly 
                collects debts currently or originally owed or 
                allegedly owed to a Federal agency.''; and
                    (B) in subparagraph (F), by inserting ``or that has 
                been obtained by assignment or transfer from another'' 
                after ``owed or due another''.

SEC. 3. DEBT COLLECTION PRACTICES FOR DEBT COLLECTORS HIRED BY 
              GOVERNMENT AGENCIES.

    (a) In General.--The Fair Debt Collection Practices Act (15 U.S.C. 
1692 et seq.) is amended by inserting after section 812 (15 U.S.C. 
1692j) the following:
``Sec. 812A. Debt collection practices for debt collectors hired by 
              Federal agencies
    ``(a) Limitation on Time To Turn Debt Over to Debt Collector.--A 
Federal agency that is a creditor may sell or transfer a debt described 
in section 803(5)(B) to a debt collector not earlier than 90 days after 
the date on which the obligation or alleged obligation becomes 
delinquent or defaults.
    ``(b) Required Notice.--
            ``(1) In general.--Before transferring or selling a debt 
        described in section 803(5)(B) to a debt collector or 
        contracting with a debt collector to collect such a debt, a 
        Federal agency shall notify the consumer not fewer than 3 times 
        that the Federal agency will take such action.
            ``(2) Frequency of notifications.--The second and third 
        notifications described in paragraph (1) shall be made not less 
        than 30 days after the date on which the previous notification 
        is made.''.
    (b) Clerical Amendment.--The table of contents for the Fair Debt 
Collection Practices Act is amended by inserting after the item 
relating to section 812 the following:

``812A. Debt collection practices for debt collectors hired by Federal 
                            agencies.''.

SEC. 4. UNFAIR PRACTICES.

    Section 808 of the Fair Debt Collection Practices Act (15 U.S.C. 
1692f) is amended by striking paragraph (1) and inserting the 
following:
            ``(1) The collection of any amount (including any interest, 
        fee, charge, or expense incidental to the principal obligation) 
        unless--
                    ``(A) such amount is expressly authorized by the 
                agreement creating the debt or permitted by law; and
                    ``(B) in the case of any amount charged by a debt 
                collector collecting a debt described in section 
                803(5)(B), such amount is--
                            ``(i) reasonable in relation to the actual 
                        costs of the collection;
                            ``(ii) authorized by a contract between the 
                        debt collector and the Federal agency; and
                            ``(iii) not greater than 10 percent of the 
                        amount collected by the debt collector.''.

SEC. 5. GAO STUDY AND REPORT.

    (a) Study.--The Comptroller General of the United States shall 
commence a study on the use of debt collectors by State and local 
government agencies, including--
            (1) the powers given to the debt collectors by Federal, 
        State, and local government agencies;
            (2) the contracting process that allows a Federal, State, 
        or local government agency to award debt collection to a 
        certain company, including the selection process;
            (3) any fees charged to debtors in addition to principal 
        and interest on the outstanding debt;
            (4) how the fees described in paragraph (3) vary from State 
        to State;
            (5) consumer protection at the State level that offer 
        recourse to those whom debts have been wrongfully attributed;
            (6) the revenues received by debt collectors from Federal, 
        State, and local government agencies;
            (7) the amount of any revenue sharing agreements between 
        debt collectors and Federal, State, and local government 
        agencies;
            (8) the difference in debt collection procedures across 
        geographic regions, including the extent to which debt 
        collectors pursue court judgments to collect debts; and
            (9) any legal immunity or other protections given to the 
        debt collectors hired by State and local government agencies, 
        including whether the debt collectors are subject to the Fair 
        Debt Collection Practices Act (15 U.S.C. 1692 et seq.).
    (b) Report.--Not later than one year after the date of enactment of 
this Act, the Comptroller General of the United States shall submit to 
Congress a report on the completed study required under subsection (a).
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