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Schneiderman joins coalition urging Congress to oppose debt collection proposal

PRESS RELEASE


NEW YORK – Attorney General Eric T. Schneiderman, part of a bipartisan coalition of 20 state attorneys general, submitted a letter today urging Congress to oppose the Practice of Law Technical Clarification Act of 2018, which would strip away protections against debt collection attorneys who take unfair advantage of state courts to intimidate, harass and deceive consumers.

"As the Trump administration continues to dismantle basic protections for consumers, Congress is now considering doubling down – attempting to shield abusive debt collection law firms from being held accountable for their intimidation and harassment tactics," said Attorney General Schneiderman. "My office has not hesitated to take on crooked debt collectors that target New Yorkers, and we will continue to do so, no matter what happens in Washington."

If enacted, the Practice of Law Technical Clarification Act would amend the federal Fair Debt Collection Practices Act (FDCPA) to exclude law firms and licensed attorneys engaged in "litigation activities," shielding them from liability for abusive practices and preventing state attorneys general from using the FDCPA to bring enforcement actions against them. The amendment would also bar individuals from suing debt collection lawyers for damages and reasonable attorneys' fees. Such lawsuits supplement the work of attorney general offices across the country.

The attorneys general argue that "certain debt collection attorneys and law firms routinely misuse their access to the judicial system to take improper advantage of unsophisticated consumers." These debt collectors' use of litigation to collect debts disproportionally affects the most vulnerable consumers, who often lack the resources to hire lawyers, including the elderly, disabled and poor. 

State attorneys general and the Consumer Financial Protection Bureau have brought numerous actions against the practices of abusive debt collection law firms, which include falsely threatening to garnish the income and social security benefits of elderly and disabled consumers, threatening consumers with arrest and imprisonment for failure to pay debts, improperly suing consumers in courthouses miles from their homes, and filing lawsuits without meaningfully reviewing pleadings and without proof that consumers owe the debt at issue.

Today's letter comes in response to the House Financial Services Committee's decision to vote the Practice of Law Technical Clarification Act out of committee.

The letter, which was led by Massachusetts Attorney General Maura Healey, was signed by the Attorneys General of California, Delaware, Hawaii, Iowa, Maine, Massachusetts, Maryland, Michigan, Minnesota, Nebraska, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, Washington and Washington D.C.

Click here to read more about consumer rights related to debt collection.