Protecting Personal Information: A Guide for Businesses

Published: December 28, 2007

Recent attention to data security breaches by the media and state legislatures reinforces the importance of protecting the personal information of a company’s customers, clients and employees.

This month, the Federal Trade Commission announced the release of a new interactive tutorial, “Protecting Personal Information: A Guide for Businesses,” to be used in conjunction with the information regarding security already available on the FTC's Web site. The FTC offers this tutorial in hopes of providing businesses with practical and no- or low-cost ways to maintain data security. 

There are numerous laws that require businesses to keep sensitive personal information secure, such as the Gramm-Leach-Bliley Act, the Fair Credit Reporting Act and the Federal Trade Commission Act. In addition, many state and local laws have been codified with the aim of protecting such information. The cost of a security breach could be extensive, including loss of customer's trust and/or violations of federal or state law. Thus, the FTC states it's “just plain good business” to safeguard sensitive personal information.

To read the full article, click here.

(© 2007 ACA International. All Rights Reserved. Reprinted with the express written permission of ACA International, the Trade Association of Credit and Collection Professionals.)

Massachusetts House Bill 1104 Causes Concern for Debt Buyers

the Paper

December 2007

Published: December 03, 2007

HB 1104 offers a new approach to regulating the actions of debt purchasers. The obligations placed on debt purchasers are very onerous and would encounter serious implementation problems.

Massachusetts House Bill 1104, which if passed would require debt purchasers to notify consumers in writing when their accounts are purchased, has continued to raise a number of issues that would affect the credit and collection industry.

HB 1104 offers a new approach to regulating the actions of debt purchasers. The obligations placed on debt purchasers are very onerous and would encounter serious implementation problems.

Section 2(a) requires that following the purchase of a debt the purchaser must, within 30 days, send the consumer a written notice of:

The dollar amount of the debt; The original creditor;  The date on which the debt purchaser bought the debt; and  The interest rate and penalty charges that may be charged on the debt.

This requirement is based on a flawed assumption; that the debt purchaser, or debt seller for that matter, is in possession of the correct address information for the consumers at issue. One of the most common reasons for debt portfolio sale is a lack of consumer contact information. Even the most diligent effort may not lead to the correct mailing address to reach a consumer.

Section 2(b) of the bill relies further on the improbable assumption of accurate location information by requiring the debt purchaser to send each consumer a monthly notice of the activity on the consumer's account stating:

The unpaid balance on the account; The amount of any payments on the account in the last 30 days; and  The amount of interest ad penalties charged on the account in the last 30 days.

The monthly notices required by Section 2(b) would operate in conflict with the Fair Debt Collection Practices Act (FDCPA). Under the FDCPA there are situations when a debt collector must cease communications with a consumer. For instance if the consumer requests verification, the debt collector cannot communicate with the consumer until verification is provided. Or if the consumer requests the debt collector cease communications, the debt collector is no longer allowed to communicate with the consumer. In both these instances, a monthly notice as required by this bill would violate the FDCPA.

Failure to fulfill the obligations of Section 2(a) or 2(b) would be an unfair business practice and subject the debt purchaser to the liability of a private right of action. There is no allowance in the bill for consumers the purchaser is unable to locate or contact. The result is strict liability before the debt purchaser has even attempted to collect the debt.