Proposed Tougher Rules Being Opposed by Debt Collectors
A host of U.S. state laws requiring debt collectors to put on record exactly who owes what has sparked a lobbying battle being conducted state-by-state over the rules of evidence that the debt collection industry claims could slice into its profitability.
A 2009 North Carolina law, which require collectors to present original contracts and penalizing erroneous litigation has slowed down the work of the industry in that state. Other states like Florida, Oregon, California and Massachusetts, have adopted North Carolina’s law with identical proposals. According to consumer advocates, the laws are necessary to minimize abuses. The Consumer Financial Protection Bureau, although a new federal agency, will weld authority over debt collectors.
At present, the industry is kicking into high gear its lobbying efforts, directed primarily at state level. Debt industry groups also hired Thurbert Baker, the former attorney general of the state of Georgia, to lead the efforts in convincing legislators to modify the state bills.
Steven Fredrickson, the Portfolio Recover Associates, Inc. chief executive officer, said, “We don’t have lobbyists in 50 states but we do have internal resources that are talking, certainly, to all the large states. Portfolio Recover Associates is the largest debt collector being publicly traded.
New state legislation in general targets debt buyers, who purchase and service the collection of debt from the original creditors, usually for pennies on the dollar. Debt buyer have intensified the amount of lawsuits that they have filed in recent years to collect payment.