Creditors and medical services providers should reevaluate their consumer credit agreements and collection practices in light of a recent amendment to Washington, D.C.’s debt collection law, which goes into effect on January 1, 2023. The D.C. Council previously adopted emergency debt collection restrictions in response to the COVID-19 pandemic. These restrictions are now being adopted on a permanent basis via the new amendment and impose new restrictions on communicating with consumers via email, text message and social media.
The amendment adopts a definition of “consumer debt” that is subject to the debt collection law that includes medical debts, and it also defines “consumer debt” to include only debts that are “more than 30 days past due and owing, unless a different period is agreed to by the consumer.” Creditors, including medical services providers, should consider updating their customer agreements to better define at what stage of delinquency a debt will become subject to the D.C. debt collection law.
In addition, the amendment limits the number of permitted consumer communications, shortens the statute of limitations, prohibits collecting debts on which applicable statutes of limitations have run, limits the collection of attorneys’ fees in collection actions and requires debt collectors to provide extensive disclosures in their initial written communication in connection with a charged-off consumer debt, in English and in Spanish.
In contrast to the CFPB’s Regulation F, the amendment expressly prohibits communicating with consumers electronically via email, text message or “private messages through social media platforms." Subject to numerous restrictions, however, debt collectors may use such electronic communications methods to obtain consumers’ consent to continue to use such methods. The amendment is unclear if creditors collecting on non-charged-off consumer debts may also communicate electronically with consumers to obtain consent to further electronic communications.
Penalties for violations of D.C.’s debt collection law include actual damages, costs and attorneys’ fees, punitive damages of between $500 and $4,000 per violation, and any other relief that the court deems appropriate.
D.C.’s debt collection amendments continue a nationwide trend toward imposing restrictions on medical debt collection practices, such as the enactment of the No Surprises Act, the Consumer Financial Protection Agency’s recent medical debt collection enforcement bulletin, California’s recent prohibition against certain sales of medical debt and its increased minimum income qualification for financial assistance, and the recent passage of Arizona Proposition 209, which limits the rate of interest on medical debt to 3% and imposes various other restrictions on debt collection practices.