Patrick McHenryChairman

Washington, September 26, 2019 -

The top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), delivered the following opening statement at a full committee hearing on debt collection practices and the best solutions for consumers and small business owners:

“Thank you, Madam Chair, and thank you to the witnesses for being here.

“A CFPB survey conducted in 2017 found that 63 percent of consumers said they were contacted too frequently by a creditor or debt collector.

“In 2018, the Consumer Financial Protection Bureau (CFPB) received more than 81,000 consumer complaints related to debt collection. In some cases, the CFPB and the Federal Trade Commission received complaints from consumers being called anywhere from seven to twenty times a day.

“The data proves that consumers aren’t happy with debt collectors so, we can all agree that there is a problem. The current regime does not work for the American people.

“One cause could be the Fair Debt Collection Practices Act (FDCPA), the principle statute governing debt collection activities. The FDCPA was signed into law by President Jimmy Carter in 1977. 1977 is also the year Apple Corporation was incorporated. It’s fair to say that much has changed in terms of technology and how society interacts since that time.

“The CFPB recognizes the need to modernize the FDCPA and the rules surrounding debt collection. Despite what you will hear today from my friends on the other side of the aisle, the CFPB is working to fix this problem for the benefit of the American consumer.

“The proposed rule addresses the use of newer technologies; establishes clear, bright-line rules limiting call attempts and telephone conversations; and clarifies consumer protections, disclosure requirements, and communications with consumers.

“That includes opt-out instructions in every email, text message, and other electronic communication. It also addresses standards for contact through social media platforms and requires a collector to communicate with a consumer about a debt before furnishing information to a consumer reporting agency.

“Now, how consumers want to be contacted is different now than was contemplated in the existing rules. So, let’s acknowledge that.

“Text messages, well, if you want to talk to a millennial, text them. Trying to get them to answer the phone, give me a break. Not possible.

“In short, the CFPB’s proposed rule offers certainty for consumers and a clear rule of the road for debt collectors. Given the discussions we’ve had in this committee this year, I’m surprised that more of my colleagues are not commending the steps taken by Director Kraninger.

“This modernization isn’t just important only to consumers. Small businesses in America and healthcare providers across this country depend on third-party collectors to manage receivables and ensure they are compensated for services that have been provided.

“Federal, state, and local governments also depend on the collection industry for tax payments. Government-related debts represent 16 percent of all debt collections. So, we need to think about the taxpayers in this term as well, because that means the vast majority of taxpayers are paying on time and they would see their taxes go up if there’s not a way to collect from those that are not paying.

“That money, which covers everything from unpaid parking tickets to unpaid taxes, is better spent on things like infrastructure and education, rather than just letting those that aren’t paying not pay.

“Madam Chair, the reality is that prices increase for all when some decline to pay.

“Methods for debt collection can and should improve, but we must allow for modernization that appropriately accounts for the vast changes in technology and the way that consumers wish to be communicated with.

“I look forward to a productive hearing and thank our witnesses on this vast panel for appearing.”

Watch Ranking Member McHenry’s opening remarks here.