WASHINGTON, D.C. – District of Columbia Council Chairman Phil Mendelson and Attorney General Karl A. Racine today announced the introduction of legislation to strengthen protections for DC consumers against unfair and abusive debt collection practices.
The legislation—introduced by Chairman Mendelson and written in collaboration with the Office of the Attorney General (OAG)—would modernize the District’s outdated debt collection law, which was written in 1971 and does not currently cover most types of consumer debt, including medical debt and credit card debt. This legislation would also ensure that necessary and long overdue consumer protections are in place when debt collection relief provided by the District’s COVID-19 public health emergency legislation expires.
“When the District’s COVID-19 protections expire, residents who are struggling to get back on their feet will face a wave of aggressive debt collection activity—and we know this activity will disproportionately affect residents of color,” said AG Racine. “Our current debt collection law was passed 50 years ago and must be updated to address modern forms of communication and combat abusive debt collection practices. My team worked closely with Chairman Mendelson and community advocates to develop this legislation, which would bring protections for DC residents into the 21st century. I encourage the Council to act quickly to ensure that we have the tools we need protect consumers and pursue debt collectors who take advantage of District residents.”
“As the public health emergency nears its end, the debt collection protections put in place will expire,” said Chairman Mendelson. “Meanwhile, we’ve realized that our 50 year old consumer protection law hasn’t kept pace with technology. We must do all we can to protect our most vulnerable residents from harassment. Now is the time to strengthen consumer protections and the tools available to pursue debt collectors who take advantage of consumers.”
According to a pre-pandemic analysis by the Urban Institute, nearly 30% of DC residents have debt in collections, and those residents are disproportionately people of color. When debt goes to collections, the individual who owes money is often repeatedly contacted by debt collectors, who use a variety of tactics—including some that may be aggressive or misleading—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 lead to serious consequences for individuals who are already struggling, including loss of drivers’ licenses, seizure 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 got sick and struggled to recover, and tens of thousands more lost jobs and 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 survey conducted by the Census Bureau in April and May of 2021. Currently, DC consumers are protected from debt collection suits through COVID-19 emergency legislation. Those protections will soon expire, and a wave of new collection lawsuits against consumers will likely follow.
Because the District’s existing law regulating debt collection law passed 50 years ago, it is significantly weaker than similar laws in other states. The Protecting Consumers from Unjust Debt Collection Practices Emergency and Temporary Acts would update the District’s debt collection laws by:
- Expanding protections to cover medical debt and credit card debt: Medical debt and credit card debt are among the most common forms of debt held by consumers, but collection on these debts is unregulated by existing DC law. This legislation would outlaw abusive collection practices for all forms of consumer debt, including medical debt and credit card debt.
- Prohibiting harassment by debt collectors: The proposed legislation would prohibit excessive communications that constitute harassment, including making more than three phone calls in a 7-day period. The law would also be broadened to clearly apply to modern forms of communication, like text message and email. This legislation would protect consumers from harassment across all forms of communication.
- Strengthening existing protections for DC consumers: Under the District’s current laws, collectors of a few types of debts may not call consumers very early in the morning or late at night, call anonymously, use profane or threatening language, or make false statements about a person’s debt to employers or family members. In addition to expanding the types of debts covered by these protections, under this legislation, debt collectors would not be allowed to communicate any information about a person’s debt to their employers or family members.
- Stopping criminalization of poverty: Creditors are increasingly using the legal system as a tool to collect debts, and under current law, if the consumer fails to appear for a proceeding, the creditor can request that a bench warrant be issued for the consumer’s arrest. This bill would eliminate the ability of creditors to have consumers jailed for contempt of court in these circumstances. It would also clarify that no person can be jailed for failing to pay a debt.
- Clarifying that the law applies to debt buyers: The bill would clarify that debt buyers must follow all laws applicable to debt collectors. It would also require debt buyers to comply with additional requirements, like providing itemized statements and account numbers for debts owed, to prevent attempts to collect on inaccurate or expired debts.
- Increasing penalties for debt collectors who violate the law: This legislation would establish clear financial penalties for wrongdoers, including extra penalties of up to $4,000 per harmed individual.
Chairman Mendelson and AG Racine also plan to introduce legislation in the near future with permanent updates to modernize the District’s debt collection laws in the long-term, in addition to this legislation with urgently needed temporary fixes before the COVID-19 public health emergency ends.
"As the experiences of our clients and thousands of fellow DC residents show, this is an important and timely bill. We applaud Chairman Mendelson and Attorney General Racine and members of their offices for supporting these protections against debt collection harms, which disproportionately impact DC's African American and Latino residents,” said Tzedek DC's Director Ariel Levinson-Waldman. “Too often in connection with debt collection, residents are fearful that their savings may be wiped out, their wages garnished, or even that they may face arrest. The bill makes clear that debt collections protections in DC extend to medical debt, and includes common sense and core fairness and accountability provisions that will protect residents facing debt-related crises in the wake of the pandemic and going forward. We urge the Council to enact the set of temporary protections in this bill, and, in future session, to make those protections permanent."
“Modernizing and strengthening the District’s debt collection law is so important in this particular moment of pandemic recovery planning and transition planning – especially when you consider the flood of debt collection activity that we know is coming after the moratorium ends, and the dramatically disproportionate impacts of debt collection on communities of color,” said Jennifer Ngai Lavallee, Supervising Attorney of the Consumer Law Unit at the Legal Aid Society of DC. “Just to highlight one of the most impactful improvements: with this legislation, the District’s debt collection law would finally apply to credit card debts and medical debts - that’s huge as we look toward emerging from the pandemic, knowing that thousands of District residents are being saddled with new or worsened debt. And the legislation adds a lot of substantive protection on top of the expanded scope - like requiring collectors to have adequate information about the debts they collect, protecting against unfairness and harassment, and making sure collectors can’t get judgments against consumers when they fail to comply. District consumers are going to need these improvements for the long haul, so it’ll be important for permanent legislation to follow – but this is a very strong start and we appreciate Chairman Mendelson’s and Attorney General Racine’s leadership and all the effort put in by their offices to try to bring this urgently-needed relief to DC residents.”
A copy of the emergency legislation is available here.
A copy of the temporary legislation is available here.
How to Report Unfair Business Practices
To report scams, fraud, or unfair business practices, contact OAG’s Office of Consumer Protection by:
- Texting (202) 738-5212
- Messaging OAG using the chat feature at: https://oag.dc.gov/consumer-protection/submit-consumer-complaint
- Submitting a complaint online at: https://oag.dc.gov/consumer-protection/submit-consumer-complaint
- Calling (202) 442-9828
- Emailing firstname.lastname@example.org