From the original title of DC Law 28-3814, which was simply, “Debt Collection,” emerged a compassionately named enactment called the “Protecting Consumers From Unjust Debt Collection Practices Amendment Act of 2022.” Yes, that’s quite a mouthful, and reducing it to an acronym doesn’t help: PCFUDCPAA. Nevertheless, this reformation of the laws governing debt collection practices seeks to protect consumers, and some lawmakers felt it was long overdue.
Debt collection law in DC emerged in the early 1970s in response to common aggressive collection practices during the late 1960s. Prior to 1971, DC did not have laws or rules regulating the actions of debt collectors. The initial change came as part of the establishing of consumer lending laws, which included provisions relating to collection of debt, but the law was thin in its coverage of debt collection and times have greatly changed since the early 1970s, especially relating to technology, business, and consumerism.
The growing debt among the DC population—more than 25% of the population have delinquent debt— brought increased complaints about how the debt was being collected. In 2019, DC ranked second highest in the United States for collection complaints per capita. (CITE)
In response to these increased complaints, Democrats introduced partisan Bill 24-357 in July 2021 with several purposes in mind. Primarily, it sought to include all consumer debt and prohibit deceptive behavior and various threats from debt collectors by:
- prohibiting the communication of consumer indebtedness to employers, friends, or neighbors
- establishing requirements for debt collectors initiating a cause of action against a consumer for consumer debt
- allowing consumers to collect damages and other fees from debt collectors for violations
- prohibiting imprisonment or jailing of consumers for failure to pay consumer debt; and
- establishing debt collection protections during a public health emergency
After being read in early 2022, Bill 24-357 was adopted in August 2022 and becomes effective January 1, 2023 as D.C. Law 24-154.
Several notable elements of the new law include: limiting the rights of creditors and consumers to negotiate contract terms relating to collection of reasonable attorney fees by establishing a 15% cap; and, detailing, with some precision, the requirements for notifying debtors that collection actions are being initiated. Debt collectors should familiarize themselves with these requirements before proceeding against a debtor.
Finally, an unusual aspect of DC Law 24-154 is that it broadens the typical definition of “debt collector” to include original creditors. Only a handful of states have done this. For DC, this inclusion comes after research revealed that of the nearly ten thousand small claims debt collection cases filed in 2019, almost half of them were filed by only five entities, all of whom were original creditors to the debt. (CITE)
A parallel synopsis of the former DC Law 28-3814, the new DC Law 24-154, and relative portions of the FDCPA (15 USC §§1692, et sec.) can be found here.
The motivation for enacting the new collection laws is varied, but there was a need for change. And, while the high level of debt in the DC communities will keep the dunning letters coming and the debt collector knocking on the door of delinquent debtors, the face, hopefully, will be a bit less aggressive.