Lawmakers Reintroduce Fair Debt Collection Practices For Servicemembers Act

By Credit and Collection News

Bipartisan legislation aimed at curbing debt-collection threats tied to military careers has been reintroduced in the House of Representatives. Rep. Madeleine Dean, D-Pa., and Rep. Warren Davidson, R-Ohio, introduced H.R. 10018, the Fair Debt Collection Practices for Servicemembers Act, on Aug. 3; the measure has been referred to the House Financial Services Committee.

The bill would amend the Fair Debt Collection Practices Act (FDCPA) to expressly bar debt collectors, when collecting a covered individual’s debt, from threatening to reduce a servicemember’s rank, revoke a security clearance, or prosecute the person under the Uniform Code of Military Justice.

Expanded FDCPA prohibitions

The House bill would add a servicemember-specific provision to FDCPA Section 805, governing communications in connection with debt collection, and would amend Section 808’s list of unfair or unconscionable collection practices.

Under the measure, a collector could not threaten a covered individual with:

• Reduction in military rank

• Revocation of a security clearance

• Prosecution under the Uniform Code of Military Justice

It also would specifically prohibit telling a covered individual that a failure to cooperate with a collector will produce any of those outcomes. Companion Senate language makes clear that collectors may still provide accurate, lawful information about the debt, including its amount, status and legitimate consequences of nonpayment, provided the communication does not run afoul of the new restrictions or other FDCPA provisions.

Who would be covered

The bill’s proposed protections extend beyond active-duty personnel. The Senate version of the legislation defines a “covered individual” to include covered members and dependents under the Military Lending Act, individuals separated, discharged or released from qualifying duty during the preceding 365 days, certain dependents of those former members, and members of the Selected Reserve.

That scope is significant for collection compliance. Firms handling accounts involving military consumers would need controls capable of identifying not only active-duty borrowers, but potentially eligible family members, recently separated servicemembers and reservists.

Military readiness rationale

Dean and Davidson framed the proposal as a measure to prevent collectors from improperly invoking the military chain of command or career consequences as leverage.

“Debt collectors have no business attempting to interfere with the military’s chain of command,” Davidson said in announcing the bill. Dean said servicemembers should not have to fear that their careers will be affected by manipulative collection tactics.

The legislation also directs the Government Accountability Office to study and report to Congress on the law’s impact on military readiness and national security, including how uncollected debt could affect covered individuals who hold security clearances.

In their announcement, the lawmakers cited CFPB Office of Servicemember Affairs data indicating that debt collection accounted for 13.8% of complaints submitted by servicemembers, compared with 6.6% of complaints from non-servicemembers.

Compliance implications

The proposal would not displace ordinary, lawful collection activity. Rather, it would create bright-line FDCPA exposure around representations that exploit military discipline, rank, clearance status or the prospect of military prosecution.

For collectors, creditors and servicers, the principal operational implications would include:

• Reviewing call scripts, letters, email templates and digital collection messages for military-status language

• Prohibiting any suggestion that a collector can cause rank reduction, clearance revocation or UCMJ action

• Training front-line collectors and complaint staff on the enhanced rules

• Updating escalation procedures for accounts identified as belonging to servicemembers, dependents, veterans within the statutory lookback period or reservists

• Maintaining documentation that legitimate disclosures regarding debt status and nonpayment consequences are accurate and do not imply military authority

The measure has support from the Military Family Advisory Network and the National Military Family Association. It remains at the committee stage, and no House floor action has been scheduled.