As the frontrunners in Florida's gubernatorial race debate who should regulate rogue collection agencies - each arguing the other failed to police the industry as required by their current political roles - the collection industry will closely track developments in the race leading up to the November election.
For now, industry insiders are calling recent exchanges between the two candidates nothing more than political posturing. "Rogue" is the operative word.
"The reality for the majority of agencies is that it's business as usual. We all want the bad agencies banned from doing business," Anna Inglett, owner of PHG Financial Recovery Services, a Tampa, Fla. collection agency, tells Collections & Credit Risk. PHG, a 10-year-old firm, is a member of the Florida Collectors Association and ACA International, which represents the nation's collection agencies.
In the race to replace Gov. Charlie Crist, Alex Sink, a Democrat and currently Florida's chief financial officer, and state Attorney General Bill McCollum, a Republican, are the leading candidates. Details of their debate concerning regulating collections were published yesterday,
Political Showdown Turns To Collection Industry Crackdown, Jan. 25.
The issue of regulating agencies became an early key in the race after it was widely reported last October that no investigations had been opened into illegal collection activities by either Sink's or McCollum’s offices, the two agencies presumed to be in charge of regulating such activities.
At that time, the Office of Financial Regulation - which licenses in-state collectors - had received more than 1,400 complaints in the past two years but had not fined or suspended anyone. That office answers to Sink, McCollum, Agriculture Commissioner Charlie Bronson and Gov. Crist in their roles on the state's Financial Services Commission.
Sink says the existing law regulating collectors was crafted by collection industry lobbyists and is too weak. As an example, she says the law requires five violations within one year before the state can act against an agency. Complaints must be written and notarized - meaning phone, e-mail and regular mail complaints are not enough.
She wants to empower the state to go after collectors after a single complaint, gain access to their books and records and make harassment of debtors a felony punishable by a $5,000 fine for each violation. She wants legislators to give the Department of Financial Services - under her office - the power to regulate and punish collectors instead of leaving that job to an agency overseen by the full Florida Cabinet. Sink promised to offer a new plan at a meeting today with Gov. Crist and the state cabinet.
McCollum also wants to extend his power to go after collectors. His office suggested Sink's proposal would weaken the attorney general's ability to protect consumers. McCollum wants lawmakers to define certain collection practices as violations of Florida's Deceptive and Unfair Trade Practices Act. Doing so would make it easier for the attorney general to pursue cases without first having to prove that certain actions, such as posing as a detective, violate the act.
The collection industry widely supports measures to punish agencies that, at times blatantly, violate existing laws such as the Fair Debt Collection Practices Act (FDCPA), but insiders have been quick to raise concerns that lawmakers err on the side of unfairly scrutinizing collectors in the guise of protecting consumers.
"[Tracking developments in the Florida race] is critical to an industry that is already heavily regulated and scrutinized. To punish an entire industry for a few bad apples is not politically or economically wise," says Inglett. "We have to keep an eye on how it plays out.
"The professional and compliant agencies have worked very hard to be viewed as working with consumers to help them out of their debt problems," she adds. "[We] should be asked to help in getting rid of those rogue agencies."
On the federal level, a proposed Consumer Financial Protection Agency (CFPA) could supplant the Federal Trade Commission as the primary regulator for collection agencies. Language creating such an agency is included in both the House and Senate version of financial reform legislation. ACA opposes any measure to include collection agencies and debt buyers under CFPA, according to Rozanne Andersen, chief executive at ACA.
The FTC reports it receives more complaints about collectors than any other industry. Complaints also are filed directly with attorneys general in all 50 states, which can open state investigations. Of an estimated 45,000 complaints received by the FTC in 2009, the agency opened one investigation.
"I think that says it all. If only one FDCPA violation made it up the channel, do we really need another layer of government?" says Inglett.
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