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Consumer protection plan leaves Emanuel facing rare opposition

Updated: February 11, 2013 7:29AM

Mayor Rahm Emanuel’s plan to protect consumers against financial scams ran into a buzzsaw of opposition Wednesday from retailers and debt collectors fearful they could lose their licenses for mere technical violations.

The City Council’s Committee on License and Consumer Protection — under pressure from a hearing room full of critics led by the Illinois Retail Merchants Association — put off a vote on Emanuel’s plan to license and regulate debt collectors. The critics essentially accused the mayor of attacking a fly with a sledgehammer and dictating an ordinance that goes too far without consulting impacted parties.

“It’s a lot broader than debt collection. If you have a wage violation anywhere in the last five years — for not getting checks out on time, not paying vacation pay on time or underpaying — they can take your license away or deny you a license,” said David Vite, president of the merchants association.

“Let’s say I have 6,000 stores. I could have made a mistake in Idaho. Does that mean I should lose my license in Chicago? That doesn’t make any sense. It’ll make Chicago a less desirable place to do business and make an investment.”

Debt collectors also accused the mayor of going too far in his crackdown against an industry that’s already heavily regulated by the state and federal governments.

“If you send out a letter to a consumer and inadvertently had the wrong font [print] size, you could lose your license for something that was innocent and done to a consumer in Texas or California,” said Todd J. Lansky, president of the Resurgence Legal Group, a debt-buying company based in Chicago.

“Any innocent clerical error — something that’s not necessarily intentional to harm a consumer but a violation done by mistake — you can essentially lose your license for four years.”

Irwin Bernstein, a board member of the Illinois Collectors Association, added, “If someone were to call up a debtor and claim to be a police officer, that’s a violation. That person should be punished. We all agree with that.”

But, he said, “Industry does not want bad people. We want to get the bad apples out. The ordinance proposed doesn’t address bad apples. It puts good people out of business.”

The mayor’s office responded to the opposition saying, “Both Chairman [Emma] Mitts and the mayor are committed to promoting a thriving business environment while protecting responsible, working families from predatory enterprises. Chairman Mitts asked for a few additional days to review the ordinance before passing the legislation in her committee and moving it to the full council next week.”

The debt collection crackdown was part of a three-pronged plan to protect Chicago consumers from financial scams tied to payday and small-dollar loans, reverse mortgages and home-repair scams.

Emanuel also introduced a second ordinance that would use new zoning regulations to limit the proliferation of payday lenders, auto-title loan stores and other financial services.

His third ordinance would give the city’s Department of Business Affairs and Consumer Protection the “teeth” Emanuel said it needs to take action against businesses convicted of violating state and federal consumer protection acts.

On the same day that he unveiled the legislative crackdown, the mayor announced that Chicago would become the nation’s first major city to forge an information-sharing agreement with the U.S. Consumer Financial Protection Bureau. The partnership will allow the feds to move in quickly when patterns of financial fraud arise.

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