photo by angela n.
From the Office of Attorney General Karl Racine:
“Attorney General Karl A. Racine today released the following statement after the DC Council passed emergency law – introduced by President Mendelson earlier this week, and written in conjunction with the Attorney General’s Office ( OAG) – which will protect DC consumers from abuse and unfair debt collection practices after the district’s temporary COVID-19 protections end and debt collection activities resume.
“The district’s temporary debt collection relief is set to expire at a time when many district residents are still trying to get back on their feet after losing their jobs during the pandemic or struggling to care for their families,” said AG Racine. “By enacting our urgently needed legislation, Council is ensuring that residents of the district will be protected from abusive, unfair and deceptive debt collection practices during this critical time. Thank you to council members for moving our bill forward quickly, and I look forward to working with them to make these much-needed protections permanent for the residents of the district. We can help consumers pay off their debt while taking into account the difficult financial situations they face and avoiding harassment from debt collectors.
The District of Columbia Council unanimously passed legislation that modernizes the district’s outdated debt collection law passed 50 years ago. This legislation ensures that necessary and long-awaited consumer protections will be in place when debt collection relief under the district’s COVID-19 public health emergency legislation expires. The bill will now go to the mayor for his signature.
According to an Urban Institute pre-pandemic analysis, nearly 30% of DC residents are in debt collection, and those residents are disproportionately people of color. When the debt is collected, the person who owes the money is often contacted repeatedly by debt collectors, who use a variety of tactics, including some that can be aggressive or deceptive, in an attempt to get paid. In recent years, DC has also seen a significant increase in the use of lawsuits to collect debts. These lawsuits can have serious consequences for those already in difficulty, including loss of driver’s license, foreclosure of bank accounts or garnishment of already low wages, and can increase the risks of homelessness and unemployment.
During the COVID-19 pandemic, more than 1,100 DC residents lost their lives, tens of thousands fell ill and struggled to recover, and tens of thousands more lost their jobs and have struggled to make ends meet. More than 26% of DC residents reported using credit cards or loans to meet their spending needs during the pandemic, and 9% reported not having enough to eat, according to a Census Bureau survey in April. and May 2021. Currently, DC consumers are protected from debt collection lawsuits thanks to emergency COVID-19 legislation. These protections will expire soon and a wave of new lawsuits against consumers will likely follow.
Because the district’s existing law regulating debt collection law was passed 50 years ago, it is significantly weaker than similar laws in other states. Emergency and Temporary Laws Protecting Consumers from Unfair Debt Collection Practices update district debt collection laws by:
- Extension of protections to cover medical and credit card debts: Medical debt and credit card debt are among the most common forms of debt held by consumers, but the collection of these debts is not regulated by current DC law. This legislation prohibits abusive collection practices for all forms of consumer debt, including medical debt and credit card debt.
- Prohibition of harassment by debt collectors: The law prohibits excessive communications that constitute harassment, including making more than three phone calls in a 7-day period. It also expands the law so that it clearly applies to modern forms of communication, such as texting and email, and protects consumers from harassment in all forms of communication.
- Strengthening of existing protections for DC consumers: Under old district laws, collectors of a few types of debt could not call consumers very early in the morning or late at night, call anonymously, use foul or threatening language, or make false statements about a person’s debt to employers or family members. In addition to expanding the types of debt covered by these protections, this legislation prohibits debt collectors from disclosing any information about a person’s debt to their employers or family members.
- Stop the criminalization of poverty: Creditors are increasingly using the legal system as a tool to collect debts, and under old DC law, if the consumer did not show up for proceedings, a creditor could apply for an arrest warrant. be issued for the arrest of the consumer. This bill eliminates the possibility for creditors to jail consumers for contempt of court in these circumstances. It also specifies that no one can be imprisoned for non-payment of a debt.
- Clarify that the law applies to buyers of debt: The bill specifies that debt buyers must follow all laws applicable to debt collectors. It also requires debt buyers to comply with additional requirements, such as providing itemized statements and account numbers for debts owed, to prevent attempts to collect inaccurate or expired debts.
- Increased penalties for debt collectors who break the law: This law establishes clear financial penalties for violators, including additional penalties of up to $ 4,000 per injured party.
President Mendelson and AG Racine also plan to introduce legislation in the near future with ongoing updates to modernize the district’s long-term debt collection laws, in addition to this legislation with urgent temporary fixes.
A copy of the emergency legislation is available here.
A copy of the temporary legislation is available here.
How to Report Unfair Commercial Practices
To report scams, fraud or unfair business practices, contact the OAG Consumer Protection Office by: