New York Bill would Require Collector Licensing

Legislation requiring collection agencies to be licensed to collect in the state of New York passed the New York state assembly Friday, and could mean up to three different collections licenses for agencies looking to collect in the state.

New York is one of 16 states that currently do not require collection agencies to be licensed on a state level. The cities of Buffalo and New York City, however, do require agencies to be licensed locally. In effect, agencies looking to collect in New York State would need a state license in addition to licenses in New York City and Buffalo if an agency has accounts in those two cities. The bill, A1865, was delivered to the state Senate and referred to committee on Friday.

Queens Assemblyman Michael N. Gianaris, a member of the Committee on Consumer Affairs and Protections, proposed the legislative package of five bills aimed at licensing collection agencies in early January. The proposed reform comes amid a heightened focus on consumer outcry over what is alleged to be abusive and/or illegal debt collection tactics.

Gianaris’s proposal is complicated for New York collectors, and agencies looking to collect in New York, according to Eric Najork, legislative chairman of the New York State Collectors Association and Executive Vice President of Collection Bureau of Hudson Valley. “We’re already regulated by the Fair Debt Collection Practices Act. We’re already regulated by Fair Credit Reporting Act. There are already plenty of regulations on the book,” Najork told insideARM.com.

Rozanne Andersen, General Counsel for ACA International, agrees. “We find this type of licensure to be redundant,” Andersen told insideARM.com, “since federal law already adequately addresses these types of consumer concerns.”

Gianaris’s proposal can be traced back to a report from the FTC alleging over 69,000 complaints filed against collection agencies. “There’s a difference between a dispute and a complaint, though,” Najork points out. The FTC number is raw data, and the FTC points out in its report that it has “not [verified] the consumer complaints it receives.”

“I would caution any governmental body not to base any legislation effecting collection agencies on the FTC’s numbers” until the ACA releases its study on the FTC’s complaint data, Andersen said. “Speaking preliminarily, we are finding that there is an increase in the need for consumers to be educated about debt and debt collection – but not an increase in law violations.”

“If there was a state license that would replace both the New York City license requirement and the Buffalo license requirement, I think agencies would be for it,” Najork said. “It would make regulations in the state more uniform, which would make compliance easier. This proposal makes it harder for everyone – not just New York agencies, but anyone trying to collect in the state.”