Bill would permit secret recordings of debt collectors

CARSON CITY -- Collection agencies are using abusive phone tactics more frequently, and the consumer's best defense might be to secretly record the abuse, a panel of Nevada lawmakers was told Friday.

Assembly Bill 127 would allow Nevada consumers to record phone conversations initiated by debt collection agencies without notifying the agency.

The Nevada Supreme Court ruled in 1998 that recording telephone conversations without the consent of both parties is barred under current state law.

Without a way to prove their case, consumers will continue to be abused by debt collectors, said Assemblywoman Debbie Smith, D-Sparks, who sponsored the bill.

She cited a Federal Trade Commission report that said more than 69,000 complaints were lodged nationwide against third-party debt collectors last year, more than any other industry.

"I realize this is a departure from the way business is conducted in Nevada," Smith told the Senate Judiciary Committee. "After becoming aware of the amount of abuse is taking place, I have come to the conclusion that additional consumer protection measures in this area are warranted."

Debt collectors disputed the idea that their industry is rife with abuse, saying that the FTC numbers, which include all complaints of abuse, not just those involving telephones, could be rising simply because more consumers are in debt.

AB127 would unfairly single out the industry, allowing deceptive debtors to conduct secret "sting operations" against debt collectors, said David Stone, who owns a Las Vegas debt collection agency.

"This bill gives desperate or creative debtors license to record a conversation, manipulate it, and then sue the agency based on that manipulated recording," Stone said.

Mitch Gliner, a Las Vegas lawyer who has filed more than 500 lawsuits against debt collectors for telephone abuse, said that when abuses do occur, debt collectors are loathe to admit it.

"The abuse that's been alleged has run the course from simple harassment to claims of racial insult, deportation, threats to deprive single mothers of their children, incarceration, these types of things," Gliner said.

John Sande IV, a lobbyist for an association of Nevada debt collectors, pointed out that the industry is tightly regulated by federal law. If Nevada wants to change the law on recording phone conversations, it should regulate all conversations equally, he added.

The bill passed the Democrat-controlled Assembly by a mostly party-line vote of 28-14, with all but one Republican voting against the bill.

The Republican-controlled Senate committee asked to see research on similar laws in other states. Smith said there are 38 such laws, but debt collectors disputed that.