In recent years, a number of U.S. states have crafted legislation intended to make sure that debt collectors are doing a thorough job of properly identifying debtors and proving that a debt is actually owed. But now these collections folks are fighting these laws because they apparently make debt collecting a less profitable venture.

States like North Carolina, Massachusetts, Florida, California and Oregon each now have some sort of new laws intended to curb cases of mistaken identity or collection of already paid debts. So now the debt collection business, which had revenues of $17 billion last year, has hired legal eagles like the former attorney general of Georgia to fight against these regulations.

“We don’t have lobbyists in 50 states but we do have internal resources that are talking, certainly, to all the large states,” says the CEO of Portfolio Recovery Associates, Inc., the largest publicly traded debt collector.

Bloomberg explains why these new rules might be upsetting Portfolio Recovery and its ilk:

Portfolio Recovery Associates filed 6,709 lawsuits in 2009, before the law went into effect. In 2010, it filed 819, according to the company. Fredrickson, the firm’s chief executive, said that in addition to raising documentation requirements, the law limits flexibility in offering settlements to consumers who can pay a percentage of the debt.

A lawyer for debt collecting trade group DBA International says these new laws go too far by asking collections agencies to provide supporting documentation that may not exist:
“You can’t require that of a debt buyer or debt collector that which a creditor does not collect.”

And isn’t anyone thinking about the mom-and-pop debt collectors?

“Companies of size and scale will be able to work with regulators to create meaningful legislation that, unfortunately, will probably drive out smaller players,” said the CFO of debt collector Encore Capital.

On the opposite side of this fight, the executive director of Economic Fairness Oregon says she didn’t expect to see so much resistance to these laws. “I was surprised at the degree of lobbying to stop this… We thought we had a consensus bill.”

Debt Collectors Lobby to Block Tougher Rules [Bloomberg]

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