2008 June State Legislative Update
Published: June 18, 2008
This month features details on recently passed bills in Alaska, Colorado, Connecticut, Iowa and South Carolina. It also includes information on pending legislation in Alabama, New Jersey, New York and North Carolina.

Through Thursday, June 12, 2008

Passed Legislation

Alaska House Bill 65 requires any agency or person that conducts business and possesses, acquires, maintains or handles computerized data that contains the personal information of a state resident to disclose any breach of security of the data to any resident whose personal information has been acquired by an unauthorized person. The bill is effective immediately upon final passage.

Colorado House Bill 1240 requires a collection agency to notify a consumer, in an initial communication, of the right to discontinue further communications except as authorized by law, requires that the agency maintain an office in this state as well as a toll-free telephone number, and eliminates the collections manager's examination as a requirement to becoming a licensed debt collector. The bill is effective July 1, 2008.

Connecticut House Bill 5658 defines personal information as information capable of being associated with a particular individual through one or more identifiers, including, but not limited to, a Social Security number, a driver's license number, a state identification card number, a credit or debit card number, a passport number, an alien registration number or a health insurance identification number, and does not include publicly available information. The bill requires any person in possession of personal information of another person to safeguard the data, computer files and documents containing the information from misuse by third parties, and to destroy all data prior to disposal. This bill is effective October 1, 2008.

Iowa Senate File 2428 provides the Judicial Branch may contract with a private collection designee for the collection of court debt 60 days after the court debt in a case is deemed delinquent; the contract shall provide for a collection fee equal to 25% of the amount of the court debt in a case deemed delinquent. This bill is effective July 1, 2008.

South Carolina House Bill 3816 changes the maximum value of properties exempt from attachment, levy and sale under court order as a result of bankruptcy proceedings. The bill also provides for future annual adjustment of exempt properties to be determined by the Southeastern Consumer Price Index. The bill is effective immediately.

Current Legislation

Alabama Assembly Bill 90A requires any agency or person that conducts business and possesses, acquires, maintains or handles computerized data that contains the personal information to disclose any breach of security of the data to any resident whose personal information has been acquired by an unauthorized person.

Bill introduced: May 27, 2008
Referred to: Senate Governmental Affairs Committee

A hearing was held and the bill passed committee May 28, 2008.

New Jersey Senate Bill 1927 prohibits credit card issuers from taking any debt collection action against a parent of a student to whom a credit card has been issued, unless the parent has agreed in writing to be liable for the student's debt.

Bill introduced: June 5, 2008
Referred to: Senate Commerce Committee

New York Assembly Bill 11497 extends the tax of up to 4% on collection services in the city of New York until December 31, 2011.

Bill introduced: June 6, 2008
Referred to: NY Assembly Rules Committee

North Carolina Senate Bill 1714 authorizes the Legislative Research Commission to study improvements in consumer credit reporting practices, including the means to provide that credit histories reported by businesses and other credit reporting entities that have fewer than 500 customers, or accounts are included as part of customers' consumer credit reports or credit histories. In its study, the Commission may consider all of the following:
(1) The reasons businesses and other credit reporting entities that have fewer than 500 customers or accounts are not currently included as part of customers' consumer credit reports or credit histories.
(2) The consequences of businesses and other credit reporting entities that have fewer than 500 customers or accounts not being included as part of customers' consumer credit reports or credit histories.
(3) The number of consumers that would benefit from the reporting of additional payment information and whether they fall into any demographic groups.
(4) The desirability and feasibility of including every business as part of its customers' consumer credit reports.
(5) The estimated cost of including every business as part of its customers' consumer credit reports and how to pay for the cost, if any.
(6) Any other issues the Commission considers relevant to this topic.

The Legislative Research Commission will make its final report to the 2009 General Assembly.

Bill introduced: May 20, 2008

North Carolina Senate Bill 1948 states Duplin County may treat the amount due for any fee or debt that the county has authority to levy or collect as if it were a tax due to the county and may proceed to collect the amount due through the use of attachment and garnishment proceedings to garnish the disposable income of any person who owes the county. For these purposes, the term "disposable income" means the part of the compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus or otherwise which remains after the deduction of any amounts required by law to be withheld.

Bill introduced: May 22, 2008

CFOs Take Action as Economic Optimism Sinks
Published: August 8, 2008
Chief financial officers cite sagging economic growth and rising oil costs as their top concerns.

American company CFOs' optimism toward the U.S. economy continued to sink to an all-time low in the second quarter, according to a recent survey of CFOs conducted by Financial Executives International and Baruch College's Zicklin School of Business.

The CFO Optimism Index for the U.S. economy was 48.92 for the quarter, plummeting even further past last quarter (54.29), which was an all-time low for the survey. The growth of the U.S. economy was identified to be the principal CFO worry for the second half of 2008 (48 percent). Rising oil costs (35 percent), consumer spending/demand (29 percent) and inflation (25 percent) were also top concerns.

CFOs' outlook toward their own companies, however, remained relatively stable this quarter, as the Optimism Index for CFOs' own companies declined only 1.06 points from last quarter's all-time low to 67.06. CFOs cited top business challenges for the remainder of the year as expense control and competition (30 percent and 25 percent respectively), while controlling labor costs was low on the list (1 percent). While availability of capital continues to receive significant attention in the financial press, few CFOs identified this as a top concern (10 percent).

In the next 12 months these CFOs continue to plan increases in technology spending by an average of 4 percent and other capital spending by an average of 8 percent. They expect modest hiring increases of one percent but believe that they will be able to increase product prices by 5 percent.

FTC Associate Director Offers Collection Industry Predictions
Published: July 28, 2008
Peggy Twohig addresses ACA Convention attendees.

Speaking in Friday morning's ACA Convention general session, Federal Trade Commission (FTC) Division of Financial Practices Associate Director Peggy Twohig offered five predictions about the credit and collection industry:

1. Consumer financial issues will be in the spotlight like never before. “The spotlight will move from just mortgages to other areas, including credit and collections,” Twohig said.

2. The FTC will be shining the spotlight on the problems in the credit and collection industry along with possible solutions. Much of this will be the result of last October's FTC Debt Collection Workshop.

3. Data integrity and verification will be a major focus of FTC policy and enforcement. “Debt collectors should have access to information to ensure they are contacting the correct consumer,” Twohig said.

4. Record-setting enforcement activity is on the horizon. In addition to holding companies responsible for their actions, the FTC will also seek to hold individuals responsible, according to Twohig.

5. The more the credit and collection industry can police itself, the less need there will be for legislative solutions. “To be effective, [self-regulation] has to have teeth, which can be a challenge,” she said. “I can't emphasize enough how much self-regulation can provide relief."

FCRA Amended: Expiration Dates and Clarification of Willful Noncompliance
Published: July 17, 2008
Amendment makes technical corrections to the definition of “willful noncompliance” regarding violations involving printing of a credit or debit card’s expiration date on a consumer’s receipt.

On June 3, 2008, President Bush signed H.R. 4008, the Credit and Debit Card Receipt Clarification Act of 2007, into law. This bill amended the Fair Credit Reporting Act (FCRA) by making technical corrections to the definition of “willful noncompliance” regarding violations involving the printing of a credit or debit card's expiration date on a consumer's receipt. Specifically, H.R. 4008 added the following new subsection to Section 616 [Section 1681n] of the FCRA:

(d) Clarification of Willful Noncompliance—For the purposes of this section, any person who printed an expiration date on any receipt provided to a consumer cardholder at a point of sale or transaction between December 4, 2004, and the date of the enactment of this subsection but otherwise complied with the requirements of Section 605(g) for such receipt shall not be in willful noncompliance with Section 605(g) by reason of printing such expiration date on the receipt.

Section 605(g) [Section 1681c(g)] of the FCRA prohibits parties accepting credit or debit cards from printing more than the last five digits of the card number in the receipt and also prohibits such parties from printing the card's expiration date on any receipt provided to the card holder at the point-of-sale or transaction. Many merchants believed this requirement would be satisfied by only truncating the account number down to the last five digits, however, hundreds of lawsuits were subsequently filed alleging the failure to remove the expiration date was a willful violation of the FCRA even when the account number was properly truncated.

In an effort to protect consumers while simultaneously limiting abusive lawsuits, the amendment to the FCRA holds any person who included an expiration date on a receipt provided to the consumer between Dec. 4, 2004, and June 3, 2008, is not in willful noncompliance with the FCRA if the account number is truncated as required by the FCRA. Thus, for alleged violations of Section 605(g) occurring between Dec. 4, 2004, and June 3, 2008, the amendment to the FCRA states such an alleged violation will not be deemed willful noncompliance regardless of when the action is filed.

However, failure to comply with Section 605(g) on or after June 4, 2008 will be deemed willful noncompliance with the FCRA. In order to comply with Section 605(g), parties must truncate the credit or debit card number and omit the expiration date on a receipt provided to the cardholder.

View the entire text of H.R. 4008.

Home Price Decline Continues in First Quarter of 2008
Published: July 3, 2008
The decline in the S&P/Case-Shiller U.S. National Home Price Index recorded a 14.1 percent decline in the first quarter of 2008 versus the first quarter of 2007, the largest in the series 20-year history.

Broad-based declines in the price of existing single-family homes across the United States continued to be a trend in the first quarter of 2008, according to data measured through March 2008 released by Standard & Poor in its S&P/Case-Shiller Home Price Indices, May 27, 2008.

The decline in the S&P/Case-Shiller U.S. National Home Price Index—which covers all nine U.S. census divisions—reached well into double digits, recording a 14.1 percent decline in the first quarter of 2008 versus the first quarter of 2007, the largest in the series 20-year history. As a comparison, during the 1990/91 housing recession the annual rate bottomed at -2.8 percent. The 10-City and 20-City Composites also set new records, with annual declines of -15.3 percent and -14.4 percent, respectively.

“The steep downturn in residential real estate continues,” says David M. Blitzer, chairman of the index committee at Standard & Poor's. “There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path, with 19 of the 20 metro areas reporting annual declines, and six of those now at negative rates exceeding -20 percent. Looking closely at these returns, you can see that 15 of the metro areas are also reporting record lows, and eleven are in double digit decline, with Chicago being the latest metro area to join these ranks. The monthly data paints a similar picture, with 18 of the metro areas reporting at least seven consecutive months of negative returns. For the first time in as many months, we finally saw monthly price appreciation in two of the metro areas – Charlotte was up 0.2 percent in March over February, and Dallas was up 1.1 percent.”

Las Vegas remained the weakest market, reporting an annual decline of -25.9 percent, followed by Miami and Phoenix at -24.6 percent and -23.0 percent, respectively. Charlotte is the only market with appreciation over the past year, returning +0.8 percent.

In March, half of the MSAs and both composites fell by more than 2 percent over February. Miami was the worst performer, returning -4.5 percent. Dallas and Charlotte were the only two MSAs to provide positive returns for the month. Overall, the markets that grew the most during the recent real estate boom are the ones that are leading the current decline.

This article is provided as a service of ACA International's Asset Buyers Division..

Consumer Confidence Index Declines in June
Published: July 11, 2008
Following May's decline, the index dipped to its fifth lowest reading ever..

The Conference Board Consumer Confidence Index, which had declined in May, declined even further in June, the Conference Board reported in its most recent monthly survey. The index now stands at 50.4 (1985=100), down from 58.1 in May. The Present Situation Index decreased to 64.5 from 74.2. The Expectations Index declined to 41.0 from 47.3 in May.

"This month's Consumer Confidence Index is the fifth lowest reading ever. Consumers' assessment of present-day conditions continues to grow more negative and suggests the economy remains stuck in low gear. Looking ahead, consumers' economic outlook is so bleak that the Expectations Index has reached a new all-time low. Perhaps the silver lining to this otherwise dismal report is that Consumer Confidence may be nearing a bottom," said Lynn Franco, director of The Conference Board Consumer Research Center.

Consumers' assessment of present conditions grew dimmer in June. Those claiming business conditions are "bad" increased to 32.5 percent from 29.7 percent, while those claiming business conditions are "good" declined to 11.5 percent from 13.0 percent last month. Consumers' appraisal of the job market was also more pessimistic. Those saying jobs are "hard to get" increased to 30.5 percent from 28.3 percent in May. Those claiming jobs are "plentiful" declined to 14.1 percent from 16.1 percent.

Consumers' short-term expectations deteriorated further in June. Those expecting business conditions to worsen over the next six months rose to 33.9 percent from 32.9 percent, while those anticipating business conditions to improve decreased to 8.8 percent from 10.6 percent in May.

The outlook for the labor market was also more pessimistic. The percent of consumers expecting fewer jobs in the months ahead increased to 35.5 percent from 32.3 percent, while those anticipating more jobs declined to 8.0 percent from 9.0 percent. The proportion of consumers expecting their incomes to increase declined to 12.3 percent from 14.1 percent.

For more information, please visit the Conference Board Web site..