Jerry Kopel

Private Investigators

March 19, 2011

By Jerry Kopel

You remember the movie. Humphrey Bogart chain-smoker who keeps a bottle of Scotch in his left hand drawer, sitting in his dilapidated office, with a good- hearted babe receptionist in the outer office. Suddenly the door opens, and there is Ingrid Bergman, a beautiful dame who needs a private eye.

Private investigators (PIs) and private detectives (PDs) were regulated by the state beginning in 1877 until 1977. In 1977 the state Supreme Court ruled in People vs Ro'Mar, 559 P2d 710, the statute was unconstitutional because it lacked a valid definition of what entities had to be licened as PD agencies. Some several hundred PIs or PDs then holding licenses became unregulated. In 1984 the PI - PD language was removed from the statutes.

In 1976 the legislature adopted the nation's first Sunset Law to consider what occupations needed to be continue to be regulated. There is a Professional Private Investigators Assn. of Colorado (PPIAC) which has filed applications to obtain PI licensure. They tried in 1985, again in 1987, again in 2000, and again in 2006. Each time the Dept. of Regulatory Agencies (DORA) recommended no change in the law.

DORA's position in the four applications has been (1) few complaints against the persons in the occupation and (2) opposition within the profession from significant PIs who see the re-regulation as a way to reduce competition. By 2012 the profession expects 600 PIs. Only 26 percent of PIs are members of PPIAC.

Twenty-seven former Federal Bureau of Investigation agents who had to retire at reaching age 57 practice now in Colorado as PIs. In 2000 as members of the Society of Former Special Agents of the FBI they voiced their objections to the proposed licensing bill, listing the 27 members on the letter. What position they take in 2011 has not been revealed in the DORA report.

DORA's words in 2006: "this review finds insufficient evidence of harm to the public from the unregulated practice of the PIs to warrant state licensing ... State licensing can significantly restrict competition by reducing the number of competitors and increasing business compliance costs, thus increasing costs to consumers. In addition state licensing increases the cost of government."

The 2011 DORA research did conclude in favor of less regulation than licensing. "Most importantly" wrote DORA "regulation in any form, is intended to provide protection to consumers instead of enabling practitioners,, in this case PIs, to gain access to personal information.. Here are the three standards which either support or deny a need to regulate.

(1) According to the state Attorney General staff, during the last five years (or since the 2006 denial) there were five complaints filed against PIs or PI companies. Three of the complaints were fee disputes (not a licensing violation). One involved fraud and identity theft, and one involved misrepresentation.

The Denver/Boulder BBB reported 28 complaints against PIs in the past three years of which 14 were for PI company failure to complete agreed-upon service and five were forms of false advertising . "According to BBB staff, fewer complaints regarding PIs are received compared to other professions".

DORA then states" "The limited number of complaints and the current process utilized by the BBB further calls into question the extent of consumer harm, and therefor the need for licensure, as highlighted in the Sunrise application."

(2) The second standard is "will the public benefit by having the PI tested as to knowledge of existing laws which are violated?" That could be part of any registration form without licensing being involved.

(3) The third standard is "can the public be adequately protected by other means in a most cost effective manner." The researcher believes creation of a state registry may be a viable option to enhance consumer protection.

The DORA report did not focus on licensing especially since "harm to a lot of consumers" was not shown. "If it ain't broken, don't fix it," remains a good approach.

Cities or counties presently have the right to license and Durango does license five PIs.

A statewide registry form of regulation could eliminate persons who have commited crimes, who fail a jurisprudence exam regarding state laws relevant to PIs, and who lack a surety bond or errors and omission insurance.

The proposed law change by PPIAC is HB 1195, a voluntary licensing law sponsored by Rep. Bob Gardner (R) and Sen. Linda Newell (D) which by its title "Concerning the Voluntary Licensure of Private Investigators" cannot be amended to deal with a registry form of regulation. It would definitely reduce competition and increase costs to the state government.

(Jerry Kopel served 22 years in the Colorado House.)

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