On the 6th day of June 2001 the National Council of Child Support Directors (NCCSD) resolves that:
The National Council of Child Support Directors strongly opposes any proposal to allow private access to child support enforcement information and remedies. Congress should reject any federal legislation to allow private access to child support data and enforcement remedies through means other than programs operated under Title IV-D of the Social Security Act of 1975, as amended.
Currently, access to most child support enforcement remedies and information provided by Congress is limited to Title IV-D programs. The decisions to limit access to these tools and remedies were not made lightly by Congress, but were made with the explicit intention that while the tools would assist in obtaining child support for children, the information obtained through these means must be safeguarded and the privacy of citizens must be protected. Most of the information in these databases is not available to other federal agencies.
Several bills have been introduced in Congress in the past two years to provide the IV-D enforcement tools and remedies to private attorneys and private child support collection agencies. NCCSD believes that such an action would not be in the best interest of the general public, private citizens, or child support obligors and obligees. These bills would provide massive amounts of sensitive personal data and enforcement remedies, such as passport denial, credit bureau reporting, income tax and unemployment compensation interception, and Financial Institution Data Match to private attorneys and private child support collection agencies with few safeguards for the data or penalties for unauthorized disclosure or misuse.
Unlike private collectors that pursue consumer debt, these companies are not regulated under the Fair Debt Collection Practices Act, 15 U.S.C. 1692. In addition, unlike private companies performing contractual work for IV-D agencies, they are not subject to state oversight and controls. Information recently received from the Center for Law and Social Policy indicated that only 3 states had state laws or case law regulating these practices. While two additional states have recently passed regulating legislation, the majority of state jurisdictions do not regulate or oversee the practices of these agencies.
The IV-D agency is obliged under federal and State laws and regulations to represent the best interests of the child who is the intended beneficiary of the support obligation to be established or enforced. Federal enforcement remedies are already available to custodial parties at no cost, or a minimal fee of $25 simply by applying for title IV-D services. It is not in the best interest of children to send child support monies collected by the IV-D agency directly to private collection agencies which will keep a substantial percentage of the monies. Congress provided these remedies to the IV-D agencies so that the services could be provided at little cost to custodial parties, not for the purpose of allowing private child support collection agencies to keep a portion of the collections.
As amplified in the balance of this paper, NCCSD has concluded, that the practices of some private child support collection agencies tend to deprive custodial parents and their children of monies that should come to them - often enriching the collection agencies on the basis of collections in which they had no role. Additionally, unwarranted financial, systemic and labor burdens are placed on the states to accommodate these practices, diverting scarce resources from higher priority activities in support of primary customers.
* The IV-D agency is required to ensure that the custodial party and the children have benefit of the support paid by the noncustodial party. The IV-D agency is not a party to, and therefore not bound by, any agreement made between the custodial parent and a private agency.
* Federal and State law and regulations do not require IV-D agencies to send child support collections to anyone other than custodial parents. Yet, some private agencies attempt to camouflage their mandate of payment redirection from IV-D agencies as a change of address. This seemingly routine administrative change is indicative of the questionable nature of the private agencies' practices.
* To ensure that the custodial party does receive the child support, Colorado, Connecticut, South Carolina, Utah, Virginia, Oregon and Massachusetts are denying requests to redirect support payments to private child support collection agencies. Several additional states will be following suit in the near future.
* In most states, there is no limit on the fees or percentage of collections charged by private child support collection agencies. The proposed federal legislation does not provide a limit on fees or percentage of collections, which may be shared by private agencies. This could have costly and long-term negative consequences to the custodial parent and child by reducing the amount of support received. A recent copy of an agreement for services from one of the large private child support collection agencies indicates that the fee is 34% of the specified amount of support collected, as defined by the contract.
* The practices of private child support collection agencies regarding distribution of the child support payments are inconsistent with the federally mandated distribution scheme followed by IV-D agencies. The IV-D agency must apply payments first to current support, which is appropriate to the needs of the children involved. The contract between the custodial party and the private collection agency often prohibits the collection of the fee from current support payments. Consequently, these agencies do not apply payments to current support until all arrearages are paid. Therefore, unless the noncustodial parent has made payment in excess of all arrearages on his or her case, he or she is never credited with current support. This in turn means that the custodial parent is subjected to forfeiting to the company, one third of every dollar paid by the noncustodial parent. Many custodial parents fail to understand this practice when they enter into these contracts.
* Proposed legislation does not provide requirements for contract terms and limitations. Custodial parents could unknowingly enter into "adhesion" contracts lasting for years with little recourse.
* Legislation introduced to date requires considerable startup costs at the federal level for new duties, investigation, monitoring, and auditing. Significant requirements are associated with additional staffing and systems necessary to adequately establish and monitor the registry and to investigate and prosecute improprieties. It also requires additional responsibilities for state IV-D agencies. While this legislation has stated that implementation procedures would be cost neutral, the only way for states or the federal government to achieve cost neutrality in performing these functions would be to divert money from existing IV-D functions.
* If private agencies are authorized to have access to the child support enforcement information and remedies, there will be an increase in the federal and states' Revenue Services and Employment Security Agencies workload and computer programming (e.g., tax intercept and unemployment compensation intercept). In addition, there will also be an increased burden on financial institutions regarding the identification and seizure of assets.
* Allowing private access to IV-D information compromises the privacy rights of custodial and noncustodial parents and greatly expands access of highly sensitive, personal information to these agencies. Additionally, it seriously jeopardizes the confidentiality of personal information entrusted to government by custodial and noncustodial parents and greatly increases the likelihood that such information will be abused.
* Most states will be required to promulgate enabling state legislation in order to provide this access.
* The proposed legislation may not enhance, and may in fact, restrict options for custodial parents as they currently are allowed to simultaneously have an active case with the IV-D agency and contract for collections with a private collection agency. Previously introduced legislation proposes the IV-D agency shall close any case being worked on by private collection agencies.
* Passing legislation to allow a state to "opt out" of providing sensitive child support information is specious. If one state chooses to provide the information, the receiving agency essentially has access to all of the sensitive national databases.
Expanding the powers of private child support collection agencies has the potential to decrease the financial support available for children. The practices of some private agencies deprive custodial parents and their children of monies that should come to them, often enriching the collection agencies on the basis of collections in which they had no role the collections derived from enforcement by the IV-D agency.
A number of IV-D agencies have elected not to send child support payments to private agencies. The IV-D agency must ensure that the family receives the appropriate child support services. This includes notification of legal issues regarding the child support order. If the IV-D agency changes the custodial party's address as mandated by the private agency, there is no assurance that the custodial party will receive these important notices. In addition, it is not in the best interest of children to send child support monies collected by IV-D agencies through income tax intercept, income withholding, driver's license suspension or passport denial, directly to private collection agencies that will retain a substantial percentage of the monies.
State IV-D agencies entered into a contract with Congress to ensure that the data in the new databases would be safeguarded and would only be used for the limited purpose of obtaining child support for clients receiving IV-D services. Both the federal and state governments are responsible to their constituencies to not allow unprecedented access to databases containing vast amounts of personal data to private child support collection agencies when only minimal controls, oversight and/or accountability are included. Identity theft is clearly the fastest growing and perhaps most insidious of crimes facing the nation. To proliferate this information with virtually no controls or penalties for misuse would create chaos in the financial community and betray the confidence of the public who entrusted the child support community with this personal and sensitive data.
Because of the aforementioned concerns, the NCCSD strongly opposes the highly controversial and objectionable proposal to allow private access to child support enforcement information and remedies.