Proposed Legislation in Numerous States Would Negatively Impact the Collection Industry

Two weeks ago, insideARM reported on a bill that was introduced in the District of Columbia Council that would impose additional burdensome requirements on debt buyers and collectors.

In that article we suggested that these types of bills may be part of a nationwide trend. I believe we can now officially confirm that speculation.

After just cursory research insideARM has identified numerous bills introduced in various state legislatures in the past three months that – if passed – would significantly impact the debt collection industry.

The proposed legislation reviewed ranges from variations on the theme outlined in the D.C. bill to obscure provisions in a seemingly unrelated bill.

Examples include:

In Maine a bill (HP075301) was introduced to amend the Maine Fair Debt Collection Practices Act to provide greater protection to debtors with regard to collection actions by debt buyers. The bill provides that a debt buyer may not collect on a debt without providing specified information that includes the name of the original creditor and all intervening creditors, as well as the sources of added fees and interest. The information must be also be included in the complaint to initiate the cause of action to collect the debt.

The Maine bill also proposes a 3-year statute of limitations that replaces all other limitations unless the existing limitations is a shorter period.

In Oregon a similar bill (HB 2252-3) was introduced.  The proposed bill includes similar specific notice requirements and outlines additional obligations before a debt buyer may bring legal action to collect debt.

In Illinois a bill (SB1866) was introduced amending the Crime Victims Compensation Act. In that bill there are provisions restricting debt collection activity against crime victims once a crime victim provides notice to a debt collector.

What does this all mean? Well, unfortunately here are my takeaways and questions:

1)      We can continue to expect bills introduced at every level of government (City, County, State and Federal) in reaction to the negative stories we see every day about the debt collection industry.

2)      Clients and prospects are requesting – and will continue to expect – specific policies and procedures to outline how a company intends to keep up with the ever changing regulatory landscape.

3)      Does the ARM industry have the financial resources to impact proposed legislation BEFORE it becomes law?

4)      The challenge of keeping up with these potential changes is immense. Is reliance on trade association updates and industry news sites like insideARM enough?  What are the alternatives?