The Debt Collection Market and Selected Policy Issues

Changes from October 15, 2020 to May 6, 2021

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The Debt Collection Market and Selected
~~October 15, 2020~~May 6, 2021
Policy Issues
Cheryl R. Cooper
When a consumer defaults on a debt, a third-party debt collector often collects the debt obligation When a consumer defaults on a debt, a third-party debt collector often collects the debt obligation
Analyst in Financial Analyst in Financial
rather than the lender to whom the debt is originally owed. The debt collection market helps rather than the lender to whom the debt is originally owed. The debt collection market helps
Economics Economics
lenders recoup their losses when a consumer defaults, generally making consumer credit and lenders recoup their losses when a consumer defaults, generally making consumer credit and

other related markets more efficient. When lenders can effectively recoup their losses, they may other related markets more efficient. When lenders can effectively recoup their losses, they may
be more willing to lend to consumers at lower initial loan costs, leading to more access to credit be more willing to lend to consumers at lower initial loan costs, leading to more access to credit

for consumers. for consumers.
The U.S. debt collection market is large, and the debt collection process impacts many American consumers. As of The U.S. debt collection market is large, and the debt collection process impacts many American consumers. As of ~~2019~~2020, ,
there are there are ~~over~~nearly 7,000 collection agencies in the United States, and the industry’s annual revenue is about $ 7,000 collection agencies in the United States, and the industry’s annual revenue is about $~~12.7~~13.4 billion. billion.
According to a Consumer Financial Protection Bureau (CFPB) survey, approximately one-third of consumers with a credit According to a Consumer Financial Protection Bureau (CFPB) survey, approximately one-third of consumers with a credit
bureau file reported being contacted by at least one creditor or debt collector trying to collect on one or more debts in the bureau file reported being contacted by at least one creditor or debt collector trying to collect on one or more debts in the
previous year. previous year.
Lenders make contracts with debt collectors to collect their debts, and consumers may not choose the debt collector with Lenders make contracts with debt collectors to collect their debts, and consumers may not choose the debt collector with
whom they engage. Therefore, consumers cannot take their business elsewhere if abuses occur. For this reason, consumer whom they engage. Therefore, consumers cannot take their business elsewhere if abuses occur. For this reason, consumer
protection laws and regulations may be particularly consequential. According to the CFPB, debt collection is the consumer protection laws and regulations may be particularly consequential. According to the CFPB, debt collection is the consumer
finance market with the second most complaints, accounting for finance market with the second most complaints, accounting for 2115% of the total complaints the agency received in % of the total complaints the agency received in ~~2019.~~
2020. Consumers’ most common debt collector complaints assert that a debt collector attempted to collect a debt the consumer did Consumers’ most common debt collector complaints assert that a debt collector attempted to collect a debt the consumer did
not believe was owed (not believe was owed (4549%), or a consumer received insufficient written notification about a debt (%), or a consumer received insufficient written notification about a debt (1820%). %).
The Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. §§1692-1692p) is the primary federal statute regulating the The Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. §§1692-1692p) is the primary federal statute regulating the
consumer debt collection market. It generally applies only to debt collectors, not the original lender. The FDCPA prohibits consumer debt collection market. It generally applies only to debt collectors, not the original lender. The FDCPA prohibits
debt collectors from engaging in certain types of conduct (such as misrepresentation or harassment) when seeking to collect debt collectors from engaging in certain types of conduct (such as misrepresentation or harassment) when seeking to collect
certain personal, family, or household debts from consumers and grants consumers the right to dispute or stop some certain personal, family, or household debts from consumers and grants consumers the right to dispute or stop some
communications about an alleged debt. In addition, the FDCPA requires that a debt collector must send to a consumer a communications about an alleged debt. In addition, the FDCPA requires that a debt collector must send to a consumer a
validation notice disclosing certain information about the debt. validation notice disclosing certain information about the debt.
Recently, the CFPB Recently, the CFPB ~~has been actively engaged in rulemaking~~finalized two new regulations intended to clarify and update provisions in the FDCPA. On intended to clarify and update provisions in the FDCPA. On
~~May 21, 2019, the CFPB issued a Notice of Proposed Rulemaking for the debt collection market, which generally seeks to~~
~~clarify~~November 30, 2020, the CFPB issued a final rule on how debt collectors how debt collectors ~~should~~may communicate with consumers. The communicate with consumers. The ~~proposed regulation would limit~~rule generally limits debt collector phone debt collector phone
calls to seven times calls to seven times ~~during~~in a seven-day period and a seven-day period and ~~would prohibit~~prohibits debt collectors from making calls within a week after debt collectors from making calls within a week after
speaking by phone to a consumer. speaking by phone to a consumer. ~~It would also specify~~The rule also clarifies that debt collectors can use newer technologies, such as email that debt collectors can use newer technologies, such as email,
~~voicemail,~~ and text messages, to and text messages, to ~~provide limited content messages to~~communicate with consumers. Debt collectors consumers. Debt collectors ~~would be~~are able to use these able to use these
~~communication tools without limit, but consumers would have the right to request convenient times or places or restrict the~~
~~communication medium (e.g., opt out of text messages). In addition, the proposed rule would specify~~communication tools without limit. However, the rule requires a reasonable and simple method for consumers to opt out of these types of messages. On January 19, 2021, the CFPB published a second final rule clarifying what information debt what information debt
collectors collectors ~~should~~must disclose to consumers disclose to consumers~~, such as~~. At the onset of communication, it requires disclosure of certain information about the debt certain information about the debt~~, as well as~~ and consumers’ rights in the debt consumers’ rights in the debt
collection processcollection process ~~(e.g.,~~, such as how to dispute a debt how to dispute a debt).
. The regulation also allows a debt collector to obtain a “safe harbor” from liability by using a model validation notice. Furthermore, the rule bars debt collectors from furnishing information about a debt to a credit bureau before communicating with the consumer about the debt by phone or mail. Appropriate regulation of the debt collection market has been a focus of congressional attention in the Appropriate regulation of the debt collection market has been a focus of congressional attention in the ~~116th~~117th Congress. Congress.
Ongoing concerns about debt collection include communication frequency; time-barred and obsolete debt; validation issues; Ongoing concerns about debt collection include communication frequency; time-barred and obsolete debt; validation issues;
medical debt and credit reporting; and federal, state, and local government debt. The House Financial Services Committee medical debt and credit reporting; and federal, state, and local government debt. The House Financial Services Committee
~~held a hearing on the debt collection market in September 2019. The House passed H.R. 5003, the Fair~~reported the Comprehensive Debt Collection Improvement Act (H.R. 2547; H.Rept. 117-23), which addresses many of these policy issues. Among other things, the bill limits debt collectors’ email and text messages to consumers ; prohibits medical debts related to medically necessary procedures from inclusion in consumer credit reports; and makes federal, state, and local government debts subject to the FDCPA. It also provides military servicemembers additional debt collection protections. ~~Debt Collection~~
~~Practices for Servicemembers Act, on March 2, 2020. In addition, the committee marked up and ordered to be reported seven~~
~~other bills relating to the debt collection market: H.R. 3948, H.R. 4403, H.R. 5001, H.R. 5013, H.R. 5021, H.R. 5287, and~~
~~H.R. 5330.~~
~~In response to the Coronavirus Disease 2019 (COVID-19) pandemic, the House also passed two versions of the Heroes Act~~
~~(H.R. 6800 and H.R. 925). Both bills would, among other things, ban debt collectors from collecting on a debt (such as~~
~~garnishment or seizing bank account assets), enforcing a security interest (such as repossession or foreclosure), or threatening~~
~~to take an action on a debt during the COVID-19 pandemic and for 120 days afterward. Both bills also would ban debt~~
~~collectors from charging additional fees and interest on debts that become past due during this period.~~
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Introduction
When a consumer defaults on a debt, a third-party debt collector or buyer (hereinafter referred to When a consumer defaults on a debt, a third-party debt collector or buyer (hereinafter referred to
as “debt collector”) often collects the debt obligation, rather than the first-party creditor or lender as “debt collector”) often collects the debt obligation, rather than the first-party creditor or lender
to whom the debt is to whom the debt is ~~originally~~ original y owed. The debt collection market helps lenders recoup their losses owed. The debt collection market helps lenders recoup their losses
when a consumer defaults, facilitating the resolution of delinquencies and defaults and making when a consumer defaults, facilitating the resolution of delinquencies and defaults and making
consumer credit and other related markets more efficient. consumer credit and other related markets more efficient.
The U.S. debt collection market is large, and it impacts many consumers. As of The U.S. debt collection market is large, and it impacts many consumers. As of ~~2019~~2020, there were , there were
~~over~~nearly 7,000 collection agencies in the United States, and the industry’s annual revenue was about 7,000 collection agencies in the United States, and the industry’s annual revenue was about
$$~~12.7 billion~~13.4 bil ion.1 According to a Consumer Financial Protection Bureau (CFPB) survey, .1 According to a Consumer Financial Protection Bureau (CFPB) survey,
approximately one-third of consumers with a credit bureau file reported being contacted by at approximately one-third of consumers with a credit bureau file reported being contacted by at
least one creditor or debt collector trying to collect on one or more debts in the previous year.2 least one creditor or debt collector trying to collect on one or more debts in the previous year.2
Lenders make contracts with debt collectors to collect their debts, and consumers may not choose Lenders make contracts with debt collectors to collect their debts, and consumers may not choose
the debt collector with whom they engage. Therefore, consumers cannot take their business the debt collector with whom they engage. Therefore, consumers cannot take their business
elsewhere if abuses occur. For this reason, consumer protection laws and regulations are elsewhere if abuses occur. For this reason, consumer protection laws and regulations are
particularly important.3 According to the CFPB, debt collection is the consumer finance market particularly important.3 According to the CFPB, debt collection is the consumer finance market
with the second most complaints, accounting for with the second most complaints, accounting for 2115% of the total complaints the agency received % of the total complaints the agency received
in 2020.4 ~~in 2019.4~~
The Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. §§1692-1692p) is the primary federal The Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. §§1692-1692p) is the primary federal
statute regulating the consumer debt collection market. It statute regulating the consumer debt collection market. It ~~generally~~general y applies only to debt applies only to debt
collectors, not the original lender. collectors, not the original lender. ~~In recent years, the CFPB has been actively engaged in~~
~~rulemaking to clarify and update provisions in the FDCPA and in debt collection markets.~~
Recently, the CFPB finalized two new regulations intended to clarify and update provisions in the FDCPA, including how debt collectors may communicate with consumers and what information debt collectors must disclose to consumers. Appropriate regulation of the debt collection market has been a focus of congressional attention Appropriate regulation of the debt collection market has been a focus of congressional attention
in the in the ~~116th~~117th Congress. The House Financial Services Committee Congress. The House Financial Services Committee ~~held a hearing on the debt~~
~~collection market in September 2019.5 The House passed H.R. 5003, the Fair Debt Collection~~
~~Practices for Servicemembers Act, on March 2, 2020. In addition, the committee marked up and~~
~~ordered to be reported seven other bills relating to the debt collection market: H.R. 3948, H.R.~~
~~4403, H.R. 5001, H.R. 5013, H.R. 5021, H.R. 5287, and H.R. 5330~~reported the Comprehensive Debt Collection Improvement Act (H.R. 2547; H.Rept. 117-23), which, among other things, limits debt collectors’ email and text messages to consumers; prohibits medical debts related to medical y necessary procedures from inclusion in consumer credit reports; and makes federal, state, and local government debts subject to the FDCPA. It also provides servicemembers additional debt collection protections. .
This report first provides an overview of the debt collection market, including consumer This report first provides an overview of the debt collection market, including consumer
experiences during the debt collection process. It then discusses the FDCPA, including the experiences during the debt collection process. It then discusses the FDCPA, including the
CFPB’s CFPB’s ~~ongoing rulemaking~~recently finalized regulations. Lastly, the report discusses selected policy issues pertaining to debt . Lastly, the report discusses selected policy issues pertaining to debt
collection: communication frequency; time-barred and obsolete debt; validation collection: communication frequency; time-barred and obsolete debt; validation issues; medical issues; medical
debt and credit reporting; and federal, state, and local government debtdebt and credit reporting; and federal, state, and local government debt~~. Table A-1 in the~~

~~1 Rohan Jaura,~~ . 1 Gabriel Schulman, Debt Collection Agencies in the US, IBIS, IBIS World, Industry Report 56144, December World, Industry Report 56144, December ~~2019~~2020, p. , p. 47
(hereinafter (hereinafter ~~Jaura~~Schulman, , Debt Collection Agencies in the US, IBIS, IBIS World, World, ~~2019~~2020). ).
2 Consumer Financial Protection Bureau (CFPB), 2 Consumer Financial Protection Bureau (CFPB), Consumer Experiences with Debt Collection: Findings from the
CFPB’s Survey of Consumer Views on Debt, January 2017, p. 5, at https://files.consumerfinance.gov/f/documents/, January 2017, p. 5, at https://files.consumerfinance.gov/f/documents/
201701_cfpb_Debt201701_cfpb_Debt -Collection-Survey-Report.pdf (hereinafter CFPB, -Collection-Survey-Report.pdf (hereinafter CFPB, ~~Consumer~~Consum er Experiences with Debt Collection). ).
3 For an overview of consumer financial markets, see CRS 3 For an overview of consumer financial markets, see CRS Report R45813, Report R45813, An Overview of Consumer Finance and
Policy Issues, by Cheryl R. Cooper. , by Cheryl R. Cooper.
4 CFPB, 4 CFPB, Consumer Response Annual Report: January 1-December 31, ~~2019~~2020, March , March ~~2019~~2020, p. 9, at , p. 9, at
https://files.consumerfinance.gov/f/documents/https://files.consumerfinance.gov/f/documents/~~cfpb_consumer~~cfpb_2020-consumer-response-annual--response-annual-~~report_2019~~report_03-2021.pdf (hereinafter CFPB, .pdf (hereinafter CFPB,
~~Consumer~~Consum er Response Annual Report). ~~Response Annual Report~~).
~~5 For more information on the hearing, see U.S. Congress, House Committee on Financial Services,~~ ~~Examining~~
~~Legislation to Protect Consumers and Small Business Owners from Abusive Debt Collection Practices, 116th Cong., 1st~~
~~sess., September 26, 2019 (Washington, DC: GPO, 2019), at https://financialservices.house.gov/calendar/~~
~~eventsingle.aspx?EventID=404239.~~
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~~Appendix summarizes the legislation on debt collection that passed the House or was marked up~~
~~and ordered to be reported by the House Financial Services Committee during the 116th Congress.~~
Overview of Debt Collection Market
This section provides an overview of the debt collection market. It describes the market between This section provides an overview of the debt collection market. It describes the market between
creditors and debt creditors and debt ~~collectors~~col ectors and discusses debt collector operations in detail. It also addresses and discusses debt collector operations in detail. It also addresses
consumer experiences in the market, including the CFPB’s consumer complaints about the consumer experiences in the market, including the CFPB’s consumer complaints about the
industry. industry.
The Market Between Creditors and Debt Collectors
Creditors Creditors ~~generally~~general y want to recoup their losses to the maximum extent possible after a consumer want to recoup their losses to the maximum extent possible after a consumer
defaults on a loan or debt. When creditors can effectively recoup their losses, they may be more defaults on a loan or debt. When creditors can effectively recoup their losses, they may be more
~~willing~~ wil ing to lend to consumers at lower initial loan costs, leading to more access to credit for to lend to consumers at lower initial loan costs, leading to more access to credit for
consumers.consumers.65 Some creditors may choose to collect their debts themselves. However, some may Some creditors may choose to collect their debts themselves. However, some may
choose to contract with a debt collector because they do not want to be associated with aggressive choose to contract with a debt collector because they do not want to be associated with aggressive
collection practices,collection practices,76 because debt because debt ~~collectors~~col ectors might have a competitive advantage in collecting might have a competitive advantage in collecting
debt, or both.debt, or both.87 Although creditors have the right to use the court system to recoup their losses by Although creditors have the right to use the court system to recoup their losses by
obtaining judgments against defaulting consumers, such as wage garnishment, these legal options obtaining judgments against defaulting consumers, such as wage garnishment, these legal options
may be more costly to creditors than the debt collection process.may be more costly to creditors than the debt collection process.
Many types of industries use the debt collection market. In 2019, debt from unpaid loans or other Many types of industries use the debt collection market. In 2019, debt from unpaid loans or other
financial services accounted for close to 40% of debt collection revenue.financial services accounted for close to 40% of debt collection revenue.98 The other 60% of debt The other 60% of debt
collection revenue included nonfinancial services debt, such as telecommunications, utility, collection revenue included nonfinancial services debt, such as telecommunications, utility,
medical, retail, and government debts (semedical, retail, and government debts (see Figure 1)~~.10~~

6.9 In 2020, financial services debts decreased significantly, while medical and government debts grew significantly as a proportion of revenue due to the COVID-19 pandemic. It is unclear if these market trends wil continue after the pandemic ends.10 5 Robert M. Hunt, Robert M. Hunt, Collecting Consumer Debt in America, Federal Reserve Bank of Philadelphia, Business, Federal Reserve Bank of Philadelphia, Business Review, Review,
February 2007, at https://www.philadelphiafed.org/-/media/research-and-data/publications/business-review/2007/q2/February 2007, at https://www.philadelphiafed.org/-/media/research-and-data/publications/business-review/2007/q2/
hunt_collecting-consumer-debt.pdf (hereinafter Hunt, hunt_collecting-consumer-debt.pdf (hereinafter Hunt, Collecting ~~Consumer~~Consum er Debt in ~~America~~Am erica, Federal Reserve Bank of , Federal Reserve Bank of
Philadelphia, 2007). Philadelphia, 2007).
76 Viktar Fedaseyeu Viktar Fedaseyeu and Robert M. Hunt, and Robert M. Hunt, The Economics of Debt Collection: Enforcement of Consumer Credit
Contracts, Federal, Federal Reserve Bank of Philadelphia, Working Paper no. 18Reserve Bank of Philadelphia, Working Paper no. 18 -04, October 1, 2018, at -04, October 1, 2018, at
https://www.philadelphiafed.org/-/media/research-and-data/publications/working-papers/2018/wp18-04r.pdf. https://www.philadelphiafed.org/-/media/research-and-data/publications/working-papers/2018/wp18-04r.pdf.
87 For more information on why a creditor might use For more information on why a creditor might use a debt collector, see Conference of State Bank Supervisors, a debt collector, see Conference of State Bank Supervisors,
“Chapter Five: Overview of Debt Collection,” “Chapter Five: Overview of Debt Collection,” Reengineering NonBank Supervisors, January 2020, p. 5, at , January 2020, p. 5, at
https://www.csbs.org/system/files/2020-02/Chapter%20Five%20-https://www.csbs.org/system/files/2020-02/Chapter%20Five%20-
%20Overview%20of%20Debt%20Collection%20FINAL4.pdf%20Overview%20of%20Debt%20Collection%20FINAL4.pdf (hereinafter Conference of State Bank Supervisors, (hereinafter Conference of State Bank Supervisors,
“Chapter Five: Overview of Debt Collection,” 2020). “Chapter Five: Overview of Debt Collection,” 2020).
98 Rohan Jaura, Jaura, Debt Collection Agencies in the US, IBIS, IBIS ~~World, 2019, p. 16.~~
10 World, Industry Report 56144, December 2019, p.16 (hereinafter Jaura, Jaura, Debt Collection Agencies in the US, IBIS, IBIS ~~World, 2019, p. 16~~ World, 2019). 9 Jaura, Debt Collection Agencies in the US, IBIS World, 2019, p. 16. 10 Schulman, Debt Collection Agencies in the US, IBIS World, 2020, pp. 19-21. .
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Figure 1. Debt Collection Major Market Segmentation by 2019 Share of Revenue

Source: Rohan Jaura, Rohan Jaura, Debt ~~Collection~~ Col ection Agencies in the US, IBIS World,, IBIS World, Industry Report 56144, DecemberIndustry Report 56144, December 2019, 2019,
p. 16. p. 16.
Debt collectors Debt collectors ~~typically~~typical y either contract with the original creditor to receive a share of any either contract with the original creditor to receive a share of any
amount collected on behalf of the originalamount collected on behalf of the original lender or buy the debt obligation in full.11 CFPB lender or buy the debt obligation in full.11 CFPB
research suggests that buying the debt obligation in full has declined in the past decade,12 and research suggests that buying the debt obligation in full has declined in the past decade,12 and
most debt collectors now operate by receiving a share of the amount collected on behalf of the most debt collectors now operate by receiving a share of the amount collected on behalf of the
originaloriginal lender.13 Creditors may choose among thousands of debt collector companies to contract lender.13 Creditors may choose among thousands of debt collector companies to contract
with to collect or with to collect or ~~sell~~ sel their consumer debts.14 The CFPB estimates that about 95% of companies their consumer debts.14 The CFPB estimates that about 95% of companies
operating in this market are operating in this market are ~~small~~ smal businesses.15 However, in the past few decades, the debt businesses.15 However, in the past few decades, the debt
collection market has experienced consolidation due to new technologies, such as automated collection market has experienced consolidation due to new technologies, such as automated ~~call~~
cal center systems, which have made this industry more efficient and led to greater economies of center systems, which have made this industry more efficient and led to greater economies of
scale.16 Larger debt collection companies may be better positioned to handle higher volumes from scale.16 Larger debt collection companies may be better positioned to handle higher volumes from
larger companies and increased regulatory compliance burdens.17 larger companies and increased regulatory compliance burdens.17
Debt collectors can Debt collectors can ~~call~~cal , send letters, and use other methods to contact consumers to collect an , send letters, and use other methods to contact consumers to collect an
~~alleged~~al eged debt. debt.18 In general, debt collectors expect to collect only a fraction of the face value of any In general, debt collectors expect to collect only a fraction of the face value of any

particular debt, knowing that some consumers wil never pay back their debts in full. Therefore, 11 CFPB, 11 CFPB, Fair Debt Collection Practices Act, March , March ~~2020~~2021, pp. , pp. ~~8-10~~14-15, at https://, at https://~~www~~files.consumerfinance.gov/f/documents/cfpb_fdcpa_annual-report -congress_03-2021.pdf~~.consumerfinance.gov/data-~~
~~research/research-reports/fair-debt-collection-practices-act-annual-report-2020/~~ (hereinafter CFPB, (hereinafter CFPB, Fair Debt
Collection Practices Act). Some states have debt collection licensing requirements, although there is no licensing ). Some states have debt collection licensing requirements, although there is no licensing
requirement at the federal level. See Conference of State Bank Supervisors, “requirement at the federal level. See Conference of State Bank Supervisors, “ Chapter Five: Overview of Debt Chapter Five: Overview of Debt
CollectionCollection ,” 2020, pp. 4-16, 18-19. ,” 2020, pp. 4-16, 18-19.
12 CFPB, 12 CFPB, Market Snapshot: Third-Party Debt Collections Tradeline Reporting, July 2019, p. 10, at , July 2019, p. 10, at
https://files.consumerfinance.gov/f/documents/201907_cfpb_third-party-debt-collections_report.pdf (hereinafter CFPB, https://files.consumerfinance.gov/f/documents/201907_cfpb_third-party-debt-collections_report.pdf (hereinafter CFPB,
Market Snapshot: Third-Party Debt Collections Tradeline Reporting ). ).
13 CFPB, 13 CFPB, Fair Debt Collection Practices Act, pp. , pp. ~~8-10~~14-15. .
14 Jaura, 14 Jaura, Debt Collection Agencies in the US, IBIS, IBIS World, 2019, p. 4. World, 2019, p. 4.
15 CFPB, “Debt Collection Practices (Regulation F),” 8415 CFPB, “Debt Collection Practices (Regulation F),” 84 Federal Register 23392-23393, May 21, 2019. 23392-23393, May 21, 2019.
16 Hunt, 16 Hunt, Collecting Consumer Debt in America, Federal Reserve Bank of Philadelphia, 2007. , Federal Reserve Bank of Philadelphia, 2007.
17 Jaura, 17 Jaura, Debt Collection Agencies in the US, IBIS, IBIS World, 2019, p. 11. World, 2019, p. 11.
~~18 CFPB, Fair Debt Collection Practices Act, p. 7.~~
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~~particular debt, knowing that some consumers will never pay back their debts in full. Therefore,~~
when a debt collector contacts a consumer, both parties can negotiate the amount and payment when a debt collector contacts a consumer, both parties can negotiate the amount and payment
schedule of the debt.schedule of the debt.1918
If a consumer does not settle a debt, the debt owner often has several options, such as seizing the If a consumer does not settle a debt, the debt owner often has several options, such as seizing the
collateral for secured loans (e.g., car, home)collateral for secured loans (e.g., car, home)2019 or garnishing a consumer’s wages after obtaining a or garnishing a consumer’s wages after obtaining a
court order. According to CFPB research, “the cost of filing a claim plays a large role in litigation court order. According to CFPB research, “the cost of filing a claim plays a large role in litigation
decisions and varies significantly across jurisdictions based on differences in factors such as decisions and varies significantly across jurisdictions based on differences in factors such as
filing fees and what types of collections claims can be brought in filing fees and what types of collections claims can be brought in ~~small~~ smal claims court.”claims court.”2120 More More
than half of filed suits lead to default judgments in favor of the debt owner, often because than half of filed suits lead to default judgments in favor of the debt owner, often because
consumers fail to appear in court.consumers fail to appear in court.2221 According to a CFPB consumer survey, about 15% of those According to a CFPB consumer survey, about 15% of those
contacted about a debt were sued in the past year.contacted about a debt were sued in the past year.2322 Of those sued, a fraction—about a quarter— Of those sued, a fraction—about a quarter—
of consumers reported attending the court hearing.of consumers reported attending the court hearing.24

~~19 CFPB, “~~23 18 CFPB, “ What is the Best Way to Negotiate a Settlement With a Debt Collector?” March 29, 2019, at What is the Best Way to Negotiate a Settlement With a Debt Collector?” March 29, 2019, at
https://www.consumerfinance.gov/ask-cfpb/whathttps://www.consumerfinance.gov/ask-cfpb/what -is-the-best-way-to-negotiate-a-settlement-with-a-debt-collector-en--is-the-best-way-to-negotiate-a-settlement-with-a-debt-collector-en-
1447/. 1447/.
2019 Legal processes are in place to seize collateral for secured loans, such as foreclosure or car repossession. Legal processes are in place to seize collateral for secured loans, such as foreclosure or car repossession.
2120 CFPB, CFPB, Study of Third-Party Debt Collection Operations, July 2016, p. 18, at https://files.consumerfinance.gov/f/, July 2016, p. 18, at https://files.consumerfinance.gov/f/
documents/20160727_cfpb_Third_Party_Debt_Collection_Operations_Study.pdf (hereinafter CFPB, documents/20160727_cfpb_Third_Party_Debt_Collection_Operations_Study.pdf (hereinafter CFPB, Study of Third-
Party Debt Collection Operations). ).
2221 CFPB, CFPB, Study of Third-Party Debt Collection Operations, p. 18. , p. 18.
2322 CFPB, CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
2423 CFPB, CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
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Debt Collection and Credit Reporting
Many financial institutions furnish information about their customers’ Many financial institutions furnish information about their customers’ payment historiespayment histories to credit bureaus.to credit bureaus.2524 Credit Credit
bureaus (or credit reporting agencies) col ect and subsequently provide consumer information to firms,bureaus (or credit reporting agencies) col ect and subsequently provide consumer information to firms, which use which use
this informationthis information to screen for consumerto screen for consumer risks.risks. For example,For example, lenders relylenders rely on credit reports and scoreson credit reports and scores to to
determinedetermine the likelihoodthe likelihood that prospectivethat prospective ~~borrowers wil~~ borrowers wil repay their loans before entering into a financial repay their loans before entering into a financial
relationship with those consumers. relationship with those consumers.
Debt col ectorsDebt col ectors are not required (but they may choose) to furnish information about debts to credit bureaus. For are not required (but they may choose) to furnish information about debts to credit bureaus. For
financial servicesfinancial services debts, lenders may have already reporteddebts, lenders may have already reported to the credit bureaus that a consumerto the credit bureaus that a consumer defaulted on the defaulted on the
debt before debt col ectiondebt before debt col ection begins. For nonfinancial debts, creditorsbegins. For nonfinancial debts, creditors are often lessare often less ~~likely~~ likely to report this information. to report this information.
According to the Consumer Financial Protection Bureau (CFPB), debt col ectorsAccording to the Consumer Financial Protection Bureau (CFPB), debt col ectors frequently choose not to furnish frequently choose not to furnish
information to credit bureaus due to costs and potential legal liability,information to credit bureaus due to costs and potential legal liability, but most debt col ectorsbut most debt col ectors furnish information furnish information
~~occasionally.26 Generally,~~ occasional y.25 General y, debt buyers who buy debt obligations in ful are more likelydebt buyers who buy debt obligations in ful are more likely to report debts to credit to report debts to credit
bureaus.bureaus.2726 Debts can Debts can ~~generally~~general y be reported in a consumer’s be reported in a consumer’s credit recordcredit record for seven years.for seven years. A debt is considered A debt is considered
obsolete when it can no longer be included in a consumer’s when it can no longer be included in a consumer’s credit report. credit report.
Over one-fourth of consumers have a debt col ection on their credit report.Over one-fourth of consumers have a debt col ection on their credit report.2827 Past-due medical bil s, Past-due medical bil s, credit cards, credit cards,
and student loans wereand student loans were the mostthe most common types of debts on credit records.common types of debts on credit records.29 28 According to the CFPB, those According to the CFPB, those
contacted about credit card and student loan debts differed morecontacted about credit card and student loan debts differed more across demographic characteristics and credit across demographic characteristics and credit
scoresscores than those contacted about medicalthan those contacted about medical debt.debt.3029 Some Some debt col ectorsdebt col ectors engage in engage in passive ~~collections~~col ections—reporting—reporting a a
debt to a credit reporting agency and waiting for the consumer to discoverdebt to a credit reporting agency and waiting for the consumer to discover and pay back the debt—rather than and pay back the debt—rather than
spending resourcesspending resources actively col ecting the debt fromactively col ecting the debt from consumers.consumers. The practice of passive col ectionsThe practice of passive col ections is is
controversial,controversial, and the CFPB suggests that it may not affect many consumers.and the CFPB suggests that it may not affect many consumers.3130
Debt col ectionsDebt col ections are disputed with credit bureaus at a greater rate than other types of credit report information.are disputed with credit bureaus at a greater rate than other types of credit report information.3231
This could be for many reasons.This could be for many reasons. For example,For example, debt col ectiondebt col ection information is moreinformation is more ~~likely~~ likely to negatively affect a to negatively affect a
consumer’sconsumer’s credit record.credit record. In addition, this information may tend to be less accurate than other credit report In addition, this information may tend to be less accurate than other credit report
information.information. According to a CFPB survey, moreAccording to a CFPB survey, more than half of consumersthan half of consumers who had been contacted about a debt in who had been contacted about a debt in
col ectioncol ection reported an errorreported an error relating to at least one such debt,relating to at least one such debt,3332 and about a quarter disputed the debt with the and about a quarter disputed the debt with the
debt col ector.debt col ector.34 33 Although consumers’Although consumers’ demographics were not correlateddemographics were not correlated with citing an issue with an with citing an issue with an ~~alleged~~al eged debt, debt,
older,older, wealthier,wealthier, and higher credit quality consumersand higher credit quality consumers were morewere more ~~likely~~ likely to report disputing the debt.to report disputing the debt.3534
Consumer Experiences
Many consumers in the United States experience the debt collection process.Many consumers in the United States experience the debt collection process.3635 According to a According to a
2014-2015 CFPB survey, about one-third of consumers with a credit bureau file reported being 2014-2015 CFPB survey, about one-third of consumers with a credit bureau file reported being
contacted in the last year by at least one creditor or collector trying to contacted in the last year by at least one creditor or collector trying to ~~collect~~c ollect on one or more on one or more

25 24 For more information on the credit reporting system, see CRS For more information on the credit reporting system, see CRS Report R44125, Report R44125, Consumer Credit Reporting, Credit
Bureaus, Credit Scoring, and Related Policy Issues, by Cheryl R. Cooper and Darryl E. Getter. , by Cheryl R. Cooper and Darryl E. Getter.
2625 CFPB, CFPB, Study of Third-Party Debt Collection Operations, p. 19. , p. 19.
2726 CFPB, CFPB, Market Snapshot: Third-Party Debt Collections Tradeline Reporting, p. 5. , p. 5.
2827 CFPB, CFPB, Market Snapshot: Third-Party Debt Collections Tradeline Reporting, pp. 5-7. For more information about the , pp. 5-7. For more information about the
geography of consumers with delinquentgeography of consumers with delinquent debt across the United States, see Urban Institute, “debt across the United States, see Urban Institute, “ Debt in America: An Debt in America: An
Interactive Map,” last updated December 17, 2019, at https://apps.urban.org/features/debt-interactive-map/?type=Interactive Map,” last updated December 17, 2019, at https://apps.urban.org/features/debt-interactive-map/?type=
overall&variable=pct_debt_collections. overall&variable=pct_debt_collections.
2928 CFPB, CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
3029 CFPB, CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
3130 CFPB, CFPB, Consumer Experiences with Debt Collection, pp. 14-15. , pp. 14-15.
3231 CFPB, CFPB, Market Snapshot: Third-Party Debt Collections Tradeline Reporting, p. 14. , p. 14.
3332 CFPB, CFPB, Consumer Experiences with Debt Collection,, p. 24. p. 24.
3433 CFPB, CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
3534 CFPB, CFPB, Consumer Experiences with Debt Collection, p. 25. , p. 25.
3635 For resources For resources for consumers having trouble paying their debts, see CFPB, “for consumers having trouble paying their debts, see CFPB, “ Debt Collection: Consumer Debt Collection: Consumer ~~Tools~~T ools,” at ,” at
https://www.consumerfinance.gov/consumer-tools/debt-collection/. https://www.consumerfinance.gov/consumer-tools/debt-collection/.
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debts. debts.3736 Consumers with lower incomes and nonprime credit scores were more likely to report Consumers with lower incomes and nonprime credit scores were more likely to report
experiences with debt collection than consumers with higher incomes and prime credit scores.experiences with debt collection than consumers with higher incomes and prime credit scores.3837
In addition, over 40% of consumers reported In addition, over 40% of consumers reported ~~telling~~tel ing a collector to stop contacting them, and of a collector to stop contacting them, and of
those consumers, about a quarter reported that the contact stopped after their request.those consumers, about a quarter reported that the contact stopped after their request.3938
According to the CFPB, consumer complaints about debt collection accounted for According to the CFPB, consumer complaints about debt collection accounted for 2115% of the % of the
total complaints it received in total complaints it received in ~~2019.40~~2020.39 The most common such complaints asserted that a debt The most common such complaints asserted that a debt
collector attempted to collect a debt the consumer did not believe was owed (collector attempted to collect a debt the consumer did not believe was owed (4549%), or a consumer %), or a consumer
received insufficient written notification about a debt (received insufficient written notification about a debt (1820%) (s%) (see Table 1)..41
40 Table 1. Types of Debt Collection Complaints Reported by Consumers in ~~2019~~2020
Types of Complaints
% of Debt Collection Complaints
Attempts to col ect debt not owed Attempts to col ect debt not owed
4549% %
Complaints about written notification about the debt Complaints about written notification about the debt
1820% %
Negative or legal actions or threats to take such actions Negative or legal actions or threats to take such actions
~~12%~~
~~Complaints about communication tactics~~
~~12%~~
~~False statements or representations~~
1110% False statements or representations 10% Complaints about communication tactics 8% %
Threats to contact someone Threats to contact someone or share information improperly or share information improperly
32% %
Source: Consumer Financial Protection Bureau, Consumer Financial Protection Bureau, Fair Debt ~~Collection~~ Col ection Practices Act, March , March ~~2020~~2021, p. , p. 1419, at , at
https://https://~~www~~files.consumerfinance.gov/f/documents/cfpb_fdcpa_annual-report-congress_03-2021.pdf~~.consumerfinance.gov/data-research/research-reports/fair-debt-col ection-practices-act-annual-~~
~~report-2020~~. .
Consumers who cannot pay their debts may turn to the federal bankruptcy process, which is Consumers who cannot pay their debts may turn to the federal bankruptcy process, which is
~~generally~~general y governed by the Bankruptcy Code. governed by the Bankruptcy Code.4241 In general, the bankruptcy process In general, the bankruptcy process ~~allows~~al ows a a
consumer to enter a court-administered proceeding to discharge certain debts and obtain a fresh consumer to enter a court-administered proceeding to discharge certain debts and obtain a fresh
start. However, consumers may face negative repercussions by choosing bankruptcy (e.g., a lower start. However, consumers may face negative repercussions by choosing bankruptcy (e.g., a lower
credit score and reduced access to credit for several years afterward). In 2005, Congress passed credit score and reduced access to credit for several years afterward). In 2005, Congress passed
the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA; P.L. 109-8) in the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA; P.L. 109-8) in
response to what some perceived as a high number of consumer bankruptcy filings and concerns response to what some perceived as a high number of consumer bankruptcy filings and concerns
about some consumers abusing the system. BAPCPA made numerous amendments to the about some consumers abusing the system. BAPCPA made numerous amendments to the
Bankruptcy Code. One change was to impose a “means test” to determine when consumers have Bankruptcy Code. One change was to impose a “means test” to determine when consumers have
the financial ability to pay their debts in the financial ability to pay their debts in ~~installments~~instal ments over several years, rather than receiving over several years, rather than receiving
more immediate relief from their debts.more immediate relief from their debts.43

3742 36 CFPB, CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
3837 CFPB, CFPB, Consumer Experiences with Debt Collection, pp. 15-16. , pp. 15-16.
3938 CFPB, CFPB, Consumer Experiences with Debt Collection,, p. 5. p. 5.
4039 CFPB, CFPB, Consumer Response Annual Report, p. 9. Debt collection was, p. 9. Debt collection was ~~the seventh~~ the eighth most complained about industry to most complained about industry to
the Federal the Federal ~~Trade~~T rade Commission ( Commission (~~FTC~~FT C), accounting for ), accounting for ~~4.22~~2.55% of all complaints in % of all complaints in ~~2019~~2020. See FT C, Consum er~~. See FTC,~~ ~~Consumer~~ Sentinel
Network: Data Book ~~2019, January~~2020, February 2020, p. 7, at https://www.ftc.gov/system/files/documents/reports/consumer- 2020, p. 7, at https://www.ftc.gov/system/files/documents/reports/consumer-
sentinel-network-data-book-sentinel-network-data-book-~~2019/consumer_sentinel_network_data_book_2019.pdf.~~
412020/csn_annual_data_book_2020.pdf. 40 CFPB, CFPB, Fair Debt Collection Practices Act, , ~~pp. 14-15. The~~ ~~“The~~p. 19. T he “ T he Fair Debt Collection Practices Act ”” section of this section of this
report report ~~discusses~~ discusses written notification requirements in detail. written notification requirements in detail.
4241 11 U.S.C. 11 U.S.C. §§101-1532. For more information on the bankruptcy process, see CRS§§101-1532. For more information on the bankruptcy process, see CRS Report R45137, Report R45137, Bankruptcy
Basics: A ~~Primer~~Prim er, by Kevin M. Lewis., by Kevin M. Lewis.
43 42 11 U.S.C. 11 U.S.C. §707(b) provides the following: §707(b) provides the following:
After notice and a hearing, the court, on its own motion or on a motion by the United States trustee, After notice and a hearing, the court, on its own motion or on a motion by the United States trustee,
trustee (or bankruptcy administrator, if any), or any party in interest, may dismiss a case filedtrustee (or bankruptcy administrator, if any), or any party in interest, may dismiss a case filed ~~by an~~
by an individual debtor under this chapter whose debts are primarily consumer debts, or, with the debtor’s Congressional Research Service Congressional Research Service

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In addition to the federal bankruptcy process, many states limit the length of time consumers can In addition to the federal bankruptcy process, many states limit the length of time consumers can
be sued on a debt, be sued on a debt, ~~called~~cal ed time-barred debt..4443 Different states have different time-barred debt rules, Different states have different time-barred debt rules,
but but ~~generally~~general y, most , most ~~fall~~ fal between three and six years.between three and six years.4544 Therefore, some consumers may have their Therefore, some consumers may have their
debts age past the statute of limitations, even if they do not go through the bankruptcy process.debts age past the statute of limitations, even if they do not go through the bankruptcy process.4645
This result is sometimes referred to as This result is sometimes referred to as informal bankruptcy. Even though consumers are no . Even though consumers are no
longer able to be sued on time-barred debts, debt collectors in most states can continue to collect longer able to be sued on time-barred debts, debt collectors in most states can continue to collect
on these debts. In addition, in many states, debts can be revived if certain conditions are met. For on these debts. In addition, in many states, debts can be revived if certain conditions are met. For
example, in some states, if a consumer makes a partial payment on a debt or acknowledges it in example, in some states, if a consumer makes a partial payment on a debt or acknowledges it in
writing, a debt collector can sue on the debt after the statute of limitations has expired. writing, a debt collector can sue on the debt after the statute of limitations has expired.
Debt Relief Companies and Credit Counseling Agencies
Debt relief Debt relief ~~companies~~ companies and credit counseling agencies provide servicesand credit counseling agencies provide services to help consumers manage unsecured to help consumers manage unsecured
debt.debt.4746 These organizations can be nonprofit or for-profit companies. These organizations can be nonprofit or for-profit companies. Two common types of debt reliefTwo common types of debt relief services services
are are debt consolidation (consolidating debts into one larger(consolidating debts into one larger consumer loan) and consumer loan) and debt management plans (working (working
with creditorswith creditors to gain concessions,to gain concessions, such as waiving fees and loweringsuch as waiving fees and lowering interest rates, to make it easierinterest rates, to make it easier for for
consumersconsumers to pay back creditors).to pay back creditors). Related services,Related services, such as financial education, are often offered by these types of such as financial education, are often offered by these types of
organizations. organizations.
Debt settlements are agreements between the creditor and consumer are agreements between the creditor and consumer to resolveto resolve the debt for lessthe debt for less than the ful than the ful
balance owed. These settlementsbalance owed. These settlements are sometimesare sometimes arranged directly between creditorsarranged directly between creditors and consumersand consumers ~~and~~ and are are
sometimessometimes managed by debt reliefmanaged by debt relief companies. Consumercompanies. Consumer Financial Protection Bureau data suggest a growth in Financial Protection Bureau data suggest a growth in
debt settlementsdebt settlements in recent years.in recent years.4847
A consumer protection concern in this marketA consumer protection concern in this market is whether consumersis whether consumers understand their options and the services understand their options and the services
they are paying for. In recent years,they are paying for. In recent years, the federal government has implementedthe federal government has implemented new regulations on these new regulations on these
organizations. In 2006, Congressorganizations. In 2006, Congress created standards for nonprofit credit counseling agencies, such as reasonable created standards for nonprofit credit counseling agencies, such as reasonable
fees,fees, bans on the provision of loans, and limitsbans on the provision of loans, and limits on the ability to on the ability to ~~financially~~financial y gain from services gain from services provided to provided to
consumers.consumers.49 48 In 2010, the Federal Trade CommissionIn 2010, the Federal Trade Commission issued a final rule that bans for-profit debt reliefissued a final rule that bans for-profit debt relief companies companies
from charging a fee before providing their servicesfrom charging a fee before providing their services to consumers.to consumers.50 49 It also requiresIt also requires ~~disclosures~~ disclosures and prohibits and prohibits
misrepresentationsmisrepresentations when telemarketingwhen telemarketing debt reliefdebt relief ~~services~~ services to consumers.to consumers. Given the industry’s growth in recent Given the industry’s growth in recent
years, debate continues around its appropriate regulation.years, debate continues around its appropriate regulation.51

~~individual debtor under this chapter whose debts are primarily consumer debts, or, with the debtor’s~~
~~consent, convert such a case to a case under~~ 50 The Fair Debt Collection Practices Act51 Robust debt collection markets may benefit consumers by expanding access to credit, but they could also harm consumers. Creditors who rely on relationships with consumers for future consent, convert such a case to a case under chapter 11 or 13 of this title, if it finds that the granting chapter 11 or 13 of this title, if it finds that the granting
of relief wouldof relief would be an abusebe an abuse of the provisions of this chapter. of the provisions of this chapter.
~~44 FTC, “Time~~43 FT C, “T ime-Barred Debts,” July 2013, at https://www.consumer.ftc.gov/articles/0117-time-barred-debts. -Barred Debts,” July 2013, at https://www.consumer.ftc.gov/articles/0117-time-barred-debts.
~~45 FTC~~44 FT C, , The Structure and Practices of the Debt Buying Industry, January 2013, p. 42, at https://www.ftc.gov/sites/, January 2013, p. 42, at https://www.ftc.gov/sites/
default/files/documents/reports/structure-and-practices-debt-buying-industry/debtbuyingreport.pdf. default/files/documents/reports/structure-and-practices-debt-buying-industry/debtbuyingreport.pdf.
~~46 The~~45 T he debtor remains legally debtor remains legally obligated to pay the debt, however, the debt collector can no longer resort to legally obligated to pay the debt, however, the debt collector can no longer resort to legally
enforceable actions. Seeenforceable actions. See MidlandMidland Funding,Funding, LLC v. Johnson, 137 1407 1411-1420 (S.Ct. 2017). LLC v. Johnson, 137 1407 1411-1420 (S.Ct. 2017).
4746 Conference of State Bank Supervisors, “ Conference of State Bank Supervisors, “ Chapter Five: Overview of Debt Collection,” 2020, pp. 3, 6. Chapter Five: Overview of Debt Collection,” 2020, pp. 3, 6.
4847 Christa Gibbs Christa Gibbs et al., et al., Recent Trends in Debt Settlement and Credit Counseling, CFPB, Quarterly Consumer Credit , CFPB, Quarterly Consumer Credit
~~Trends~~T rends, July 2020, at https://files.consumerfinance.gov/f/documents/cfpb_quarterly-consumer-credit-trends_debt, July 2020, at https://files.consumerfinance.gov/f/documents/cfpb_quarterly-consumer-credit-trends_debt --
settlementsettlement -credit-credit -counseling_2020-07.pdf. -counseling_2020-07.pdf.
4948 P.L. 109-280, §1220. P.L. 109-280, §1220.
~~50 FTC, “Telemarketing~~49 FT C, “T elemarketing Sales Rule,” Sales Rule,” 7575 Federal Register 48458-48523, August 10, 2010. 48458-48523, August 10, 2010.
5150 CFPB, “ CFPB, “ Evolutions in Consumer Debt Relief,” March 10, 2020, at https://www.consumerfinance.gov/about-us/Evolutions in Consumer Debt Relief,” March 10, 2020, at https://www.consumerfinance.gov/about-us/
events/archive-past-events/evolutions-in-consumer-debt-relief-event/. events/archive-past-events/evolutions-in-consumer-debt-relief-event/.
51 For more information about the Fair Debt Collection Practices Act (FDCP A), see CRS In Focus IF11247, The Fair Congressional Research Service Congressional Research Service

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~~The Fair Debt Collection Practices Act52~~
~~Robust debt collection markets may benefit consumers by expanding access to credit, but they~~
~~could also harm consumers. Creditors who rely on relationships with consumers for future~~
business may care more about maintaining their reputations when collecting on a debt than debt business may care more about maintaining their reputations when collecting on a debt than debt
collectors who contract with creditors rather than consumers. Consumers do not have the ability collectors who contract with creditors rather than consumers. Consumers do not have the ability
to choose the debt collector with whom they engage and are unable to take their business to choose the debt collector with whom they engage and are unable to take their business
elsewhere if abuses occur. In this way, the debt elsewhere if abuses occur. In this way, the debt ~~collection~~col ection market does not provide an economic market does not provide an economic
incentive to provide good service to consumers, as in other consumer markets. For this reason, incentive to provide good service to consumers, as in other consumer markets. For this reason,
consumer protection laws and regulations may be particularly consequential. consumer protection laws and regulations may be particularly consequential.
The FDCPA is the primary federal statute regulating the consumer debt collection market. The FDCPA is the primary federal statute regulating the consumer debt collection market.5352
Congress passed the FDCPA in 1977 to “eliminateCongress passed the FDCPA in 1977 to “eliminate abusive debt collection practices by debt abusive debt collection practices by debt
collectors.”collectors.”5453 The law The law ~~generally~~general y applies only to debt collectors, not the original creditors. applies only to debt collectors, not the original creditors.5554 It It
prohibits debt collectors from engaging in certain types of conduct when seeking to collect certain prohibits debt collectors from engaging in certain types of conduct when seeking to collect certain
debts from consumers, such as engaging in harassment or debts from consumers, such as engaging in harassment or ~~abuse56~~abuse55 or making false or misleading or making false or misleading
representations.representations.5756 The FDCPA limits when and how a debt collector communicates with a The FDCPA limits when and how a debt collector communicates with a
consumer, such as limits on communications at “unusual time[s] or place[s],”consumer, such as limits on communications at “unusual time[s] or place[s],”5857 and grants and grants
consumers the right to consumers the right to ~~dispute59~~dispute58 or stop certain communications about an or stop certain communications about an ~~alleged~~al eged debt. debt.60
59 Moreover, the FDCPA requires that a debt collector must send a consumer a validation notice, Moreover, the FDCPA requires that a debt collector must send a consumer a validation notice,
which is to disclose certain information about the debt to the consumer, within five days of the which is to disclose certain information about the debt to the consumer, within five days of the
~~initial~~ initial communication.communication.6160
In 2010, the Dodd-Frank In 2010, the Dodd-Frank ~~Wall~~ Wal Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L.
111-203) granted the CFPB authority over the FDCPA and became the first federal agency to be 111-203) granted the CFPB authority over the FDCPA and became the first federal agency to be
able to write regulations to implement the FDCPA.able to write regulations to implement the FDCPA.6261 It also grants the CFPB authority over those It also grants the CFPB authority over those
who collect debt related to a consumer financial product service, as defined in the Dodd-Frank who collect debt related to a consumer financial product service, as defined in the Dodd-Frank
Act. The rest of this section discusses the CFPB’s supervision and enforcement of the FDCPA. Act. The rest of this section discusses the CFPB’s supervision and enforcement of the FDCPA.
This section also discusses the CFPB’s active proposed rulemaking related to the debt collection This section also discusses the CFPB’s active proposed rulemaking related to the debt collection
market, including its intention to clarify and update provisions in the FDCPA. market, including its intention to clarify and update provisions in the FDCPA.

~~52 For more information about the Fair Debt Collection Practices Act (FDCPA), see CRS In Focus IF11247,~~ ~~The Fair~~
~~Debt Collection Practices Act: Legal Framework, by Kevin M. Lewis.~~
~~53 15 U.S.C. §1692a. The law only includes~~ Supervision and Enforcement The federal government supervises and enforces the debt collection market for compliance with relevant laws, such as the FDCPA. The CFPB has supervisory authority, or the authority to conduct examinations, over nonbank firms with more than $10 mil ion in annual receipts from consumer debt collection activities. Both the Federal Trade Commission (FTC) and the CFPB can Debt Collection Practices Act: Legal Fram ework, by Kevin M. Lewis. 52 15 U.S.C. §1692a. T he law only includes consumer debts “primarily for personal, family, or household purposes.” consumer debts “primarily for personal, family, or household purposes.”
5453 15 U.S.C. 15 U.S.C. §1692. §1692.
5554 15 U.S.C. 15 U.S.C. §1692a. §1692a. ~~The~~T he FDCPA can apply to a creditor collecting its own debts FDCPA can apply to a creditor collecting its own debts ~~using~~ using a different name. Some a different name. Some
creditors audit creditors audit ~~their~~t heir debt collectors in terms of compliance with federal and state law. For more information on auditing debt collectors in terms of compliance with federal and state law. For more information on auditing
practices of debt collectors, see CFPB, practices of debt collectors, see CFPB, Study of Third-Party Debt Collection Operations, pp. 20-21. , pp. 20-21.
5655 15 U.S.C. 15 U.S.C. §1692d. §1692d.
5756 15 U.S.C. 15 U.S.C. §1692e. §1692e.
5857 15 U.S.C. 15 U.S.C. §1692c(a)(1). §1692c(a)(1).
5958 15 U.S.C. 15 U.S.C. §1692g(b). §1692g(b).
6059 15 U.S.C. 15 U.S.C. §1692c(c). For exceptions to this rule, see 15 U.S.C.§1692c(c). For exceptions to this rule, see 15 U.S.C. §1692c(c)(1)-(3). §1692c(c)(1)-(3).
6160 15 U.S.C. 15 U.S.C. §1692g(a). §1692g(a).
6261 See See P.L. 111-203, §1002 and §1011. For more information on the CFPB’s authorities, see CRSP.L. 111-203, §1002 and §1011. For more information on the CFPB’s authorities, see CRS In FocusIn Focus IF10031, IF10031,
Introduction to Financial Services: The ~~Bureau of Consumer~~Consum er Financial Protection Bureau (CFPB) , by Cheryl R., by Cheryl R. Cooper and Cooper and
David H. Carpenter. David H. Carpenter.
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enforce FDCPA provisions.62
~~Supervision and Enforcement~~
~~The federal government supervises and enforces the debt collection market for compliance with~~
~~relevant laws, such as the FDCPA. The CFPB has supervisory authority, or the authority to~~
~~conduct examinations, over nonbank firms with more than $10 million in annual receipts from~~
~~consumer debt collection activities. Both the Federal Trade Commission (FTC) and the CFPB can~~
~~enforce FDCPA provisions.63~~ The FDCPA also establishes a private right of action for consumers The FDCPA also establishes a private right of action for consumers
to sue on their own behalf.to sue on their own behalf.6463
Recently, the debt collection market has been an active area for the CFPB and the FTC. The Recently, the debt collection market has been an active area for the CFPB and the FTC. The
CFPB is required to report CFPB is required to report ~~annually~~annual y on the “administration of its functions” relating to the on the “administration of its functions” relating to the
FDCPA. In FDCPA. In ~~FY2019~~FY2020, the CFPB found three patterns in its supervisory activities: (1) , the CFPB found three patterns in its supervisory activities: (1) ~~the false~~
~~representation of the amount and legal status of debts; (2) a failure to disclose what~~
~~communications are coming from a debt collector; and (3) a failure to send mandatory debt~~
~~validation notices to consumers before collecting on a debt.65 In FY2019~~false litigation threats and misrepresentations regarding litigation, (2) the false implication that a debt could be reported to credit reporting agencies, and (3) a false representation that a debt collector is a credit reporting agency.64 In FY2020, the CFPB and the FTC , the CFPB and the FTC
also announced, filed, or also announced, filed, or ~~resolved more than 30~~ resolved 11 debt collection enforcement actions. debt collection enforcement actions.6665 In addition, In addition,
the CFPB and the FTC conducted education and outreach to the public about consumer rights and the CFPB and the FTC conducted education and outreach to the public about consumer rights and
responsibilities in the debt responsibilities in the debt collection market under relevant laws.collection market under relevant laws.6766
Consumer Financial Protection Bureau Rulemaking
~~On May 21, 2019, the CFPB issued a Notice of Proposed Rulemaking intended to regulate the~~
~~debt collection market.68 The CFPB’s proposed regulation, among other things, seeks to clarify~~
~~what information debt collectors should be required to disclose to consumers and how they~~
~~should be required~~The CFPB recently finalized two new regulations to regulate the debt collection market.67 On November 30, 2020, the CFPB issued a final rule on how debt collectors may communicate with consumers.68 On January 19, 2021, the CFPB published a second rule clarifying what information debt collectors must disclose to consumers.69 The following sections describe selected provisions of the CFPB’s two regulations. First Rule: Communication The CFPB’s first regulation general y seeks to clarify appropriate communication tactics for debt collectors. The rule sets standards on contact frequency, general y limiting debt collector phone cal s to seven times in a seven-day period. It would also prohibit debt collectors from making cal s within a week after speaking by phone to a consumer. The rule also clarifies that debt collectors can use newer technologies, such as email and text messages, to communicate with to communicate with consumers. Debt collectors are able to use these communication tools without limit. However, the rule requires a reasonable and simple method for consumers to opt out of these types of messages. Second Rule:~~consumers. The following sections describe selected~~
~~provisions of the CFPB’s proposal.~~
~~Debt~~ Disclosure
The CFPB’s The CFPB’s ~~proposed~~second regulation regulation ~~would specify~~clarifies the information a debt collector must include in the information a debt collector must include in the
validation notice it sends to a consumervalidation notice it sends to a consumer~~, including certain information about the debt that may~~
~~help the consumer identify the debt. It also would require disclosure about a consumer’s~~ at the onset of communication. It requires disclosure of certain information about the debt and consumers’ rights in rights in
the debt collection process, such as how to dispute a debt. The the debt collection process, such as how to dispute a debt. The ~~proposed~~ regulation also regulation also ~~would~~
~~establish certain procedures by which~~al ows a debt collector a debt collector ~~may~~to obtain a “safe harbor” from liability by using a model validation notice.70 In addition, the rule bars debt collectors from 62 15 U.S.C. §1692l(a)-(b). 63 15 U.S.C. §1692k. 64 CFPB, Fair Debt Collection Practices Act, pp. 23-24. 65 CFPB, Fair Debt Collection Practices Act, pp. 29-37. 66 CFPB, Fair Debt Collection Practices Act, pp. 38-45. 67 ~~obtain a “safe harbor” from liability.~~
~~For example, the CFPB, through consumer testing, has developed a model validation notice form,~~
~~which debt collectors may use to ensure they are complying with the law.69 In addition, the~~

~~63 15 U.S.C. §1692l(a)-(b).~~
~~64 15 U.S.C. §1692k.~~
~~65 CFPB, Fair Debt Collection Practices Act, pp. 18-19.~~
~~66 CFPB, Fair Debt Collection Practices Act, pp. 24-31.~~
~~67 CFPB, Fair Debt Collection Practices Act, pp. 32-37.~~
~~68 CFPB, “Debt Collection Practices (Regulation F),” 84 Federal Register~~ ~~23274, May 21, 2019.~~ For an overview of For an overview of
the CFPB’s the CFPB’s ~~proposed~~ two new debt collection debt collection ~~regulation~~regulations, see CRS, see CRS Insight Insight ~~IN11140,~~ ~~CFPB Proposes New~~ IN11590, CFPB Finalizes Two New Debt Collection
~~Regulation~~Regulations, by Cheryl R. Cooper. 68 CFPB, “Debt Collection Practices (Regulation F),” 85 Federal Register 76734, November 30, 2020. 69 CFPB, “Debt Collection Practices (Regulation F),” 86 Federal Register 5766, January 19, 2021. 70 T he model disclosure form can be found at https://files.consumerfinance.gov/f/documents/cfpb_model-validation-notice_2020-12.pdf. T o learn more about the CFPB’s disclosure testing, see Fors Marsh Group, Debt Collection Congressional Research Service 9 link to page 5 The Debt Collection Market and Selected Policy Issues ~~, by Cheryl R. Cooper.~~
~~69 The proposed model disclosure form can be found at https://files.consumerfinance.gov/f/documents/cfpb_debt-~~
~~collection-validation-notice.pdf. To learn more about the CFPB’s disclosure testing, see Fors Marsh Group,~~ ~~Debt~~
~~Collection Validation Notice Research: Summary of Focus Groups, Cognitive Interviews, and User Experience Testing~~,
~~February 2016, at https://files.consumerfinance.gov/f/documents/cfpb_debt-collection_fmg-summary-report.pdf~~
(hereinafter Fors Marsh Group, Debt Collection Validation Notice Research: Summary, 2016); and ICF, Quantitative
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~~proposal would bar debt collectors from~~ furnishing information about a debt to a credit bureau furnishing information about a debt to a credit bureau
before before ~~sending the consumer a validation notice about the debt.70~~
~~On March 3, 2020, the CFPB issued a supplemental proposal,71 which would require a debt~~
~~collector to disclose to a consumer whether a debt is time-barred. The supplemental proposal also~~
~~would require the debt collector to disclose whether the debt could be revived by the consumer~~
~~and how revival could occur. Like the model validation notice, the CFPB developed time-barred~~
~~debt and revival disclosures using quantitative and qualitative disclosure testing, which debt~~
~~collectors can use to ensure they are complying with the law.72~~
~~Communication~~
~~The proposal would specify appropriate communication tactics for debt collectors. It would set~~
~~standards on contact frequency, limiting debt collector phone calls to seven times in a seven-day~~
~~period. It would also prohibit debt collectors from making calls within a week after speaking by~~
~~phone to a consumer. The proposed regulation would clarify that debt collectors can use newer~~
~~technologies, such as email, voicemail, and text messages, to provide limited content messages to~~
~~consumers. Debt collectors would be able to use these communication tools without limit, but~~
~~consumers would have the right to request convenient times or places or restrict the~~
~~communication medium (e.g., opt out of text messages).~~
~~Policy Issues~~
communicating with the consumer about the debt by phone or mail.71 In addition, debt collectors are prohibited from suing or threatening to sue consumers in the case of time-barred debts.72 Policy Issues Research suggests that policymakers face a trade-off in the debt collection market between consumer protection benefits and the cost of reduced credit availability for consumers. Some economic research suggests that stricter debt collection regulations may lead to lower recovery rates on past debts, causing a reduction in credit (or higher cost of credit) for some consumers— however, the magnitude of this effect is debated.73 Appropriate regulation of the debt collection market has been a focus of congressional attention Appropriate regulation of the debt collection market has been a focus of congressional attention
in the in the ~~116th Congress. Research suggests that policymakers face a trade-off in the debt collection~~
~~market between consumer protection benefits and the cost of reduced credit availability for~~
~~consumers. Some economic research suggests that stricter debt collection regulations may lead to~~
~~lower recovery rates on past debts, causing a reduction in credit (or higher cost of credit) for some~~
~~consumers—however, the magnitude of this effect is debated.73~~
117th Congress. The House Financial Services Committee marked up and reported H.R. 2547, the Comprehensive Debt Collection Improvement Act. This would, among other things, limit debt collectors’ email and text messages to consumers; prohibit medical debts related to medical y necessary procedures from inclusion in consumer credit reports; and make federal, state, and local government debts subject to the FDCPA. It would also provide servicemembers additional debt collection protections.74 This section highlights five significant policy issues in the debt collection market: (1) This section highlights five significant policy issues in the debt collection market: (1)
communication frequency; (2) time-barred and obsolete debt; (3) validation issues; (4) medical communication frequency; (2) time-barred and obsolete debt; (3) validation issues; (4) medical
debt and credit reporting; and (5) federal, state, and local debt and credit reporting; and (5) federal, state, and local government debt. When relevant, each section discusses how H.R. 2547 addresses these policy issues. Validation Notice Research: Sum m ary of Focus Groups, Cognitive Interviews, and User Experience Testing , February 2016, at https://files.consumerfinance.gov/f/documents/cfpb_debt -collection_fmg-summary-report.pdf (hereinafter Fors Marsh Group, Debt Collection Validation Notice Research: Sum m ary, 2016); and ICF, Quantitative ~~government debt. Table A-1 in the~~

Survey Testing of Model Disclosure Clauses ~~and Forms~~ and Form s for Debt Collection: Methodology Report, January 21, 2020, at , January 21, 2020, at
https://files.consumerfinance.gov/f/documents/cfpb_icf_debthttps://files.consumerfinance.gov/f/documents/cfpb_icf_debt -survey_methodology-report.pdf (hereinafter ICF, -survey_methodology-report.pdf (hereinafter ICF,
Methodology Report, 2020). , 2020).
7071 For more information on debt collection and credit reporting, see the “Debt Collection and Credit Reporting” text For more information on debt collection and credit reporting, see the “Debt Collection and Credit Reporting” text
box in box in “~~The~~T he Market Between Creditors and Debt Collectors.”
~~71 CFPB, “Debt Collection Practices (Regulation F),” 85 Federal Register 12672-12702, March 3, 2020.~~
~~72 To~~72 T o learn more about the CFPB’s disclosure learn more about the CFPB’s disclosure testing relating to time-barred debt and revival, see CFPB, testing relating to time-barred debt and revival, see CFPB, Disclosure of
~~Time~~Tim e-Barred Debt and Revival: Findings from the CFPB’s Quantitative Disclosure Testing ~~Testing~~, February, February 2020, at 2020, at
https://files.consumerfinance.gov/f/documents/cfpb_debthttps://files.consumerfinance.gov/f/documents/cfpb_debt -collection-quantitative-disclosure-testing_report.pdf -collection-quantitative-disclosure-testing_report.pdf
(hereinafter CFPB, (hereinafter CFPB, Disclosure of ~~Time~~Tim e-Barred Debt and Revival: Findings, 2020); and ICF, , 2020); and ICF, Methodology Report, ,
2020. 2020.
73 Ryan Sandler73 Ryan Sandler and Charles J. Romeo, and Charles J. Romeo, The Effect of Debt Collection Laws on Access to Credit,, CFPB, Office of CFPB, Office of
Research, Working Paper no. 2018-01, February 12, 2018, at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=Research, Working Paper no. 2018-01, February 12, 2018, at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=
3124954; Viktar Fedaseyeu, 3124954; Viktar Fedaseyeu, Debt Collection Agencies and the Supply of ~~Consumer~~Consum er Credit, Federal, Federal Reserve Bank of Reserve Bank of
Philadelphia, Working Paper no. 20-06, February 2020, at https://www.philadelphiafed.org/Philadelphia, Working Paper no. 20-06, February 2020, at https://www.philadelphiafed.org/~~-/media/research-and-data/~~
~~publications/working-papers/2020/wp20-06.pdf?la=en~~consumer-finance/consumer-credit/debt-collection-agencies-and-the-supply-of-consumer-credit; and Julia Fonseca, Katherine Strair, and Basit Zafar, ; and Julia Fonseca, Katherine Strair, and Basit Zafar, Access to
Credit and Financial Health: Evaluating the ~~Impact~~Im pact of Debt Collection , Federal, Federal Reserve Bank of Reserve Bank of ~~New~~ New York, Staff York, Staff
Report no. 814, May 2017Report no. 814, May 2017 , at https://www.newyorkfed.org/medialibrary/media/research/staff_reports/, at https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr814.pdf?la=en. 74 H.R. 2547 would prohibit a debt collector from threatening the member’s rank or security clearance or having the member prosecuted under the Uniform Code of Military Justice, among other things. ~~sr814.pdf?la=en.~~
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~~Appendix summarizes the bills passed by the House or marked up by the House Financial~~
~~Services Committee in the 116th Congress.~~
The COVID-19 Pandemic and Debt Collection
The economic impact of the The economic impact of the ~~Coronavirus Disease 2019 (COVID-19)~~COVID-19 pandemic pandemic ~~has~~ caused many Americanscaused many Americans to lose to
~~lose~~ income and face financial income and face financial hardship. While federal laws to respond to the COVID-19 pandemic provided some relief options for consumers having trouble paying their loans, the debt col ection industry was general y not directly impacted by these laws.75 Controversial y, during the pandemic, some debt col ectors have continued to col ect on consumer debts and sue consumers in court.76 Some states have instituted new measures that impacted the debt col ection industry, such as prohibitions on wage garnishments or bank attachments.77 Due to government policy responses to the pandemic—such as loan forbearance options, enhanced unemployment insurance, and relief checks—consumers have general y not become more delinquent on their loan obligations as of spring 2021.78 However, as these relief measures expire, some consumers may fal delinquent on their loans, possibly impacting the debt col ection market and the economic recovery general y. Communication Frequency The communication frequency standards ~~hardship.74 The situation has caused some consumers to have trouble paying their~~
~~debts.75~~
~~On May 15, 2020, the House passed the Heroes Act (H.R. 6800), and on October 1, 2020, the House passed an~~
~~updated version of the bil (H.R. 925).76 Both bil s have essentially identical language on debt col ection in Division~~
~~K, Title IV, Section 110402-110404 (H.R. 6800) and Division O, Title IV, Sections 402-404 (H.R. 925). Among~~
~~other provisions, in Title IV of Division O, Section 402 of the updated bil would ban debt col ectors from~~
~~col ecting on a debt (such as garnishment or seizing bank account assets), enforcing a security interest (such as~~
~~repossession or foreclosure), or threatening to take an action on a debt during the COVID-19 pandemic and for~~
~~120 days afterward. Section 402 also would ban debt col ectors from charging additional fees and interest on debts~~
~~that become past due during this period. Section 403 of this title defines appropriate repayment periods for~~
~~different types of past-due debts after the Section 402 period ends. Private-sector debt col ectors would be able~~
~~to use a credit facility established in Section 404 of this title if they were to automatically grant loan forbearance to~~
~~consumers who are experiencing financial hardship and request loan forbearance within the COVID-19 pandemic~~
~~period and up to 120 days afterward.~~
~~In Title IV of Division O, Sections 402 and 403 of the updated Heroes Act would provide debt relief for~~
~~consumers facing financial hardship during the COVID-19 pandemic. Some observe that these provisions could~~
~~also encourage some consumers not to pay their debts, even if they have not been financially impacted by the~~
~~COVID-19 pandemic.77~~
~~Communication Frequency~~
~~The communication frequency standards proposed~~ in the CFPB’s rule continue to be a in the CFPB’s rule continue to be a
contentious issue. As mentioned in the contentious issue. As mentioned in the “~~Communication”~~ ~~section, the CFPB’s proposed~~
~~regulation would limit~~ First Rule: Communication” section, the CFPB’s regulation general y limits debt collector phone debt collector phone ~~calls~~cal s to seven times in a seven-day period and to seven times in a seven-day period and ~~would~~
~~prohibit~~prohibits debt collectors from making debt collectors from making ~~calls~~cal s within a week after speaking by phone to a consumer. within a week after speaking by phone to a consumer.
In addition, debt In addition, debt ~~collectors~~ col ectors could use technologies such as email or text message without limit, could use technologies such as email or text message without limit,
unless consumers were to opt out. The proposal would set standards on contact frequency, which unless consumers were to opt out. The proposal would set standards on contact frequency, which

~~74 For background on the economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic in the United~~
~~States, see CRS Insight IN11388, COVID-19: U.S. Economic Effects, by Rena S. Miller and Marc Labonte.~~
could reduce lawsuits relating to legal uncertainty, benefitting both debt collectors and consumers.79 Some observers disagree about whether the CFPB’s proposed communication frequency standards would be at the right levels. Some industry representatives argue that cal frequency limits may make it more difficult to reach and follow up with consumers, increasing the cost and length of time to resolve debts.80 Some consumer groups argue that cal frequency limits should be lowered.81 A CFPB survey found that most consumers considered four or more cal s a week to 75 During the COVID-19 pandemic, some consumer relief options have been available for consumers 75 During the COVID-19 pandemic, some consumer relief options have been available for consumers ~~with financial~~
~~hardship~~having trouble paying their loans. For example, . For example, loan forbearance has become a common form of consumer relief during has become a common form of consumer relief during the COVID-19 the COVID-19
pandemic.pandemic. Loan forbearance plans are agreements allowingLoan forbearance plans are agreements allowing borrowers to reduce or suspendborrowers to reduce or suspend payments for a short period payments for a short period
of time, providing extended time for consumers to become current on their payments and repay the amounts owed.of time, providing extended time for consumers to become current on their payments and repay the amounts owed.
~~These~~ T hese plans do not forgive unpaid loan payments. For more information on consumer loan plans do not forgive unpaid loan payments. For more information on consumer loan forbearance during the forbearance during the
COVID-19 pandemic, includingCOVID-19 pandemic, including the impact of the CARES Act (P.L. 116-136) and other federal regulatory efforts, the impact of the CARES Act (P.L. 116-136) and other federal regulatory efforts, see CRS ~~see~~
~~CRS~~ Report R46356, Report R46356, COVID ~~19: Consumer~~-19: Consum er Loan Forbearance and Other Relief Options, coordinated by Cheryl R. , coordinated by Cheryl R.
Cooper. For resourcesCooper. For resources for consumers having trouble paying their debts duringfor consumers having trouble paying their debts during the COVID-19 pandemic, see Kristin the COVID-19 pandemic, see Kristin
Dohn, Dohn, Dealing with Debt During the Coronavirus ~~Pandemic~~Pandem ic: Tips to Help Ease the ~~Impact~~Im pact, CFPB, June, CFPB, June 17, 2020, at 17, 2020, at
https://www.consumerfinance.gov/about-us/blog/coronavirus-and-dealing-debt-tips-help-ease-impact/. https://www.consumerfinance.gov/about-us/blog/coronavirus-and-dealing-debt-tips-help-ease-impact/.
76 76 ~~Division O, Title IV, Sections 402-404 of the updated Heroes Act apply to creditors and debt collectors. For more~~
~~information on the Heroes Act’s consumer loan provisions, see CRS Insight IN11405,~~ ~~Heroes Act (H.R. 6800/H.R.~~
~~925): Selected Consumer Loan Provisions, by Cheryl R. Cooper.~~
~~77 ACA International: The Association of Credit and Collection Professionals,~~ ~~ARM Industry Thoughts on the HEROES~~
~~Act, 2020, https://www.acainternational.org/assets/federal-advocacy-updates-covid-19/p6-arm-heroes-act-flyer.pdf.~~
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~~could reduce lawsuits relating to legal uncertainty, benefitting both debt collectors and~~
~~consumers.78~~
~~Some observers disagree about whether the CFPB’s proposed communication frequency~~
~~standards would be at the right levels. Some industry representatives argue that call frequency~~
~~limits may make it more difficult to reach and follow up with consumers, increasing the cost and~~
~~length of time to resolve debts.79 Some consumer groups argue that call frequency limits should~~
~~be lowered.80 A CFPB survey found that most consumers considered four or more calls a week to~~
~~be too much contact, and some take this as evidence that the phone call limit should be lower.81 In~~
~~addition, although some commentators believe that allowing~~Paul Kiel and Jeff Ernsthausen, “Debt Collectors Have Made a Fortune T his Year. Now T hey’re Coming for More,” ProPublica, October 5, 2020, at https://www.propublica.org/article/debt-collectors-have-made-a-fortune-this-year-now-theyre-coming-for-more; and Shane Shifflett and Justin Scheck, “ Most Big Debt Collectors Backed Off During the Pandemic. One Pressed Ahead,” Wall Street Journal, April 7, 2020, at https://www.wsj.com/articles/most-big-debt-collectors-backed-off-during-the-pandemic-one-pressed-ahead-11617804180. 77 CFPB, Fair Debt Collection Practices Act, pp. 16-17. 78 See CRS Report R46578, COVID-19: Household Debt During the Pandemic, coordinated by Cheryl R. Cooper. 79 CFPB, “Debt Collection Practices (Regulation F),” 84 Federal Register 23370-23371, May 21, 2019. 80 Letter from ACA International, the Association of Credit & Collection Professionals, to CFPB Comment Intake—Debt Collection, September 17, 2019, pp. 73 -79, at https://www.acainternational.org/assets/advocacy-resources/aca-comment -cfpb-reg-f-9.17.19.pdf. 81 National Consumer Law Center (NCLC), CFPB Debt Collection Rule Must Protect Consumers, Not Abusive Collectors, May 2019, at https://www.nclc.org/images/pdf/debt_collection/cfpb-debt-collection-rule-summary-2019.pdf (hereinafter NCLC, CFPB Debt Collection Rule Must Protect Consum ers, 2019). Congressional Research Service 11 link to page 8 link to page 8 The Debt Collection Market and Selected Policy Issues be too much contact, and some take this as evidence that the phone cal limit should be lower.82 In addition, although some commentators believe that al owing debt collectors to send unlimited debt collectors to send unlimited
emails and text messages could lead to consumer abuse, others argue that these new technologies emails and text messages could lead to consumer abuse, others argue that these new technologies
could be convenient for consumers and reduce debt collection costs. The CFPB’s survey could be convenient for consumers and reduce debt collection costs. The CFPB’s survey
suggested that most consumers preferred email over other types of communication methods.suggested that most consumers preferred email over other types of communication methods.8283
Some argue that because texts or emails may cost money for consumers to receive, these should Some argue that because texts or emails may cost money for consumers to receive, these should
be opt-in communications.be opt-in communications.~~83 For example, H.R. 5021 (see Table A-1)~~ 84 H.R. 2547 would prohibit a debt would prohibit a debt
collector from contacting a consumer by email or text message without a consumer’s opt-in collector from contacting a consumer by email or text message without a consumer’s opt-in
consent for those communication consent for those communication methods, in contrast with the CFPB’s proposal.methods, in contrast with the CFPB’s proposal.
Time-Barred and Obsolete Debt
The proposed treatment of time-barred and obsolete debt in the CFPB’s rule is a contentious The proposed treatment of time-barred and obsolete debt in the CFPB’s rule is a contentious
issue. Consumers are not always aware of statute of limitation rules and might not know that a issue. Consumers are not always aware of statute of limitation rules and might not know that a
debt is no longer debt is no longer ~~legally~~ legal y owed. This ignorance can cause consumer harm in a few different ways. owed. This ignorance can cause consumer harm in a few different ways.
First, consumers may pay debts that they would choose not to pay or not prioritize paying if they First, consumers may pay debts that they would choose not to pay or not prioritize paying if they
knew they could no longer be sued on the debt. In addition, as mentioned in the knew they could no longer be sued on the debt. In addition, as mentioned in the “Consumer
Experiences” section, time-barred debts can sometimes be revived if a borrower makes a payment section, time-barred debts can sometimes be revived if a borrower makes a payment
or acknowledges the debt in writing. In these cases, consumers can again be sued for this debt, or acknowledges the debt in writing. In these cases, consumers can again be sued for this debt,
and the statute of limitations is restarted. A debt is considered and the statute of limitations is restarted. A debt is considered ~~obsolete~~obsolete when it can no longer be when it can no longer be
included in a consumer’s credit report, included in a consumer’s credit report, ~~generally~~general y after seven years. Consumers may not be aware after seven years. Consumers may not be aware
of when debts can no longer be included on credit reports. of when debts can no longer be included on credit reports.
~~In its rulemaking, the CFPB has proposed mandating time-barred debt and revival disclosures for~~
~~consumers (but not for obsolete debts). The~~ The CFPB considered mandating a time-barred debt disclosure and found in its research that disclosures can reduce the potential for deception for many consumers. However, the CFPB decided not to finalize a time-barred debt disclosure due to concerns about (1) debt collector compliance costs incurred to determine whether a debt is time-barred and (2) whether the proposed disclosure would effectively communicate a debt’s legal status to consumers.85 The time-barred and revival disclosures developed by the CFPB~~time-barred and revival disclosures developed by the~~
~~CFPB have~~ led to more consumer comprehension led to more consumer comprehension of these concepts.of these concepts.8486 However, the CFPB’s However, the CFPB’s
qualitative testing suggested some consumers were confused about time-barred debt, obsolete qualitative testing suggested some consumers were confused about time-barred debt, obsolete
debt, and revival, even with disclosures provided.debt, and revival, even with disclosures provided.8587 In addition, the CFPB found that although a In addition, the CFPB found that although a
majority of respondents answered comprehension majority of respondents answered comprehension questions correctly when viewing these disclosures, the comprehension gains were more pronounced for those with higher education and income levels.88 For these reasons, some argue that the CFPB should ban the collection of time-barred debts.89 Validation Issues Debt validation is another significant policy issue in this market, where debt collectors may contact the wrong consumer or collect for the wrong amount. If a consumer receives a debt 82 CFPB, Consumer Experiences with Debt Collection, p. 31. 83 CFPB, Consumer Experiences with Debt Collection, p. 37. 84 NCLC, CFPB Debt Collection Rule Must Protect Consumers, 2019. 85 CFPB, “Debt Collection Practices (Regulation F),” 86 Federal Register 5783, January 19, 2021. 86 CFPB, Disclosure of Time-Barred Debt and Revival: Findings, 2020, p. 25. 87 Fors Marsh Group, Debt Collection Validation Notice Research: Summary, 2016, pp. 35-39. 88 CFPB, Disclosure of Time-Barred Debt and Revival: Findings, 2020, pp. 25-27. 89 NCLC, CFPB Debt Collection Rule Must Protect Consumers, 2019. Congressional Research Service 12 The Debt Collection Market and Selected Policy Issues ~~questions correctly when viewing these~~

~~78 CFPB, “Debt Collection Practices (Regulation F),” 84 Federal Register 23370-23371, May 21, 2019.~~
~~79 Letter from ACA International, the Association of Credit & Collection Professionals, to CFPB Comment Intake—~~
~~Debt Collection, September 17, 2019, pp. 73-79, at https://www.acainternational.org/assets/advocacy-resources/aca-~~
~~comment-cfpb-reg-f-9.17.19.pdf.~~
~~80 National Consumer Law Center (NCLC),~~ ~~CFPB Debt Collection Rule Must Protect Consumers, Not Abusive~~
~~Collectors, May 2019, at https://www.nclc.org/images/pdf/debt_collection/cfpb-debt-collection-rule-summary-~~
~~2019.pdf (hereinafter NCLC, CFPB Debt Collection Rule Must Protect Consumers, 2019).~~
~~81 CFPB, Consumer Experiences with Debt Collection, p. 31.~~
~~82 CFPB, Consumer Experiences with Debt Collection, p. 37.~~
~~83 NCLC, CFPB Debt Collection Rule Must Protect Consumers, 2019.~~
~~84 CFPB, Disclosure of Time-Barred Debt and Revival: Findings, 2020, p. 25.~~
~~85 Fors Marsh Group, Debt Collection Validation Notice Research: Summary, 2016, pp. 35-39.~~
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~~The Debt Collection Market and Selected Policy Issues~~

~~disclosures, the comprehension gains were more pronounced for those with higher education and~~
~~income levels.86 For these reasons, some argue that the CFPB should ban the collection of time-~~
~~barred debts.87~~
~~Validation Issues~~
~~Debt validation is another significant policy issue in this market, where debt collectors may~~
~~contact the wrong consumer or collect for the wrong amount. If a consumer receives a debt~~
collection validation notice from a debt collector, no debt collector database or other resource collection validation notice from a debt collector, no debt collector database or other resource
currently exists to help the consumer verify that the debt collector owns the debt or that the currently exists to help the consumer verify that the debt collector owns the debt or that the
information about the debt is accurate. The consumer would need to recognize the debt in order to information about the debt is accurate. The consumer would need to recognize the debt in order to
believe that they owe it. believe that they owe it.
Some of these verification issues may exist because debt collectors are not required to obtain a Some of these verification issues may exist because debt collectors are not required to obtain a
debt’s full files from the original lender.debt’s full files from the original lender.8890 Sometimes, the original lender conveys only basic Sometimes, the original lender conveys only basic
information to the debt collector—unless a consumer disputes the debt—due to expense and information to the debt collector—unless a consumer disputes the debt—due to expense and
technical complications between systems.technical complications between systems.8991 For example, creditors sometimes do not provide For example, creditors sometimes do not provide
copies of underlying account documentation to debt collectors, such as account statements or copies of underlying account documentation to debt collectors, such as account statements or
agreements.agreements.9092 In these cases, debt collectors would obtain these documents from creditors only In these cases, debt collectors would obtain these documents from creditors only
when needed (e.g., if a consumer files an FDCPA dispute).when needed (e.g., if a consumer files an FDCPA dispute).9193 This practice reduces costs for debt This practice reduces costs for debt
collectors, but it may lead to debt transfer information issues between creditors and debt collectors, but it may lead to debt transfer information issues between creditors and debt
collectors. collectors.
According to the CFPB, “there are often substantial deficiencies in the quality and quantity of According to the CFPB, “there are often substantial deficiencies in the quality and quantity of
information collectors receive at placement or sale of the debt that frequently result in collectors information collectors receive at placement or sale of the debt that frequently result in collectors
contacting the wrong consumer, for the wrong amount, or for debts that the contacting the wrong consumer, for the wrong amount, or for debts that the ~~collector~~c ollector is not is not
entitled to collect.”entitled to collect.”9294 CFPB research suggests that many debt collectors might undergo little CFPB research suggests that many debt collectors might undergo little
review of creditor data to check for potential inaccuracies or unreliability.review of creditor data to check for potential inaccuracies or unreliability.9395 In addition, lenders In addition, lenders
often do not make representations as to the accuracy of the transferred information that the debt often do not make representations as to the accuracy of the transferred information that the debt
collector receives.collector receives.9496 Moreover, debt collectors may not receive much information about whether a Moreover, debt collectors may not receive much information about whether a
consumer has disputed the same debt in the past, and as a debt gets older and possibly resold, consumer has disputed the same debt in the past, and as a debt gets older and possibly resold,
information may decay. Some debt collectors also may file litigationinformation may decay. Some debt collectors also may file litigation against a consumer without the underlying documentation97 as creditors often obtain default judgments because many consumers do not attend their court hearings.98 Inaccurate information about debts can harm consumers. For example, a consumer might pay debts they are not obligated to pay. In addition, validation issues can lead to more disputes and complaints, requiring consumers and debt collectors to spend time disputing debts or invalid lawsuits. Part of the reason that many consumers report inaccuracies with their debts in collections may be due to limited information on debt validation notices. Currently, most validation notices do not include some elements, such as the original creditor or original amount owed. The information in 90~~against a consumer without~~

~~86 CFPB, Disclosure of Time-Barred Debt and Revival: Findings, 2020, pp. 25-27.~~
~~87 NCLC, CFPB Debt Collection Rule Must Protect Consumers, 2019.~~
88 CFPB, CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking: Outline of Proposals Under
Consideration and Alternatives Considered, July 27, 2016, pp. 6-7, at https://files.consumerfinance.gov/f/documents/, July 27, 2016, pp. 6-7, at https://files.consumerfinance.gov/f/documents/
20160727_cfpb_Outline_of_proposals.pdf (hereinafter CFPB, 20160727_cfpb_Outline_of_proposals.pdf (hereinafter CFPB, ~~Small~~Sm all Business Review Panel for Debt Collector and
Debt Buyer ~~Rulemaking~~).
89Rulem aking). 91 CFPB, CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking , pp. 6-7. , pp. 6-7.
9092 CFPB, CFPB, Study of Third-Party Debt Collection Operations, pp. 22-23. , pp. 22-23.
9193 CFPB, CFPB, Study of Third-Party Debt Collection Operations, pp. 23-24. , pp. 23-24.
9294 CFPB, CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, p. 6. , p. 6.
9395 CFPB, CFPB, Study of Third-Party Debt Collection Operations, p. 22. , p. 22.
9496 CFPB, CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking , p. 8. 97 For this reason, the CFPB also was considering a requirement that debt collectors have “reasonable support” legally (e.g., necessary documentation) before filing litigation against consumers. T his requirement was not included in the CFPB’s final rule. See CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking , p. 12. 98 For this reason, the CFPB considered creating a requirement that debt collectors disclose to consumers that a court could rule against them if consumers do not defend themselves in court. T his requirement was not included in the CFPB’s final rule. See CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking , pp. 18-19. Congressional Research Service 13 The Debt Collection Market and Selected Policy Issues the notice might be insufficient for some consumers to recognize their debts.99 To address some of these concerns, the CFPB’s final rule clarifies additional ~~, p. 8.~~
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~~the underlying documentation95 as creditors often obtain default judgments because many~~
~~consumers do not attend their court hearings.96~~
~~Inaccurate information about debts can harm consumers. For example, a consumer might pay~~
~~debts they are not obligated to pay. In addition, validation issues can lead to more disputes and~~
~~complaints, requiring consumers and debt collectors to spend time disputing debts or invalid~~
~~lawsuits.~~
~~Part of the reason that many consumers report inaccuracies with their debts in collections may be~~
~~due to limited information on debt validation notices. Currently, most validation notices do not~~
~~include some elements, such as the original creditor or original amount owed. The information in~~
~~the notice might be insufficient for some consumers to recognize their debts.97 To address some of~~
~~these concerns, the CFPB proposed rule would clarify additional~~ information debt collectors information debt collectors
should disclose to consumers in the validation notice. However, some argue that validation errors should disclose to consumers in the validation notice. However, some argue that validation errors
will not be reduced without mandating that debt collectors improve the quality and transparency will not be reduced without mandating that debt collectors improve the quality and transparency
of their information and recordkeeping prior to taking action to collect the debt. Others argue that of their information and recordkeeping prior to taking action to collect the debt. Others argue that
this type of regulation could be prohibitively expensive and overly burdensome for debt this type of regulation could be prohibitively expensive and overly burdensome for debt
collectors.collectors.98100
The CFPB has announced enforcement actions regarding inaccurate or unverifiable information The CFPB has announced enforcement actions regarding inaccurate or unverifiable information
used during the debt collection process.used during the debt collection process.99101 Although the CFPB has considered debt information Although the CFPB has considered debt information
validation proposals, the CFPB did not include any requirements relating to debt information validation proposals, the CFPB did not include any requirements relating to debt information
transfer or validation in its transfer or validation in its ~~proposed~~final rule. rule.~~100~~
102 Medical Debt and Credit Reporting
Medical debt collection raises specific policy issues relating to inconsistent Medical debt collection raises specific policy issues relating to inconsistent ~~billing~~bil ing and reporting and reporting
practices. According to a 2014 CFPB study, consumers are unlikely to know how much various practices. According to a 2014 CFPB study, consumers are unlikely to know how much various
medical services cost in advance, particularly those associated with accidents and emergencies.medical services cost in advance, particularly those associated with accidents and emergencies.~~101~~
103 People often have difficulty understanding co-pays and health insurance deductibles, and medical People often have difficulty understanding co-pays and health insurance deductibles, and medical

~~95 For this reason, the CFPB also was considering a requirement that debt collectors have “reasonable support” legally~~
~~(e.g., necessary documentation) before filing litigation against consumers. This requirement was not included in the~~
~~CFPB’s proposed rule. See CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, p. 12.~~
~~96 For this reason, the CFPB considered creating a requirement that debt collectors disclose to consumers that a court~~
~~could rule against them if consumers do not defend themselves in court. This requirement was not included in the~~
~~CFPB’s proposed rule. See CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, pp.~~
~~18-19.~~
~~97 CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, pp. 6-7.~~
~~98 For example, during the small business review panel process, the public discussion outline discussed how the option~~
~~of transferring all account-level documentation during the debt transfer process would be an overly burdensome~~
~~requirement. See CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, p. 9.~~
99 For example, CFPB, Consent Order: Portfolio Recovery Associates, LLC, debts are often transferred to debt collectors after different periods of time, depending on the medical provider. Therefore, medical debts can appear on people’s credit reports inconsistently. To address inconsistency concerns, the Internal Revenue Service (IRS) announced on December 31, 2014, a final rule requiring the separation of bil ing and collection policies of nonprofit hospitals.104 Under the rule, hospitals that have or are pursuing tax-exempt status are required to make reasonable efforts to determine whether their patients are eligible for financial assistance before engaging in “extraordinary collection actions,” which may include turning a debt over to a collection agency or garnishing wages. In short, tax-exempt hospitals must al ow patients 120 days from the date of the first bil ing statement to pay the obligation before initiating collection procedures.105 The IRS rule impacts only nonprofit hospitals, but on September 15, 2017, the 99 CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, pp. 6-7. 100 For example, during the small business review panel process, the public discussion outline discussed how the option of transferring all account -level documentation during the debt transfer process would be an overly burdensome requirement. See CFPB, Sm all Business Review Panel for Debt Collector and Debt Buyer Rulem aking , p. 9. 101 For example, CFPB, Consent Order: Portfolio Recovery Associates, LLC, File no. 2015-CFPB-0023, September 9, File no. 2015-CFPB-0023, September 9,
2015, at https://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf; and 2015, at https://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf; and
CFPB, CFPB, Consent Order: Encore Capital Group, Inc., Midland Funding, LLC, Midland Credit ~~Management~~Managem ent, Inc. and
Asset Acceptance Capital Corp., File, File no. 2015-CFPB-0022, September 9, 2019, at https://files.consumerfinance.gov/f/no. 2015-CFPB-0022, September 9, 2019, at https://files.consumerfinance.gov/f/
201509_cfpb_consent-order-encore-capital-group.pdf. 201509_cfpb_consent-order-encore-capital-group.pdf.
~~100~~102 For example, during For example, during the small businessthe small business review panel process, the public discussionreview panel process, the public discussion outline includedoutline included proposals proposals
around the integrity of information, including the transfer of debts and recordkeeping; the around the integrity of information, including the transfer of debts and recordkeeping; the ~~acquisition~~ac quisition and transfer of and transfer of
accounts; and the process for obtaining information and reviews of information at various stages of the debt collection accounts; and the process for obtaining information and reviews of information at various stages of the debt collection
process. Seeprocess. See CFPB, Sm all~~CFPB,~~ ~~Small~~ Business Review Panel for Debt Collector and Debt Buyer ~~Rulemaking~~Rulem aking , pp. 4-8., pp. 4-8.
~~101 See~~ 103 See CFPB, CFPB, Consumer Credit Reports: A Study of Medical and Non-Medical Collections, December 2014, at , December 2014, at
http://files.consumerfinance.gov/f/201412_cfpb_reports_consumer-credithttp://files.consumerfinance.gov/f/201412_cfpb_reports_consumer-credit -medical-and-non-medical-collections.pdf. 104 Department of the Treasury, Internal Revenue Service (IRS), New Requirements for 501(c)(3) Hospitals Under the Affordable Care Act, at https://www.irs.gov/charities-non-profits/charitable-organizations/requirements-for-501c3-hospit als-under-the-affordable-care-act-section-501r (hereinafter IRS, New Requirem ents for 501(c)(3) Hospitals Under the Affordable Care Act). 105 See IRS, New Requirements for 501(c)(3) Hospitals Under the Affordable Care Act. Congressional Research Service 14 The Debt Collection Market and Selected Policy Issues three major credit reporting agencies—Experian, Equifax, and TransUnion106—established a 180-day (six-month) waiting period after the date of first delinquency before posting a medical collection of any type on a consumer credit report.107~~-medical-and-non-medical-collections.pdf.~~
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~~debts are often transferred to debt collectors after different periods of time, depending on the~~
~~medical provider. Therefore, medical debts can appear on people’s credit reports inconsistently.~~
~~To address inconsistency concerns, the Internal Revenue Service (IRS) announced on December~~
~~31, 2014, a final rule requiring the separation of billing and collection policies of nonprofit~~
~~hospitals.102 Under the rule, hospitals that have or are pursuing tax-exempt status are required to~~
~~make reasonable efforts to determine whether their patients are eligible for financial assistance~~
~~before engaging in “extraordinary collection actions,” which may include turning a debt over to a~~
~~collection agency or garnishing wages. In short, tax-exempt hospitals must allow patients 120~~
~~days from the date of the first billing statement to pay the obligation before initiating collection~~
~~procedures.103 The IRS rule impacts only nonprofit hospitals, but on September 15, 2017, the~~
~~three major credit reporting agencies—Experian, Equifax, and TransUnion104—established a 180-~~
~~day (six-month) waiting period after the date of first delinquency before posting a medical~~
~~collection of any type on a consumer credit report.105~~
Concerns about the impact of medical debts on credit reports continue. Some observers may Concerns about the impact of medical debts on credit reports continue. Some observers may
believe it is unfair for medical debts to appear on credit reports because these debts are believe it is unfair for medical debts to appear on credit reports because these debts are ~~generally~~general y
incurred for incurred for ~~medically~~medical y necessary reasons and are less likely to indicate whether someone is necessary reasons and are less likely to indicate whether someone is
~~financially~~financial y responsible. For example, the CFPB found that medical debts may be less reliable responsible. For example, the CFPB found that medical debts may be less reliable
predictors of creditworthiness or credit performance than other types of debts.predictors of creditworthiness or credit performance than other types of debts.~~106~~108 H.R. H.R. ~~5330~~
2547 would prohibit furnishing medical debt to consumer reporting agencies for a would prohibit furnishing medical debt to consumer reporting agencies for a ~~year107~~year and would and would
prohibit medical debt related to prohibit medical debt related to ~~medically~~medical y necessary procedures from inclusion in consumer necessary procedures from inclusion in consumer
credit reportscredit reports ~~(see Table A-1).108~~.
Federal, State, and Local Government Debt Exemptions
Currently, government fines and fees are often exempt from the FDCPA.109 Therefore, if a Currently, government fines and fees are often exempt from the FDCPA.109 Therefore, if a
government fine or fee, such as a municipal utility government fine or fee, such as a municipal utility ~~bill~~bil , traffic ticket, or court debt, creates a debt that is transferred to a debt collector, that collector is not always required to comply with the ~~, traffic ticket, or court debt, creates a debt~~

~~102 Department of the Treasury, Internal Revenue Service (IRS),~~ ~~New Requirements for 501(c)(3) Hospitals Under the~~
~~Affordable Care Act, at https://www.irs.gov/charities-non-profits/charitable-organizations/requirements-for-501c3-~~
~~hospitals-under-the-affordable-care-act-section-501r (hereinafter IRS,~~ ~~New Requirements for 501(c)(3) Hospitals~~
~~Under the Affordable Care Act~~).
~~103 See IRS, New Requirements for 501(c)(3) Hospitals Under the Affordable Care Act.~~
~~104 See Experian, “Medical Debt and Your Credit Score: Here’s What You Need to Know,” press release, August 8,~~
~~2017, at https://www.experian.com/blogs/ask-experian/medical-debt-and-your-credit-score/.~~
~~105 P.L. 115-174, §302 amends the Fair Credit Reporting Act to provide veterans with credit reporting protections~~
~~relating to medical debt, extend the waiting period for medical debts to be included in credit reports to one year, and~~
~~remove paid or settled medical debts from veterans’ credit reports.~~
~~106 See Kenneth P. Brevoort and Michelle Kambara, Data Point: Medical Debt and Credit Scores, CFPB, May 2014, at~~
~~http://files.consumerfinance.gov/f/201405_cfpb_report_data-point_medical-debt-credit-scores.pdf.~~
~~107 The prohibition lasts for a year after the billing date or a year after the consumer’s last debt payment, whichever is~~
~~later.~~
~~108 H.R. 3621, the Comprehensive Credit Reporting Enhancement, Disclosure, Innovation, and Transparency Act of~~
~~2020 (Comprehensive CREDIT Act), which passed the House during the 116th Congress, also would prohibit~~
~~furnishing medical debt to consumer reporting agencies for a year and would prohibit medical debt related to medically~~
~~necessary procedures from inclusion in consumer credit reports. It also would remove paid or settled medical debts~~
~~from credit reports. For more information on this bill, see CRS Report R44125,~~ ~~Consumer Credit Reporting, Credit~~
~~Bureaus, Credit Scoring, and Related Policy Issues, by Cheryl R. Cooper and Darryl E. Getter.~~
~~109 The FDCPA defines a debt as money consumers must pay “arising out of a transaction in which the money,~~
~~property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household~~
~~purposes.” See 15 U.S.C. §1692a(5).~~
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~~link to page 20~~ ~~The Debt Collection Market and Selected Policy Issues~~

~~that is transferred to a debt collector, that collector is not always required to comply with the~~
FDCPA. Recently, as more government debts have been outsourced to debt collectors, reports of FDCPA. Recently, as more government debts have been outsourced to debt collectors, reports of
aggressive debt collection practices for these types of debt have grown.110 Some federal aggressive debt collection practices for these types of debt have grown.110 Some federal
government programs, such as the federal student loan program, by statute have flexible government programs, such as the federal student loan program, by statute have flexible
repayment terms (e.g., income-driven repayment plans);111 however, when these types of debts go repayment terms (e.g., income-driven repayment plans);111 however, when these types of debts go
into default and are transferred to a debt collector, the consumer loses some of these consumer into default and are transferred to a debt collector, the consumer loses some of these consumer
protections. protections.
H.R. H.R. ~~3948~~2547 would make would make federal, state, and local government debts, including court debts, debts subject to FDCPA and other rules. ~~state and local debts collected by debt collectors subject to the FDCPA,~~
~~and H.R. 4403 would make many federal debts collected by debt collectors subject to the FDCPA~~
~~and other rules. H.R. 5287 would prohibit debt collectors from collecting or garnishing wages for~~
~~federal student loan debts that would not require payment under an income-driven repayment~~
~~plan and would subject these debt collectors to the FDCPA (see Table A-1).~~
Conclusion
The debt collection market continues to be an important part of ensuring that consumers have The debt collection market continues to be an important part of ensuring that consumers have
access to a robust consumer credit market; however, the potential for consumer harm may make access to a robust consumer credit market; however, the potential for consumer harm may make
consumer protection laws and regulations particularly important. The regulation of the debt consumer protection laws and regulations particularly important. The regulation of the debt
collection market may continue to be an active policy issue because it impacts many consumers collection market may continue to be an active policy issue because it impacts many consumers
going through the debt collection process and the efficiency of consumer credit markets in the going through the debt collection process and the efficiency of consumer credit markets in the
United States. As the CFPB United States. As the CFPB ~~finalizes and~~ implements its debt collection implements its debt collection ~~rulemaking~~rules, stakeholders , stakeholders
~~may be able to see how new regulations could impact the market. For these reasons, the debt~~
~~collection market may continue to be the subject of congressional interest and legislative~~
~~proposals.~~

~~110 For example, Blake Ellis and Melanie Hicken, “The Secret World of Government Debt Collection,” CNN Money,~~
~~February 17, 2015; and Blake Ellis and Melanie Hicken, “Threatening Letters from a Government Debt Collector,”~~
CNN Money, February 17, 2015.
~~111 For more information on the federal student loan program and income-driven repayment plans, see CRS Report~~
~~R45931,~~ ~~Federal Student Loans Made Through the William D. Ford Federal Direct Loan Program: Terms and~~
~~Conditions for Borrowers, by David P. Smole.~~
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~~Appendix. Debt Collection Market Legislation~~

~~Table A-1. Legislation Passed by the House or Marked Up and Ordered to Be~~
~~Reported by the House Financial Services Committee During the 116th Congress~~
~~(2019-2020), Primarily Related to the Debt Collection Market~~
~~Bill Number~~
~~Bill Title~~
~~Summary of Bill~~
~~H.R. 3948~~
~~Debt Col ection Practices~~
~~Makes state and local debts, such as municipal utility~~
~~Harmonization Act~~
~~bil s, traffic tickets, and court debts, col ected by a~~
~~debt col ector subject to the Fair Debt Col ection~~
~~Practices Act (FDCPA), among other things.~~
~~H.R. 4403~~
~~Stop Debt Col ection Abuse Act~~
~~Makes certain federal agency debts, such as a fine,~~
~~fee, penalty, or other money owed to a federal~~
~~government agency that is not less than 180 days~~
~~past due, col ected by a debt col ector subject to~~
~~the FDCPA, among other things.~~
~~H.R. 5001~~
~~Non-Judicial Foreclosure Debt~~
~~Makes nonjudicial foreclosure proceedings covered~~
~~Col ection Clarification Act~~
~~under the FDCPA.~~
~~H.R. 5003~~
~~Fair Debt Col ection Practices for~~
~~Prohibits a debt col ector from threatening the~~
~~Servicemembers Act~~
~~member’s rank or security clearance, or to have the~~
~~member prosecuted under the Uniform Code of~~
~~Military Justice, among other things.~~
~~H.R. 5013~~
~~Small Business Fair Debt Col ection~~
~~Expands FDCPA protections to cover debts owed~~
~~Protection Act~~
~~by small businesses.~~
~~H.R. 5021~~
~~Ending Debt Col ection Harassment Prohibits a debt col ector from contacting a~~
~~Act~~
~~consumer by email, text message, or other~~
~~electronic means without a consumer’s opt-in~~
~~consent to be contacted electronically, among~~
~~other things.~~
~~H.R. 5287~~
~~Fair Student Loan Debt Col ection~~
~~Prohibits debt col ectors from col ecting or~~
~~Practices Act~~
~~garnishing wages for federal student loan debts that~~
~~would not require payment under an income-driven~~
~~repayment plan and subjects these debt col ectors~~
~~to the FDCPA, among other things.~~
~~H.R. 5330~~
~~Consumer Protection for Medical~~
~~Prohibits medical debt related to medically~~
~~Debt Col ections Act~~
~~necessary procedures from inclusion in consumer~~
~~credit reports, among other things.~~
Source: Compiled by the Congressional Research Service.
~~Notes:~~ ~~H.R. 5003 passed the House on March 2, 2020. All other bil s were marked up and ordered to be~~
~~reported by the House Financial Services Committee during the 116th Congress.~~

~~Author Information~~

~~Cheryl R. Cooper~~

~~Analyst in Financial Economics~~

~~Congressional Research Service~~

17

~~The Debt Collection Market and Selected Policy Issues~~

may be able to see 106 See Experian, “Medical Debt and Your Credit Score: Here’s What You Need to Know,” press release, August 8, 2017, at https://www.experian.com/blogs/ask-experian/medical-debt-and-your-credit -score/. 107 P.L. 115-174, §302 amends the Fair Credit Reporting Act to provide veterans with credit reporting protections relating to medical debt, extend the waiting period for medical debts to be included in credit reports to one year, and remove paid or settled medical debts from veterans’ credit reports. 108 See Kenneth P. Brevoort and Michelle Kambara, Data Point: Medical Debt and Credit Scores, CFPB, May 2014, at http://files.consumerfinance.gov/f/201405_cfpb_report_data-point_medical-debt-credit -scores.pdf. 109 T he FDCPA defines a debt as money consumers must pay “ arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes.” See 15 U.S.C. §1692a(5). 110 For example, Blake Ellis and Melanie Hicken, “T he Secret World of Government Debt Collection,” CNN Money, February 17, 2015; and Blake Ellis and Melanie Hicken, “ T hreatening Letters from a Government Debt Collector,” CNN Money, February 17, 2015. 111 For more information on the federal student loan program and income-driven repayment plans, see CRS Report R45931, Federal Student Loans Made Through the William D. Ford Federal Direct Loan Program : Term s and Conditions for Borrowers, by David P. Smole. Congressional Research Service 15 The Debt Collection Market and Selected Policy Issues how new regulations could impact the market. For these reasons, the debt collection market may continue to be the subject of congressional interest and legislative proposals. Author Information Cheryl R. Cooper Analyst in Financial Economics

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