Collectors Face New Law in Colorado, and NY Considers Debtor's Bill of Rights

Two states have advanced legislation directly impacting debt collection activity within their borders in the past week. New York’s General Assembly passed a package of bills that would allow for more consumer disclosure of the state’s FDCPA laws, establish an administrative procedure for violations, and curtail seizure of certain assets to pay off debts. Colorado signed a bill into law that impacts initial consumer communication and licensing requirements for collectors in the state.

The bills in New York are sponsored by New York City-area Democrat Audrey Pheffer, chair of the Assembly Consumer Affairs Committee.

According to The Queens Gazette, one of the bills would require collectors to disclose a new "Debtor’s Bill of Rights" to consumers on their initial communication. The bill create a private right of action for consumers that are victims of improper debt collection tactics and require greater disclosure of the protections provided by the New York Fair Debt Collection Practices Act.

Another Pheffer bill would target certain assets as exempt from garnishment or seizure by private collectors, including Social Security payments and other public assistance money. Collectors working in the state would be required to be licensed by the New York Department of State.

The bills still must be passed by the state’s Senate and signed into law by Governor David Patterson.

On June 2, Colorado Governor Bill Ritter signed a bill into law that “makes significant changes to the Colorado collection regulations,” according to ARM industry trade group ACA International.

The law specifically lays out new language that must be included in the initial communication with a debtor. Initial collection letters must include the following statement: “A consumer has the right to request in writing that a debt collector or collection agency cease further communication with the consumer. A written request to cease communication will not prohibit the debt collector or collection agency from taking any other action authorized by law to collect the debt.” If the language is printed on the back of the letter, collection agencies must inform debtors of the fact.

The bill also requires a collection agency in Colorado to maintain a toll free number. A collection agency must also employ a collection manager, but that person is no longer required to pass a written exam for licensing purposes.