ACA International is advocating for legislation to balance industry and consumer protection needs.
2/19/2020 11:00
Licensing legislation, which may shape proposals impacting debt collectors across the U.S., is currently circulating in New York and California.
These states are influential when it comes to setting the stage for activity in other states. Take the California Consumer Privacy Act, for example. June Coleman, of counsel with Messer Strickler Ltd., told ACA International earlier this year that California’s law will likely serve as a model for other states, and already has. At least 25 states have laws that address data security practices in the private sector, according to the National Conference of State Legislatures.
“It’s expected that New York and California will pass the licensing legislation, so we’re trying to make sure it is reflective of the industry’s concerns,” said ACA’s Vice President of State and Government Affairs Andrew Madden.
Here's a look at the proposals:
California Debt Collection Licensing Act
Legislation from State Sen. Bob Wieckowski, D-Fremont, the Debt Collection Licensing Act (SB 908), would require a license from the California Department of Business Oversight (DBO) for debt collectors and debt buyers to collect on debts in the state, according to a news release from the senator’s office.
“This bill would enact the Debt Collection Licensing Act, which would provide for the licensure, regulation, and oversight of debt collectors by the commissioner, define terms for its purposes, and make other conforming changes,” according to the draft of SB 908. “The bill would prohibit a person from engaging in the business of collecting on a consumer debt in this state without a license and comply with reporting, examination, and other oversight by the commissioner.”
If enacted, Wieckowski’s bill would subject debt collection agencies and buyers in the state to licensing requirements for the first time since 1992 and require the DBO to respond to consumer complaints and enforce violations.
New York Governor Seeks to Expand State’s Licensing Authority
ACA has advocated for the industry for years when it comes to licensing legislation in New York. The proposal this year is coming directly from Gov. Andrew Cuomo as part of his 2020 State of the State agenda, and would require debt collectors to obtain a license from the New York Department of Financial Services (NYDFS).
The department adopted regulations last year, including new licensing requirements for student loan servicers, but Cuomo’s proposal would expand them to include “comprehensive oversight of debt collectors operating in New York,” according to a news release.
The NYDFS regulates debt collectors, but licenses are not required. The proposal defines a consumer debt collector as “any person who engages in a business, a principal purpose of which is the collection of consumer debts or of debt buying, or who regularly collects or attempts to collect, directly or indirectly, consumer debts owed or due to another person.”
Cuomo’s proposal includes:
- Requiring licensed collectors to submit information about their operations and/or be subject to supervisory examinations;
- Allowing the NYDFS to bring punitive administrative actions against debt collectors resulting in possible finds or loss of license; and
- Creating a tool for the public to search for a debt collector’s license information and credentials as one way to prevent fraudulent schemes against consumers to collect debt they do not owe.
If approved, New York’s bill would take effect on Oct. 1, 2020.
State Consumer Protection Agencies
While ACA is tracking those bills and the proposals in California and New York, proposals for state consumer protection agencies are also popping up this year.
California is leading the charge on creating a state consumer protection agency that mirrors the federal Consumer Financial Protection Bureau.
California Gov. Gavin Newsom proposed a “California Consumer Financial Protection Law” as part of the state’s 2020/21 proposed state budget.
Details on the proposed state bureau and law, ACA previously reported, currently include:
- The bureau would be a state version of the Consumer Financial Protection Bureau;
- It would be named the Department of Financial Protection and Innovation and revamp the state’s current Department of Business Oversight; and
- Focus on state licensing of financial institutions as well as greater consumer protection and oversight of financial practices.
“New York and California shape the rest of the country, so it’s important to advocate,” Madden said.
Register for ACA’s 2020 Washington Insights Conference for the opportunity to learn the latest about federal and state advocacy efforts, hear from members of Congress and regulators and talk with legislators on Capitol Hill May 19-21.
For more information on how the ACA Licensing staff can assist with your licensing needs, please contact us at [email protected] or call (952) 926-6547.
Related Content from ACA International:
California Governor Eyes Creating State Consumer Protection Bureau