Debt Collectors Spending Big to Block a Crackdown
Two months ago, debt collectors won a victory when congressional lawmakers allowed stimulus checks to be garnished by creditors and government agencies. Now, as the credit industry hits a jackpot during the pandemic, the leading lobby group for debt collectors has more than tripled the amount of cash it funnels to lawmakers as it campaigns to block upcoming Democratic legislation to protect millions of Americans from the repo man.
At issue is a package of bills designed to restrict the $13 billion debt collection industry, as new Federal Reserve and Census Bureau reports show consumer and medical debt has skyrocketed during the pandemic.
One measure would prohibit the collection of medical debt for the first two years after a medical payment is due. Another would discharge student debt in the event of a debtor’s death. Other provisions aim to block lenders from forcing debtors to sign away their legal rights; outlaw threats of demotion that debt collectors reportedly aim at members of the military; and subject government-contracted debt collectors to the same restrictions as consumer debt collectors.
“In the midst of the pandemic crisis, predatory debt collectors have made record profits while continuing with their abusive, harassing tactics while consumers struggle to make ends meet through no fault of their own,” said Rep. Maxine Waters (D-CA), who led the successful effort to pass the bill through the House Financial Services Committee last month over the objections of GOP lawmakers.
As the legislation now moves to the House floor Thursday, ACA International—which bills itself as “the largest trade group for the debt collection industry”—has been running what it calls a “grassroots campaign” urging its 2,500 members to pressure lawmakers to vote down the legislation.
“The accounts receivable management industry plays a key role in the process of attempting to recover outstanding payments, and as such, collection agencies are an extension of every community’s businesses,” says a form letter that ACA has asked debt collectors to send to lawmakers. “If creditors cannot collect, they will be forced to not lend, and consumers—who much of this legislation is supposedly aimed at protecting—will end up being harmed the most, particularly those with fewer options for credit.”
ACA’s campaign to block the legislation coincides with debt collection giants Encore Capital and PRA Group this month announcing booming profits. The latter boasted to investors that “PRA Group had an incredible 15 months,” setting “four quarterly global cash records.”
Debt Collectors’ Four-Fold Increase in Campaign Cash
While ramping up its efforts to try to block the legislation, ACA has spent $136,000 on lobbying lawmakers, and its political action committee has made more than $72,000 in campaign donations in the first three months of 2021, according to federal records reviewed by The Daily Poster. That includes almost $60,000—or roughly $2,000 a day—in the month of April alone, as the legislation was being negotiated.
The campaign cash represents a nearly four-fold increase in donations from the group compared to the first three months of 2019, during the start of the last election cycle.
Among the recipients are Sens. Joe Manchin and Krysten Sinema, both conservative Democrats, as well as the National Republican Senatorial Campaign Committee, which bankrolls GOP senators’ election bids.
The debt collection industry has become a political force in Washington. The finance and credit companies poured more than $27 million into the last two federal elections. Donors from debt collection companies such as Encore, PRA Group, and Sherman Financial Group have become significant sources of campaign cash. Sherman Financial Group’s billionaire owner, for example, most recently dumped $250,000 into a GOP super PAC supporting the party’s Senate candidates.
