May 2, 2018

State AGs Urge Congress to Protect State Enforcement of the FDCPA

3 min

On April 19, 2018, a bipartisan group of 20 state attorneys general sent a letter to Congress opposing a bill they say would impede their ability to enforce the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., "which currently prohibits debt collectors, including attorney debt collectors, from engaging in unfair and deceptive practices." The letter is notable because it sheds light on state enforcement activity of federal law regarding debt collection.

The Practice of Law Technical Clarification Act of 2018 (H.R. 5082), which recently passed the House Financial Services Committee, would exclude law firms and licensed attorneys from the scope of the FDCPA to the extent they are engaged in "litigation activities." The state AGs oppose the bill on the grounds that "there are a significant number of law firms and attorneys" that do not abide by the law and abuse state judicial systems, at a time when "creditors and debt buyers are ever more frequently turning to litigation to collect debts allegedly owed by consumers" and "debt collection lawsuits comprise the majority of many state-court dockets." The letter spells out a variety of alleged abuses committed by collection firms, including suing consumers in courts far from where they live and filing suit without proof the debt is owed.

While noting that state AGs are tasked with enforcing "the consumer protection laws of our respective states," the letter asserts the AGs' authority—and intent—to enforce federal FDCPA by means of the Consumer Financial Protection Act (CFPA). As Venable previously reported, the CFPA gives state enforcement and regulatory bodies broad authority to bring cases under the CFPA's 19 enumerated consumer laws, including the FDCPA. The letter stated: "Crucially, the FDCPA is the only consumer protection tool available to State Attorneys General in a significant number of jurisdictions where state consumer protection law does not govern the conduct of attorneys." And the state AGs asserted that H.R. 5082 "would preclude State Attorneys General from using the FDCPA to pursue unscrupulous debt collection attorneys."

This collective advocacy from the 20 state AGs comes on the heels of New Jersey's recent announcement of a new "state-level CFPB," in a press release titled "New Focus on Filling the Void Left by Federal Pullback of Consumer Protection Regulation." The press release states that Paul R. Rodriguez, currently acting counsel to New York City Mayor Bill de Blasio, will be nominated to serve as the director of the New Jersey Division of Consumer Affairs, subject to state senate confirmation. In the interim, Kevin Jespersen, who has been chief counsel to the attorney general, will serve as the Division's acting director.

While it remains to be seen whether other states will take such bold steps, recent activity by multiple states in the consumer financial services space further shows that state attorneys general intend for their presence to be felt, notwithstanding—and, indeed, because of—the perceived pullback by federal regulators such as the CFPB.