Senate Bill Aims to Prohibit ‘Predatory’ Collectors From Accessing PPP Loans

A month after a similar bill was introduced in the House of Representatives, a bill has been introduced in the Senate that seeks to choke off access to the Paycheck Protection Program for any debt collector that has committed any violation of the Fair Debt Collection Practices Act.

Just like the bill in the House, the Senate Bill — S.1430 — is called the Ceasing Underserved Relief Benefits for Debt Collectors Act for 2021 or the CURB Debt Collectors Act. It was introduced by Sen. Martin Heinrich [D-N.M.], and is being cosponsored by Sen. Ben Ray Lujan [D-N.M.], and Sen. Ron Wyden [D-Wisc.].

The bill was introduced late last month, but the text of the bill was only made available earlier this week.

Both the House and Senate bills are a response to an article that was published in the Washington Post in January that analyzed the funds that collectors had received under the PPP and tied those collectors to complaints that had been made about them by consumers to either the Federal Trade Commission or the Consumer Financial Protection Bureau. The report indicated that collectors had received more than $580 million in loans, and that 170 of those recipients were the subject of at least 100 complaints by consumers with the CFPB and that 25 have been “subject to legal enforcement or consumer alerts” either by the CFPB or the FTC.

The PPP was created under the CARES Act last year and offered low-interest loans to help businesses pay their payroll and certain other expenses during the COVID-19 pandemic. If the businesses met certain conditions, like not laying off employees, the loans they received could be partially or totally forgiven.

The bill would make any collector ineligible for PPP funds if it has been found to have violated any provision of the FDCPA pursuant to:

  • an adjudication by a Federal agency or an action brought in a court of competent jurisdiction if such adjudication or action constitutes an exercise of enforcement authority under Section 814 the FDCPA, or
  • any other action brought in a court of competent jurisdiction
    • the adjudication was or action was not resolved by a settlement agreement or consent decree that remains in effect as of the date on which such individual or entity applies for the covered loan if the adjudication or action was brought by a Federal agency, and
    • a final order or final judgment against such individual or entity pursuant to an adjudication or action
      • is issued or entered, as appropriate, during the 10-year period ending on the date on which such individual or entity applies for the covered loan
      • has not been overturned
      • is no longer subject to appeal

“It is unconscionable that predatory debt collectors have abused the Paycheck Protection Program – taking funds that are intended to help small businesses stay afloat during the COVID-19 pandemic,” said Heinrich in a statement. “It’s time to put an end to this abuse, and keep these dollars flowing to small businesses that need them most.” 

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