You coach a high school football team. You're tired of that referee who keeps penalizing your players 15 yards for pulling opposing players down by gripping their face guards. So what do you do? You go to the powers-that-be and get that referee removed from your games. Good idea?
Unfortunately that's what the Dept. of Regulatory Agencies (DORA) suggests be done with supervision of 350 collection agencies in Colorado that DORA claims employ about 20,000 unlicensed debt collectors and solicitors.
Our state has a Fair Debt Collection Practices Act as part of its collection law. (I was chief sponsor of this Act in 1985.) DORA states the law's three-fold mission: "Protect debtors, protect (creditor) clients and regulate collection agencies."
DORA reviewed the Collection Agency Board in 2002 and it's up for legislative action in 2003. DORA wants supervision of the Fair Debt Collection Practices Act and the board taken from Attorney General Ken Salazar and given to DORA's director of registrations.
The board was formerly under DORA, but in 1977 the State Auditor recommended it be transferred (and it was) to the Attorney General (AG) as a Type 2 transfer. That meant the board became "advisory" with substantive authority vested in the AG as to disciplinary actions, licensing, and adopting regulations. Over the past 25 years, the administrator appointed by the AG has sometime delegated duties to the board, and sometimes taken those duties away.
The suggested transfer (pushed by collection agencies and the board) is really aimed at Laura Udis, a well respected attorney who has served under at least three attorneys general (Woodard, Norton, and Salazar) as administrator of the Uniform Consumer Credit Code, the Fair Debt Collection Practices Act, and the Deferred Deposit Loan Act (payday lenders).
As stated on page 28 of the DORA report:
"They argue that this is evidence that the Administrator and the Attorney General's Office are overzealous and overprotective of the consumer at the expense of the licensee."
That's a very frank statement. On page 2 of the report, DORA mentions the Collection Practices Act is the state version of the federal law and "The goal of both acts is to protect the public from harassment by third party debt collectors." DORA admits the Collection Practices Act isn't subjective, and that intent isn't the issue. Either you obey the law or you don't.
N.Y. Mayor Rudolph Giuliani saved his city's neighborhoods from decline and crime by starting to fix the small stuff: Broken windows, graffiti, abandoned cars. According to DORA, Ms. Udis spends one-third of her time on collection agency matters. She originates letters of admonition (these are not major violations, but the acts do violate the law) and cease and desist orders. Between 1996 and 2001, admonitions went from 23 in 1996 to 69 in 2001, and cease and desist orders went up from 14 to 53.
As a consequence, collection agencies shaped up. Between 1996 and 2001, allegations of wrongdoing dropped per year from 1,202 to 652, and the number of complaints per year dropped from 863 to 593.
How does an advisory board regain power? Place it under DORA's registration director. DORA gives the example of the outfitters advisory board. They "make licensing, policy and disciplinary recommendations to the director, who, with rare exceptions, adopts the recommendations..." The Collection Board would have the power and would then not be "overzealous or overprotective of consumers at the expense of the licensee."
Unlike DORA, Colorado's Attorney General has a separate section devoted to consumer protection. Example: A consumer buys a product on a credit card, loses his or her job and defaults. The collection agency tries to collect the money. The payday lender lends the consumer a sum at heavy interest rates to pay the collection agency to pay the creditor. All this is PRESENTLY under regulation and review by the Attorney General.
Personal vendettas prominently displayed in the DORA report should not be the basis for collection practices legislation. If the system is working for the public, don't destroy it.
(Jerry Kopel served 22 years in the legislature.)
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