House Bill Offers Technical Fix to FDCPA for Collection Attorneys

A bill introduced last week in the U.S. House of Representatives would exempt debt collection attorneys from the Fair Debt Collection Practices Act (FDCPA) “when taking certain actions.” The bill’s supporters say that it is a technical fix that does not erode the consumer protections of the FDCPA.

H.R. 2892 was introduced Wednesday by Rep. Ed Perlmutter (D-Colo.), a member of the House Financial Services Committee. The bill has one co-sponsor so far, Rep. Spencer Bachus (R-Ala.), the Chairman Emeritus of the Financial Services Committee, the third highest-ranking Republican.

The bill’s official title, or purpose, is “To amend the Fair Debt Collection Practices Act to preclude law firms and licensed attorneys from the definition of a debt collector when taking certain actions.” The bill has been referred to the House Financial Services Committee for further action.

Although the text of the bill is not yet available from the Government Printing Office, the proposal is very similar to a bill introduced in the waning days of the last Congress. That bill proposed to insert an additional exemption to the definition of “debt collector” in the FDCPA as follows:

…The term (debt collector) does not include –

(F) any law firm or licensed attorney–

(i) serving, filing, or conveying formal legal pleadings, discovery requests, or other documents pursuant to the applicable rules of civil procedure; or

(ii) 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; and…

Lou Freedman, president of the National Association of Retail Collection Attorneys (NARCA), said that it is important to note that consumer protections under the FDCPA will not be harmed by the bill.

“All other communications from collection attorneys must still comply with the FDCPA,” he said. “This is a technical amendment to the law.” Freedman is also Chair of the Collections Group at Freedman Anselmo Lindberg, LLC.

The bill attempts to shield attorneys from liability when they are arguing in court on behalf of clients. For example, some states have ambiguous statutes of limitations for certain types of credit (written vs. oral contracts, or different standards for revolving debt). If an attorney argues that the account falls under one definition and the court rules that, in fact, the account is time-barred, that attorney could be liable under the current FDCPA.

NARCA was instrumental in getting the measure introduced. Freedman said that the fact that the bill already has bi-partisan support and that there is plenty of time left in the current Congress bodes well for its prospects.