State Will Regulate Debt Collectors
Assemblywoman Audrey I. Pheffer has announced Assembly passage of legislation she introduced to require third-party debt collectors and debt buyers to obtain a license from the Department of State (A.3926-D).
“Consumer complaints received by the Federal Trade Commission regarding third-party debt collectors grew for the 11th consecutive year in 2008, and consumers filed more complaints against third-party collectors than against any other specific industry,” said Assemblywoman Pheffer.
The term “Debt buyer” generally refers to a debt collection agency that buys old debts purchased in default, many of which are past the statute of limitations, and attempts to collect them.
“Third party debt collectors” or “Third party debt collection agencies” are companies that regularly collect or attempt to collect debts owed to another company.
In addition, the New York City Department of Consumer Affairs announced that debt collection complaints topped the department’s annual complaint list for the first time in the agency’s history in 2008.
According to the bill, licenses would cost $500 and be valid for two years. In addition to submitting the usual information, applicants would be required to include a summary of the methods used to confirm the validity of the debts it seeks to collect, their recordkeeping policy, and whether they intend to sell debts.
The Secretary of State would be authorized to refuse a license to any applicant found to have violated New York’s Fair Debt Collection Practices Law or the federal Fair Debt Collection Practices Act.
The attorney general would be authorized to enforce the provisions of the legislation by seeking an injunction against a violator.
Third-party debt collection agencies are currently required to be licensed in 29 states, as well as in Buffalo and New York City.
“While most debt-collection businesses try to work within the law, there are a growing number of unscrupulous collection agencies that practice abusive tactics,” said Pheffer. “Due to the sensitive nature of the information used in the course of their business, and the vulnerable position consumers are in when dealing with these agencies, we must protect the interests, reputations and fiscal well-being of our citizens against those who may abuse it. In an economy this uncertain, we need to do everything we can to protect consumers.”