Congress considers court waivers to strengthen consumer protection

Unanimously decision last Thursday, the Supreme Court of the United States made a decision this would limit the ability of the Federal Trade Commission to seek monetary relief for borrowers who have been defrauded by corporate lenders. Under the new ruling, the FTC would only be allowed to pursue restitution in the form of injunctions, not cash payments, for customers who have been victims of deceptive practices like short-term or payday loans.

“An imminent uncertain Supreme Court ruling on FTC 13 (b) authorities has given crooks new opportunities to take advantage of people, including those who are isolated at home due to the pandemic,” said the Chairman of the House Energy and Trade Committee, Frank Pallone Jr., and Chairman of the Consumer Protection and Trade Subcommittee, Jan Schakowsky, in a joint statement two days earlier. Lawmakers have announced that they plan to change the FTC’s founding legislation, which would preserve its ability to seek financial redress under Section 13 (b), regardless of the court ruling.

By clarifying its intention in the FTC law through the proposed amendment, called the Consumer Protection and Collection Act, Congress would effectively overturn the Supreme Court’s more limited interpretation. With a simple adjustment to the legislative text – which can be adopted individually or as part of an omnibus package – a so-called judicial derogation can resolve or eliminate any ambiguity that the Supreme Court found in the law, thus overturning the decision of the courtyard. Like the interception and the American perspective written last year, this Congressional option has the potential to thwart a conservative-leaning court and overturn dozens of damaging rulings.

And the FTC’s proposed legislative fix isn’t the only legal waiver Democratic lawmakers are seeking. Last week, the House Financial Services Committee, chaired by Representative Maxine Waters, tag an omnibus package known as the “Comprehensive Debt Collection Improvement Act”. The legislation strengthens a number of consumer protections, ranging from limits on how debt collectors can harass consumers electronically (sponsored by Rep. Ayanna Pressley, D-Mass.), D-Mich.).

A seemingly obscure bill included in the package, introduced by first-term representative Jake Auchincloss, D-Mass., Seeks to challenge a 2019 Supreme Court case that limited consumer rights in non-judicial foreclosure states . (Non-judicial foreclosure means lenders don’t have to go to court to repossess your home. Nolo legal blog, 30 states and the District of Columbia use non-judicial foreclosure, including the home state of Auchincloss, Massachusetts.) The bill would classify any business involved in foreclosure in a non-judicial foreclosure state as an agent collection, thereby subjecting it to the rules and protections of the Fair Debt Collection Practices Act, or FDCPA. It is that of Auchincloss first invoice in Congress.

The bill would overturn a Supreme Court ruling in 2019, when it heard a dispute between a man named Dennis Obduskey and a law firm that said it was closing its Colorado home. Obduskey challenged the proceedings under the FDCPA, alleging that the company had failed to verify its debt, as collectors required under federal law.

In Obduskey v. McCarthy and Holthus LLP, the High Court of the country pronounced unanimously with the law firm, saying that in a non-judicial state, the firm would not qualify as a “debt collector” under the FDCPA. But in her concurring opinion, Judge Sonia Sotomayor said she believed it was a “close case”. She explicitly noted that “today’s opinion does not prevent Congress from clarifying this law if we were wrong.”

Auchincloss, a former Republican who succeeded Joe Kennedy seat in Congress, accepted this invitation. His bill proposes that Congress simply remove the language of the FDCPA which currently, at least in the eyes of the Supreme Court, limits the definition of “debt collector.”

“The bill is extremely important in helping to combat harassment and abuse,” said Andrea Bopp Stark, a lawyer at the National Consumer Law Center. She noted that judicial foreclosure states are already better for consumers “by giving them due process rights to defend the foreclosure or bring positive claims. [about the foreclosure] in court. ”In non-judicial foreclosure states, individuals have fewer rights to begin with, making their protection under the FDCPA all the more crucial.

While foreclosure defense lawyers have insisted that there are workarounds In Obduskey, reinterpreting the law would be the easiest way to restore protections for people on the brink of foreclosure. And with the Office of Consumer Financial Protection propose to ban seizures until 2022, the timeline would leave borrowers and foreclosed lawyers months to adjust to the changes provided by the bill.

The Comprehensive Debt Collection Improvement Act – the omnibus package that contains Auchincloss, Pressley and Tlaib bills – has been withdrawn from committee and will now be considered by the entire House. The House hearing on the Consumer Protection and Recovery Act, the amendment to the FTC Act, is scheduled for Tuesday at 11 o’clock And last week, four FTC commissioners urged Congress to pass a legislative solution and reaffirm their agency’s power to provide remedies to consumers.

Although relatively easy to use and representing an important control over the judiciary, these statutory exemptions have fallen through in recent years. In November, The Intercept and The American Prospect identified dozens of statutory decisions that Congress could address with a simple adjustment of the law and encouraged lawmakers to take advantage of it. They can finally understand the message.

“Last week’s Supreme Court ruling strikes at the very heart of the FTC’s mission to protect and provide relief to consumers,” Pallone said in a statement to The Intercept. “Now it is up to Congress to come together to restore these critical authorities so the FTC can continue its vital work of protecting American consumers, and that is exactly what we intend to do. “

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