State Holds Hearing to Probe Surge in Debt Collection Complaints

by Mike Bevel, CollectionIndustry.com

The New York State General Assembly Committee on Consumer Affairs and Protection held hearings on Tuesday to look into the surge in complaints about debt collection. Complaints to the Federal Trade Commission have risen for the past eight years, and New York City’s consumer bureau has seen complaints jump 70 percent in two years, committee chair Audrey I. Pheffer has said in a statement.

The hearing’s goal was to help the Legislature draft a package of measures to combat abusive practices. Pheffer, a Democratic assembly member from Queens, has proposed a debtor “bill of rights” that collectors would be required to provide to consumers they contact. Other attendees called for statewide licensing of collection agencies — unlicensed outside Buffalo and New York City — higher penalties for abusive tactics and more oversight of the practice of debt buying.

Collection industry representatives said existing federal and state laws are sufficient to protect consumers, and that complaints don’t necessarily indicate wrongdoing by collectors.

“There are many people who don’t like being called on the telephone by a stranger,” said Mark Davitt, president of New York collection agency ConServe and past president of the industry’s national association, ACA International. The numbers of complaints amount to a small fraction of collection activity as consumers’ debt load swells, industry representatives said.

While complaints have jumped 70 percent in two years, what isn?t clear is how many of these complaints are legitimate and how many are stalling tactics from debtors newly versed in obfuscation techniques in attempts to wiggle their way out of the debts they owe. The ACA, with about 6,000 member agencies, is studying complaints to the FTC to pinpoint the sources of consumer gripes.