Permanent Version Of DC’s Protecting Consumers From Unjust Debt Collection Practices Amendment Act Takes Effect January 1, 2023

As we previously discussed here, in March 2022, the D.C. Council of the District of Columbia Committee of the Whole met in a full hearing, in part to hear amendments introduced to B24-0357, known as the Protecting Consumers From Unjust Debt Collection Practices Amendment Act (Act). The Act contains a host of new and amended requirements with respect to collection activities and litigation involving residents of the district and applies to both debt collectors and creditors collecting their own debts. The permanent version replaces the various temporary amendments that have been in place since early 2020 and was passed into law on August 27 with an applicability date of January 1, 2023.

Among other things, the Act:

• Amends D.C. Code Section 28-3814 to make all consumer debt other than a loan directly secured on real estate or a direct motor vehicle installment loan subject to the district’s debt collection law;

• Clarifies that a debt collector may send one text message, email, or private message in any seven-day period for the purposes of acquiring consent from the consumer to communicate via one or more of these methods;

• Prohibits debt collectors from sending more than five electronic communications — which are defined to include emails, text messages, and private messages — cumulatively on a consumer account in any seven-day period and provides that consent must first be obtained from the consumer receiving such electronic communications;

• Prohibits the communication of consumer indebtedness to employers, except when such indebtedness is guaranteed by the employer, when the employer requests the loan, or the information is an attachment to an execution or judgment allowed by law;

• Prohibits debt collectors from communicating an individual’s indebtedness to family, friends, or neighbors except through proper legal processes;

• Requires debt collectors who enter into a payment schedule or settlement to provide a written copy of said schedule or agreement to the consumer;

• Implements specific requirements that a debt collector must comply with when initiating a lawsuit against a consumer involving a consumer debt, including:
  • Attaching the signed contract, application, or other proof of consumer’s indebtedness to the complaint;
  • Stating the basis for any interest, fees, or attorney’s fees request;
  • Listing the current owner of the debt and the names and dates of all prior owners; and
  • Affirming the action is filed within the statute of limitations period;

• Expands the private right of action so that a debt collector that violates any provision of the Act may be liable for actual damages, costs, attorneys’ fees, punitive damages, and a penalty of between $500 and $4,000 per violation.

There is much to consider and prepare for in advance of the Act’s January 1, 2023 effective date. Updating D.C.-specific contact frequency controls, developing appropriate processes for obtaining consent to electronic communications, and adjusting collection litigation filing processes are among the items that the receivables industry needs to consider in preparing. Troutman Pepper routinely assists clients in complying with consumer protection laws and will continue to monitor the developments of state’s regulation of collection practices.