Proposed Amendments to the FDCPA

In July this year, the Minnesota U.S. Senator Al. Franken issued a press release and demanded that the Federal Trade Commission take action to reign in illegal debt collection activity. He said: "Right now, Minnesotans are struggling to make ends meet. The last thing they need is to become victims of debt collection abuse." He also said: "Recent reports raise serious questions about whether our current laws go far enough to protect consumers, and I want to make sure Minnesotans aren’t at risk of being harassed or improperly jailed."

Shortly before the Al. Franken press release, the Minneapolis Star Tribune published two articles about the new disturbing debt collection practices in Minnesota. The newspaper wrote about a rise in the arrests made in connection with consumer debts. The articles highlighted the increasing number of Minnesotans finding themselves behind bars for very old or minor debts and attributed the rise in arrests to the consumer’s failure to appear in court when debt buyers sue the consumer over the debt. Collection agencies have had success using arrest warrants to collect the debts and courts have often set bail at the amount the debtor owes.

Senator Franken's bill proposes to amend the Fair Debt Collection and Practices Act (FDCPA) with the intent to stop certain debt collection practices and to provide new rights to consumers. His proposed legislation would:

• Classify the use of arrest warrants as an "unfair practice" under the FDCPA. This would provide consumers with the right to sue debt collection agencies that utilized this practice.

Sen. Franken has indicated that this potential classification of arrest warrants would not limit the authority of judges to issue arrest warrants for those who can afford to pay their debts yet fail to make their scheduled court hearings.

• Require debt collection agencies to provide consumers with more in-depth information about the debt in question, including a summary/explanation of interest owed and any other fees.

Sen. Franken's proposed legislation would also give judges the power to stop any continuing misconduct by debt collections agencies via injunction and enable attorneys to seek triple damages in civil court for willful violations of the FDCPA.

In Franken’s opinion, the consumers should not be burdened with proving they don’t owe a debt; the burden of proving the consumer owes a debt should be on the debt collector. When a consumer receives a debt collection notice and challenges it, collectors would be required to verify that the money is actually owed. In addition, debt collectors would have to provide detailed information about the alleged amount owed, including fees, interest, and what rights the consumer has in regards to collection and the debt.

It seems unlikely that Congress will take any action on Senator Franken's bill this year, but it may become the starting point in the drive to amend the FDCPA in the coming year.