Debt Buyers Make Their Presence Known on Capitol Hill

Editor’s Note: DBA International provided the following update to insideARM concerning the group’s lobbying and legislative activities on behalf of its membership.

 
Unlike traditional debt collectors, debt buyers comprise a smaller, but significant, segment of the debt industry. DBA International (DBA) is devoting both time and money to make sure that Capitol Hill understands the needs of debt buyers while also advocating on behalf of the larger debt community.  

DBA has retained the Washington, DC-based firm of Oldaker, Biden & Belair, LLP to make its presence known on Capitol Hill. Bob Belair is a nationally recognized lawyer and lobbyist on the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and other laws impacting the debt industry.  Belair has served as Deputy Counsel to the White House Privacy Committee and as a lawyer in the Federal Trade Commission’s Bureau of Consumer Protection.  Working in conjunction with Belair is John Blount, a consultant for Oldaker, Biden & Belair, LLP and a Senior Vice President at the Capitol Hill Consulting Group.

Over the past few years, through this Washington representation, DBA has made real progress in helping Congress members and staff understand the positive and important role played by the debt industry.  Debt buyers, in particular, provide a reliable and critical secondary market for charged-off receivables through the purchase of delinquent debt portfolios.  Creditors frequently turn to debt buyers as a way to realize a return on what would otherwise be a non-performing asset.  DBA members, by purchasing ownership of consumer debts, are uniquely positioned to assist lower-income consumers by providing discounted settlements, lower monthly payments and reduced interest rates. Third party collectors, working directly for banks and other original creditors, simply do not have the freedom to provide consumers with these types of beneficial repayment terms.

In the 110th Congress, DBA has worked to shape and support several critical pieces of legislation.  One legislative area of special concern for debt buyers is the annual privacy notice requirement under the Gramm-Leach-Bliley Act.  These notices, which allow consumers to opt-out of having their non-public personal information shared with third parties, uniquely burden debt buyers unlike other financial institutions, because debt buyers are prohibited by law to share such information under the Fair Debt Collection Practices Act.  Seeking legislative relief, DBA is worked closely with Reps. Peter Roskam (R-IL) and Jim Marshall (D-GA) and their staffs to build support for the Financial Privacy Notice Relief Act bill (H.R. 1967) and with Rep. Dennis Moore (D-KS) and his staff to gain support and momentum for his recently introduced regulatory relief bill (H.R. 5841).  Title III of the Moore bill includes the language of H.R. 1967.

Like other debt industry groups, DBA is also closely monitoring any activity to reform the Fair Debt Collection Practices Act (“Debt Collection Industry Invests in Capitol Hill Campaign,” April 9).  In addition to congressional outreach on this issue, DBA has reached out to the Federal Trade Commission (FTC), specifically through participation in the FTC’s debt collection workshop last fall (“Inconclusive Close for FTC Workshop,” Oct. 12, 2007).

Additionally, DBA has proactively lobbied on legislation that would place restrictions on Social Security numbers.  DBA has urged that legitimate business uses of Social Security numbers should not be impeded by legislation designed to counter illegal abuses.  DBA has been supportive of language authored by Senator Byron Dorgan (D-ND) that expressly permits the sale, purchase or display of a social security account number, “… to facilitate the enforcement of an obligation of, or collection of a debt from, a consumer, if the person selling, providing, displaying or obtaining the social security account number does not do so for marketing purposes”. 
 
DBA is also working with other parts of the Executive Branch to address debt buyer issues.  Specifically, DBA is working with the Treasury Department to review 1099-C reporting requirements, which memorialize the discharge of any principal amounts of a debt as taxable “income” received by the consumer.  Debt buyers frequently settle debts with consumers at deep discounts.  Debt buyers are not always able to provide a breakdown of the debt discharged into principal, interest and fees.  Consumers, who may face a taxable gain representing amounts of principal over $600.00 which are written off would benefit from revisions to the 1099-C requirement.  In response to a DBA petition, the Treasury Department has placed this issue on the Treasure Department’s Guidance Priority List for possible revision.