Debt collection laws have been left mostly untouched since the 1970s, an era that had never heard of answering machines, never mind text messaging and email.

So when Attorney General Martha Coakley announced proposed amendments to the commonwealth’s debt collection statutes, local professionals welcomed the idea of change – but they didn’t like a lot of the details.

The updates are long overdue, debt collectors and attorneys told Banker & Tradesman, but Coakley’s statutes need some work. Not only do her proposed amendments not fully clear up some long-standing ambiguities that have developed in the decades since debt collection laws were first written, they also create some conflicts between federal law and the statutes, they said.

Current laws at both the Division of Banks and the federal level, in addition to consumer protection statutes administered through Coakley’s office, set rules for how collectors can communicate with debtors. For example, it is illegal to make harassing late-night phone calls or threats, or to shame the debtor by informing co-workers, friends or relatives about debts owed.

Interested parties have until June 20 to weigh in on Coakley’s proposals. A public hearing on the matter earlier this month drew mostly attorneys who work with either debt collectors or debtors.

A Widened Net

One of the most sweeping changes would be to include debt buyers under the state statute for the first time, a change that drew unqualified approval from several testifiers.

Debt buyers are companies that buy old debt from banks or credit card companies and use attorneys or third-party collectors to recoup the money. Stacie Stewart of Stewart Law Practice, which has locations in Medford and Pelham, said debt buyers frequently exploited the fact that they were not included in state statutes, flagrantly violating collection rules that traditional third-party collectors must follow.

Still, other experts say some of the new disclosures and definitions create problems.

Third-party debt collectors and attorneys work on behalf of all types of lenders, mostly banks and credit card companies, and fall under existing laws as they engage in recovering delinquent debt. But Coakley’s regulations are defined broadly, so much so that bankers or any other entity that issues debt would come under these regulations themselves, said Kenneth Wilson, president of the Massachusetts Creditors Bar Association and a partner with Needham-based Lustig, Glaser & Wilson.

That stems from Coakley’s revised definition of “debt.” The old statutes defined “debt,” for the regulations’ purposes, as a payment more than 30 days delinquent. The new regulation removes any mention of delinquency at all, broadening the definition to include any owed money. That will rope in a hodgepodge of service providers, such as dentists’ offices and lawn-care companies, that collect on money owed immediately after a service is rendered.

“She’s bringing in a tremendously expanded group of creditors, and imposing regulations on them that they were never subject to previously,” Wilson said, and added that it’s unlikely these businesses are aware of that possibility.

Potentially Misleading

Amie Breton, a spokeswoman for the attorney general’s office, didn’t respond to specific industry concerns, but said the office was appreciative of the feedback from the public hearing.

“As the regulatory process continues we will continue to try to balance consumer protections with concerns from the debt collection industry,” she said in an email to Banker & Tradesman.

In the meantime, third-party collectors such as Marlborough-based American Profit Recovery are puzzling through what the new amendments might mean for them. Owner Jeff DiMatteo said his business was under the regulation of the state’s Division of Banks, and was uncertain which regulations it should abide by. DiMatteo said it would be far easier to be carved out of the attorney general’s statutes and simply be governed by the Division of Banks and federal law. ACA International, the collection industry’s trade group, argued for such an exemption during the public hearing.

David Cherner, ACA president, told Banker & Tradesman that if the attorney general was uncomfortable exempting companies like DiMatteo’s, the statutes would need to be adjusted to eliminate differing directions.

The ACA was also concerned with another major change of Coakley’s – a new rule that collectors need to tell debtors if their debt has passed the statute of limitations. In Massachusetts, a debtor cannot be sued if their debt is more than six years old. But communicating this orally can be confusing, especially since consumers might not realize that while they can’t be taken to court over debt, it’s still befouling their credit reports. It might keep them from finding employment or getting other loans, Cherner said, so this attempt to inform them of their rights doesn’t tell the whole story.

“For an ordinary consumer, I think they’re going to be misled by that,” he said.