“Legislation Will Give DC Consumers Needed Protections After Expiration of Debt Collection Relief Provided by COVID-19 Legislation”

photo by angela n.

From the office of Attorney General Karl Racine:

“Attorney General Karl A. Racine today issued the following statement after the DC Council passed emergency legislation — introduced by Chairman Mendelson earlier this week, and written in collaboration with the Office of the Attorney General (OAG) — that will protect DC consumers from abusive and unfair debt collection practices after the District’s temporary COVID-19 protections end and debt collection activity resumes.

“The District’s temporary debt collection relief is set to expire at a time when many District residents are still trying to get back on their feet after losing jobs during the pandemic or struggling to care for their families,” said AG Racine. “By passing our urgently needed legislation, the Council is making sure District residents will be protected from abusive, unfair, and misleading debt collection practices during this critical time. Thank you to Councilmembers for swiftly moving our bill forward, and I look forward to working with them to make these much-needed protections for District residents permanent. We can help enable consumers to repay their debt while taking into account the tough financial situations they face and avoiding harassment from debt collectors.”

The Council of the District of Columbia unanimously passed the legislation that modernizes the District’s outdated debt collection law, which passed 50 years ago. This legislation ensures that necessary and long overdue consumer protections will be in place when debt collection relief provided by the District’s COVID-19 public health emergency legislation expires. The bill will now go to the mayor for her signature.

According to a pre-pandemic analysis by the Urban Institute, nearly 30% of DC residents have debt in collections, and those residents are disproportionately people of color. When debt goes to collections, the individual who owes money is often repeatedly contacted by debt collectors, who use a variety of tactics–including some that may be aggressive or misleading–in an attempt to get paid. In recent years, DC has also seen a significant increase in the use of lawsuits to collect debts. These lawsuits can lead to serious consequences for individuals who are already struggling, including loss of drivers’ licenses, seizure of bank accounts, or garnishment of already-low wages, and can increase the risks of homelessness and unemployment.

During the COVID-19 pandemic, more than 1,100 DC residents lost their lives, tens of thousands got sick and struggled to recover, and tens of thousands more lost jobs and struggled to make ends meet. More than 26% of DC residents reported using credit cards or loans to meet their spending needs during the pandemic, and 9% reported not having enough to eat according to a survey conducted by the Census Bureau in April and May of 2021. Currently, DC consumers are protected from debt collection suits through COVID-19 emergency legislation. Those protections will soon expire, and a wave of new collection lawsuits against consumers will likely follow.

Because the District’s existing law regulating debt collection law passed 50 years ago, it is significantly weaker than similar laws in other states. The Protecting Consumers from Unjust Debt Collection Practices Emergency and Temporary Acts update the District’s debt collection laws by:

• Expanding protections to cover medical debt and credit card debt: Medical debt and credit card debt are among the most common forms of debt held by consumers, but collection on these debts is unregulated by existing DC law. This legislation outlaws abusive collection practices for all forms of consumer debt, including medical debt and credit card debt.
• Prohibiting harassment by debt collectors: The legislation prohibits excessive communications that constitute harassment, including making more than three phone calls in a 7-day period. It also broadens the law so it clearly applies to modern forms of communication, like text message and email, and protects consumers from harassment across all forms of communication.
• Strengthening existing protections for DC consumers: Under the District’s old laws, collectors of a few types of debts could not call consumers very early in the morning or late at night, call anonymously, use profane or threatening language, or make false statements about a person’s debt to employers or family members. In addition to expanding the types of debts covered by these protections, this legislation prohibits debt collectors from communicating any information about a person’s debt to their employers or family members.
• Stopping criminalization of poverty: Creditors are increasingly using the legal system as a tool to collect debts, and under DC’s old law, if the consumer failed to appear for a proceeding, a creditor could request that a bench warrant be issued for the consumer’s arrest. This bill eliminates the ability of creditors to have consumers jailed for contempt of court in these circumstances. It also clarifies that no person can be jailed for failing to pay a debt.
• Clarifying that the law applies to debt buyers: The bill clarifies that debt buyers must follow all laws applicable to debt collectors. It also requires debt buyers to comply with additional requirements, like providing itemized statements and account numbers for debts owed, to prevent attempts to collect on inaccurate or expired debts.
• Increasing penalties for debt collectors who violate the law: This legislation establishes clear financial penalties for wrongdoers, including extra penalties of up to $4,000 per harmed individual.

Chairman Mendelson and AG Racine also plan to introduce legislation in the near future with permanent updates to modernize the District’s debt collection laws in the long-term, in addition to this legislation with urgently needed temporary fixes.

A copy of the emergency legislation is available here.

A copy of the temporary legislation is available here.

How to Report Unfair Business Practices
To report scams, fraud, or unfair business practices, contact OAG’s Office of Consumer Protection by:

• Texting “COMPLAINT” to (202) 738-5212
• Messaging OAG using the chat feature at: oag.dc.gov/consumer-protection
• Submitting a complaint online at: https://oag.dc.gov/consumer-protection/submit-consumer-complaint
• Calling (202) 442-9828
• Emailing [email protected]“