New York Licensing Proposal Dead in the Water for Now

A proposal in the New York State legislature that would have required collection agencies in the state to be licensed died when the current legislative session ended on Sunday.

A spokesman for the proposal’s sponsor, Assemblyman Michael N. Gianaris, says Gianaris plans to reintroduce the bill proposal when the legislature meets again next January.

The New York State Assembly on Friday passed a package of bills which would require collectors to be licensed if they are attempting to collect in the state.  The bills were sent on to the state’s Senate where they were assigned to committee for scheduling and possible hearings.

However, that is the last anyone will see of the bills since the end of the Senate’s legislative session on June 24, Lynn E. Goldberg, President of the New York State Collectors Association told insideARM.com in an e-mail.

“Most of the bills that passed [the Assembly] are one-house bills without companion bills in the other house,” Goldberg writes. Since the bills were submitted as stand-alones, rather than as riders on other bills, Goldberg says that “[no] proposed New York State collection agency bills will become law in 2007.”

In a phone interview, Goldberg said, “The Assembly tends to instigate anti-collection industry laws in New York, and the Senate ends up shelving them.”

Since the Senate didn’t act on the bills during its current session, the proposal won’t be heard until next year.

Assemblyman Michael N. Gianaris introduced the measure that would require collection agencies to be licensed and grant broader powers to consumers in disputes with collection agencies, in response to an increase in consumer complaints in New York, according to his spokesperson.

Gianaris cited increased complaints in New York State — relying on additional data from the Federal Trade Commission — as the main impetus for the license proposals.

This year, the FTC released its Annual Report 2006, which reported that it had received 69,204 complaints against debt collection agencies. The ARM industry, specifically ACA International, has contended that the complaints represent unsubstantiated raw data; and even the FTC itself has written in each year’s Annual Report that the Commission does not verify the consumer complaints it receives.  ACA is currently conducting a statistical review, with the help of PricewaterhouseCoopers, of the raw data from the complaints.

Preliminary findings from this review show that, though there has been an increase in complaints filed against collection agencies, there does not appear to be an increase in law violations.

Though state licensure proposals are doomed this year, Gianaris remains optimistic the measure will have more success next year, his spokesperson says.

Both Buffalo and New York City already license collection agencies, and its unlikely they will give up those requirements in lieu of a state-wide license, says Goldberg. “It’s a significant source of revenue” for the two cities, he says.

Which is what Stephen Moeller, Director of Corporate Compliance for American Coradius, Inc., wrote in an e-mail to insideARM.com: “While I agree that eliminating Buffalo and New York City licensing would be great, it won’t happen. In Buffalo alone, the city houses so many agencies, buyers, and attorneys that they can’t live without the revenue stream. The city is being run by a Control Board; do you think they will eliminate licensing?”