HR 2547 - the Comprehensive Debt Collection Improvement Act (CDCIA)
A populist bill, the Comprehensive Debt Collection Improvement Act (CDCIA) passed the US House of Representatives on March 13, 2021, the CDCIA passed in a 215- 207 vote. Consumer groups are celebrating the vote, and after the vote passed, House Financial Services Chairwoman Maxine Waters had this to say:
During the pandemic crisis, which has harmed all of our communities, debt collectors have earned record profits. Their tactics are often abusive and predatory. Many debt collectors harass consumers with frequent phone calls, make threats, and provide misleading information to consumers. The debt collection industry is also plagued by poor record-keeping, resulting in many consumers being harassed for debts that they do not owe. Debt collection is among the top issues that the Consumer Financial Protection Bureau receives the most complaints about from consumers, and those complaints have risen since 2019.
The bill, the Comprehensive Debt Collection Improvement Act (CDCIA), is actually 8 separate bills, each with a Congressional sponsor. The member sponsors are Maxine Waters (D), Jacob Auchincloss (D), Emanuel Cleaver (D),
Madeleine Dean Cunnane (D), Gregory Meeks (D), Ayanna Pressley (D), Rashida Tlaib (D) and Nydia Velazquez (D). The eight bills are as follows:
Amends Truth in Lending Act (TILA) to restrict the use of confessions of judgment for small business owners.
Amends the FDCPA to prohibit debt collectors from threatening an Armed Services Member.
Amends TILA to require the discharge of private student loans in the case of permanent disability of the borrower.
Bars entities from collecting medical debt or reporting it to a consumer reporting agency without giving a consumer notice about their rights under the FDCPA and the FCRA.
Amends the FDCPA to prohibit a debt collector from contacting a consumer by email or text message without a consumer’s consent to be contacted electronically.
Expands the definition of debt covered under the FDCPA to include money owed to a state or local government; municipal utility bills, tolls, traffic tickets, and court debts are subject to the FDCPA. It would also extend FDCPA protections related to a debt owed to a federal agency and limit the fees debt collectors can charge.
Updates monetary penalties for inflation, including class action limits, and clarifies that courts can award injunctive relief, as well as add protections for consumers affected by national disasters.
Amends the FDCPA to clarify that the statute covers non-judicial foreclosure proceedings.
Background
Specific to medical collections, HR 2537, the “Consumer Protection for Medical Debt Collections Act”, introduced by Representative Rashida Tlaib (D-MI). At a high level, it bars entities from collecting medical debt or reporting it to a consumer reporting agency without giving a consumer notice about their rights under the FDCPA and the FCRA.
SEC. 402. AMENDMENTS TO THE FAIR DEBT COLLECTION PRACTICES ACT.
(a) Definition.—Section 803 of the Fair Debt Collection Practices Act (15 U.S.C. 1692a) is amended by adding at the end the following:
“(9) The term ‘medical debt’ means a debt arising from the receipt of medical services, products, or devices.”.
(b) Unfair Practices.—Section 808 of the Fair Debt Collection Practices Act (15 U.S.C. 1692f), as amended by section 202(b), is amended by adding at the end the following:
“(10) Engaging in activities to collect or attempting to collect a medical debt before the end of the 2-year period beginning on the date that the first payment with respect to such medical debt is due.”.
SEC. 403. PROHIBITION ON CONSUMER REPORTING AGENCIES REPORTING CERTAIN MEDICAL DEBT.
(a) Definition.—Section 603 of the Fair Credit Reporting Act (15 U.S.C. 1681a) is amended by adding at the end the following:
“(bb) Medical Debt.—The term ‘medical debt’ means a debt arising from the receipt of medical services, products, or devices.
“(cc) Medically Necessary Procedure.—The term ‘medically necessary procedure’ means—
“(1) health care services or supplies needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine; and
“(2) health care to prevent illness or detect illness at an early stage, when treatment is likely to work best (including preventive services such as pap tests, flu shots, and screening mammograms).”.
(b) In General.—Section 605(a) of the Fair Credit Reporting Act (15 U.S.C. 1681c(a)) is amended by adding at the end the following new paragraphs:
“(9) Any information related to a debt arising from a medically necessary procedure.
“(10) Any information related to a medical debt, if the date on which such debt was placed for collection, charged to profit or loss, or subjected to any similar action antedates the report by less than 365 calendar days.”.
SEC. 404. REQUIREMENTS FOR FURNISHERS OF MEDICAL DEBT INFORMATION.
(a) Additional Notice Requirements For Medical Debt.—Section 623 of the Fair Credit Reporting Act (15 U.S.C. 1681s–2) is amended by adding at the end the following:
“(f) Additional Notice Requirements For Medical Debt.—Before furnishing information regarding a medical debt of a consumer to a consumer reporting agency, the person furnishing the information shall send a statement to the consumer that includes the following:
“(1) A notification that the medical debt—
“(A) may not be included on a consumer report made by a consumer reporting agency until the later of the date that is 365 days after—
“(i) the date on which the person sends the statement;
“(ii) with respect to the medical debt of a borrower demonstrating hardship, a date determined by the Director of the Bureau; or
“(iii) the date described under section 605(a)(10); and
“(B) may not ever be included on a consumer report made by a consumer reporting agency, if the medical debt arises from a medically necessary procedure.
“(2) A notification that, if the debt is settled or paid by the consumer or an insurance company before the end of the period described under paragraph (1)(A), the debt may not be reported to a consumer reporting agency.
“(3) A notification that the consumer may—
“(A) communicate with an insurance company to determine coverage for the debt; or
“(B) apply for financial assistance.”.
(b) Furnishing Of Medical Debt Information.—Section 623 of the Fair Credit Reporting Act (15 U.S.C. 1681s–2), as amended by subsection (a), is further amended by adding at the end the following:
“(g) Furnishing Of Medical Debt Information.—
“(1) PROHIBITION ON REPORTING DEBT RELATED TO MEDICALLY NECESSARY PROCEDURES.—No person shall furnish any information to a consumer reporting agency regarding a debt arising from a medically necessary procedure.
“(2) TREATMENT OF OTHER MEDICAL DEBT INFORMATION.—With respect to a medical debt not described under paragraph (1), no person shall furnish any information to a consumer reporting agency regarding such debt before the end of the 365-day period beginning on the later of—
“(A) the date on which the person sends the statement described under subsection (f) to the consumer;
“(B) with respect to the medical debt of a borrower demonstrating hardship, a date determined by the Director of the Bureau; or
“(C) the date described in section 605(a)(10).
“(3) TREATMENT OF SETTLED OR PAID MEDICAL DEBT.—With respect to a medical debt not described under paragraph (1), no person shall furnish any information to a consumer reporting agency regarding such debt if the debt is settled or paid by the consumer or an insurance company before the end of the 365-day period described under paragraph (2).
“(4) BORROWER DEMONSTRATING HARDSHIP DEFINED.—In this subsection, and with respect to a medical debt, the term ‘borrower demonstrating hardship’ means a borrower or a class of borrowers who, as determined by the Director of the Bureau, is facing or has experienced extenuating life circumstances or events that result in severe financial or personal barriers such that the borrower or class of borrowers does not have the capacity to repay the medical debt.”
Next Steps
For the bill to become law, it would have to pass the Senate. The Senate goes on recess August 9th to September 10th.
Any of these proposed bills could make it to the finish line. Representative Waters's CDCIA may not survive, but one of the 8 bills that make up the full CDCIA could.
Once the bill hits the Senate, it will be reviewed, debated, amended, and finally voted on.
For the bill to pass the Senate, the supporters would only need a would only need a simple majority: 51 (or 50 plus the Vice President) out of 100. The current make-up of the Senate is Democratic (48) Independent (2) vs. Republican (50). Therefore, all 480 Democrats and the 2 Independents would have to be full aligned for the bill to pass.
However, if it were to pass the Senate, it's referred back to a committee of House and Senate members to finalize.
It then returns to the House and Senate for one final approval.
Finally, the President has 10 days to sign or veto the proposed bill.