State Legislatures Target Collection Agencies in Proposed Bills

As state legislatures across the country get into the full swing of their sessions, a number of bills introduced in various states could impact collection agencies and creditors working within their borders, according to an update from ACA International.

State legislative sessions typically begin in January and run only a few months so many states are scrambling to get legislation passed before sessions expire. Bills in Colorado, Idaho, Maryland and Mississippi are aimed directly at the collection industry.

A bill in Colorado would give direct authority over collection agencies operating there to the state’s Attorney General’s office by eliminating the Collection Agency Board. House Bill 1240 was introduced by Democrat Dorothy Butcher from Pueblo.

The bill also spells out some specific changes to the regulations governing collectors. First, collectors would be required in their initial communication with consumers to disclose their right to discontinue further communications. The bill also increases the administrative fine for collection agency violations to $2,000 from $1,000. The proposal eliminates the collection manager examination requirement as a prerequisite for obtaining a license in the state. The bill also removes the current requirement that collection agencies maintain a location in the state, as long as the agency offers a toll-free number for Colorado residents. 

A bill in Idaho, House Bill 451, similarly removes the in-state office requirement. The bill reiterates that an annual fee of $20 applies to all collectors licensed to operate in the state, regardless of whether the agency is based in Idaho.

In Maryland, House Bill 748 provides language that a debt collector may not knowingly fail to disclose that a debt is disputed, or threaten to take any action that the collector does not intend to take. The bill also provides for restrictions to collector behavior in the state that fall in line with the FDCPA.

Mississippi’s Senate Bill 2359 requires all collection agencies operating there to register with the state after July 1, 2008. The bill would also codify a consumer’s right to bring civil action against a collection agency for violations of state law.

ACA International, the association of credit and collection professionals, issues a monthly round up of state legislative activity governing the ARM industry.