Wyden Introduces Legislation to Protect America’s Small Business Owners from Predatory Debt Collection
Legislation is Part of Broader Wyden Effort to Ensure Equal Access to Capital for Women and Minority Business Owners
Washington, D.C. – U.S. Senator Ron Wyden, D-Ore., today introduced the Small Business Fair Debt Collection Practices Act to protect small business owners from predatory and abusive debt collection practices that can cripple their businesses and weaken the U.S. economy. A House companion bill (H.R. 5013) introduced by U.S. Representative Al Lawson, D-Fla., will be voted on by the House Financial Services Committee today.
Wyden’s Small Business Fair Debt Collection Practices Act expands the current consumer debt collection protections under the Fair Debt Collection Practices Act (FDCPA) to small businesses with loans or obligations that are less than $5 million so that debt collectors have guardrails on what they can do to collect these debts. These protections are especially important to women and minority small business owners who are particularly vulnerable to predatory practices because they are less likely than other small business owners to have the capital resources and network supports necessary to protect themselves against abusive collectors.
“Small businesses are the lifeblood of communities everywhere. Entrepreneurs should be supported and encouraged to grow their businesses, not subjected to predatory and abusive debt collectors,” Wyden said. “This effort is about making sure they have the tools and protections they need to grow. It’s about fairness and leveling the playing field for all entrepreneurs, especially women and people of color.”
The Small Business Fair Debt Collection Practices Act:
- Limits inconvenient or unusual communication by the debt collector that can be used to deceive the borrower;
- Protects the borrower from harassment and abuse by a debt collector;
- Further limits false and misleading representations, unfair practices and deceptive forms; and
- Requires lenders to give prompt notice of small business debt to the borrower and notify them of their right to dispute the debt.
Today’s introduction is part of a broader effort by Wyden to ensure equal access to capital for women and minority business owners. As the Ranking Member of the Senate Finance Committee, Wyden recently introduced the Providing Real Opportunities for Growth to Rising Entrepreneurs for Sustained Success (PROGRESS) Act to unlock the growth potential of all small businesses, especially those owned by women and people of color, by creating two new tax incentives, a first employee and investor credit.
Responsible Business Lending Coalition: “The Responsible Business Lending Coalition applauds Senator Wyden (D-OR) for his leadership to protect small business borrowers from abusive debt collection practices. Unfortunately, financial protections that are often ubiquitous and familiar for many Americans do not apply to small business owners. Without these protections, entrepreneurs face unwarranted and aggressive debt collection tactics that can interrupt the business’ ability to operate. It is important that we ensure our nation’s 30 million small business owners receive the fair and responsible treatment that they deserve from debt collectors. For this reason, the Small Business Borrowers’ Bill of Rights includes the Right to Fair Collection Practices. We are pleased to see that this Right is being embodied in the move to apply the Fair Debt Collection Practices Act to small business debt, and we encourage bipartisan support for Senator Wyden’s legislation.”
Small Business Majority Founder & CEO John Arensmeyer: “Today too many of our nation's entrepreneurs, especially women and people of color, are being harmed by predatory lending practices and abusive debt collection tactics. This is due in large part to the fact that the Fair Debt Collection Practices Act currently does not apply to small businesses, which is why we're thrilled Senator Wyden is tackling this issue. By guaranteeing that small business borrowers have the same protections as other consumers, we can ensure our nation's job creators are safer from abusive debt collectors and can focus on growing their businesses.”
Main Street Alliance Executive Director Amanda Ballantyne: “Far too many small business owners, especially women and people of color, are shut out of traditional lending and turn to alternative finance companies. These lenders are more often predatory and engage in abusive debt collection practices. By expanding the protections that currently exist for consumers, small business owners will be safer from these abusive and harassing tactics from debt collectors and more likely to have their businesses succeed. Action for small business on fair debt collection is urgent and overdue.”
Seed Spot CEO C’pher Gresham: “Entrepreneurs, the founders of small businesses, are the backbone of our local economies in communities across the country. At SEED SPOT, we believe in protecting entrepreneurs interests to serve their customers and the community without being preyed upon by disreputable loans. Together, we can create a system that serves the entrepreneurs revitalizing our cities and small towns across the USA by protecting them. Entrepreneurs will benefit. Customers will benefit. Ultimately, whole communities will benefit from fair and equitable access to capital.”
The bill text for the Small Business Fair Debt Collection Practices Act can be found here.
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