Bill Bartmann's sweeping national campaign to clean up the collection industry, a push many in the business consider highly ironic, has gone to new heights with the introduction Tuesday of the Bartmann Ethical Debt Collection Pratices Act (SB1430) in the Oklahoma State Senate.
According to a news release from CFS II, the Tulsa, Okla.-based collections business that Bartmann leads, "The filing of the Bartmann bill comes following a wave of scandals that illustrate the need for reform in the debt collection and debt buyer industries. Across the country, state legislatures and state attorneys general are cracking down on collection agencies who trick consumers into paying debt that is past the statute of limitation and who submit fraudulent documentation to support lawsuits against consumers."
Oklahoma Senator Gary Stanislawski filed the legislation. The Oklahoma AARP has endorsed the Bartmann Bill and will be promoting the endorsement to their 200,000 members across Oklahoma.
Bartmann believes it will serve as a model for states to reform debt buyer and collection laws and would curb abusive and harassing practices. The 10-point model outlines critical reform ideas, including:
1. Establish a program for state supervision and licensing of debt buyers and employees.
2. Ban collection of "zombie debt" -- debt that has passed the statute of limitation.
3. Require debt buyers to provide proof of the debt before filing litigation.
4. Require debt buyers to prove that consumers receive notice of litigation.
5. Require that debt buyers provide proof of the debt to consumers upon demand.
6. Authorize consumers to record phone calls from debt collectors.
7. Authorize the Attorney General to impose fines and prosecute violators.
8. Increase the penalties for debt buyers and debt collectors who violate the law.
9. Discourage the filing of frivolous lawsuits by awarding costs to the prevailing party.
10. Require that debt buyers, when transferring a debt, transfers all information about the consumer.
While leading collection organizations such as ACA International and DBA International champion the cause of keeping the industry free of abusive companies, many insiders generally scoff at the notion that Bartmann is pushing reform.
Bartmann's fast rise and fall in the debt-buying industry is an epic tale that many thought ended at least 12 years ago. In 1999, his revolutionary debt-buying firm, Commercial Financial Services (CFS), closed amid a huge fraud scandal,
CFS, which also was based in Tulsa, bid up the price of bad debt and monopolized forward-flow contracts with major banks in the late 1990s. Described at the time as either a maverick, a genius, a loose cannon or a kind and generous man (employees were treated, with their families, to lavish perks such as all-expense paid vacations), Bartmann was the first to securitize bad debt on Wall Street. This gave him access to huge amounts of capital that none of his competitors enjoyed, an approach that helped him quickly build his company into a $3 billion giant.
His peers and rivals questioned Bartmann’s methods from the start, arguing CFS would never be able to sustain the inflated rates he charged for bad debt. Bartmann paid up to twice as much for chargeoffs as most of his competitors. The banks that sold to him fell madly in love.
But CFS failed in 1999, putting 3,600 employees out of work. The circumstances surrounding the failure led to a federal grand jury indictment of Bartmann. Along with former CFS executive Jay Jones, he was accused of creating a shell company, Dimat Corp., to inflate the performance of CFS.
Bartmann was acquitted and jumped back into the debt-buying industry with CFS II two years ago. Jones pleaded guilty to a conspiracy charge and was sentenced to five years in prison. Federal Bureau of Prisons records show he was released in 2007.
Now, Bartmann argues that the explosive grown of debt buyers has led to increasingly more aggressive strategies.
According to Bartmann's release about the Oklahoma legislation, the bill honors his father, Louie, who "worked odd jobs in addition to his full-time job. His long hours led to a prolonged illness that stopped him from working. Faced with mounting medical bills, Louie Bartmann declared bankruptcy; yet he continued to be threatened by collectors who attacked his credibility and character. The litany of calls eventually wore Bartmann down, and after one particularly abusive call, he died from a massive heart attack."
"My father believed people should pay their bills which he himself tried valiantly to do," says Bartmann. "He believed debt collectors should be civil when attempting to collect the money owed to them. I advocated for the Bartmann Act to honor my father and his plight, and help prevent more people from becoming victims of criminal collectors."
Bartmann launched a 50-state campaign, "Stop These Criminals," nearly one year ago. Bartmann has presented his recommendations for reducing collection abuse to more than two dozen state Attorneys General, members of Congress and federal consumer protection agencies.
Stanislawski's office did not immediately return calls for comment.
Collections & Credit Risk is interested to hear your views about the Bartmann Ethical Debt Collection Practices Act. Contact Darren Waggoner at 312-777-1379 or email@example.com.