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Agreements for Collection Agency Services with <br />PennCredit & American Capital Enterprises, Inc. <br />May 16, 2017 <br />Page 2 <br />The Federal Fair Credit Reporting Act (FCRA) sets guidelines for one of the primary methods the <br />City's principal collection agency employs, which includes reporting outstanding debt to credit <br />reporting agencies. Effective September 2016, there are two types of debt categories under the <br />FCRA: 1) "Permissible Debt" — such as, unpaid utility billings, unpaid paramedic billings, and any <br />unpaid sums relating to City services which were electively sought or contracted for from the City; <br />and 2) "Prohibited Debt" — such as, taxes, licensing and permit fees, parking citations, towing & <br />impound fees /costs, administrative code violations, and damage to City property. Permissible <br />debts may continue to be reported to credit reporting agencies; prohibited debts may not. <br />Prior to June 30, 2014, the City utilized American Capital Enterprises, Inc. as its assigned <br />collection agency. On March 11, 2014, staff issued an RFP for said services and PennCredit <br />was most responsive to the evaluation criteria and to the City's collection agency service <br />requirements. As such, PennCredit was selected and was assigned as the City's principal <br />collection agency effective July 1, 2014 through June 30, 2016 and was authorized to collect on <br />outstanding debt placed for collection after July 1, 2014. The City Council also authorized staff to <br />award a secondary agreement to American Capital Enterprises, Inc. to continue collecting on <br />existing outstanding debt balances prior to July 1, 2014, due to their knowledge regarding the <br />nature and collection status of previously placed debt. <br />Given the recent regulations regarding reportable debt, and the likelihood that pending judicial <br />interpretations of these regulations will be issued within two years, staff is recommending <br />extending amended agreements with both PennCredit and American Capital Enterprises, Inc. for <br />a two -year period as follows: <br />1. PennCredit will collect on "permissible debt" reportable to credit reporting <br />agencies under the FCRA commencing July 1, 2017, and will continue to collect <br />general outstanding debt balances previously placed for collection between July <br />1, 2014 and June 30, 2017; provided, however, that outstanding debt balances <br />placed between September 1, 2016 and June 30, 2017 which constitute <br />prohibited debt shall not be reportable to credit reporting agencies in accordance <br />with the FCRA. <br />2. American Capital Enterprises Inc. will utilize other legal methods to collect on <br />"prohibited debt "; i.e., debt that cannot be reported to credit reporting agencies <br />under the FRCA commencing July 1, 2017, and in addition will continue to collect <br />outstanding debt balances placed prior to July 1, 2014. <br />STRATEGIC PLAN ALIGNMENT <br />Approval of this item supports the City's efforts to meet Goal #4 - City Financial Stability, <br />Objective 1 (maintain a stable, efficient and transparent financial environment). <br />25D -2 <br />