Minnesota is stepping up efforts to combat overly aggressive debt collectors, with new rules that aim to prevent firms from going after money a person doesn't actually owe.

Collectors would need to show evidence they're pursuing the right person for the correct bill under bipartisan legislation introduced Monday that would make it harder to get a court order requiring a debtor to pay up.

Minnesota Attorney General Lori Swanson said at a Capitol news conference that it's only fair that collections companies using the courts should have to file some proof that they have the basic facts in order.

"The law hasn't really kept up with the nature of the industry," Swanson said in an interview.

Minnesota is among a growing number of states that, either through new laws or other measures, are cracking down on collection abuses. Problems in the industry were the focus of a yearlong Star Tribune investigation in 2010.

The business has boomed in the wake of the Great Recession, with debt buyers and sellers dealing in electronic portfolios of consumers' past-due bills that can be purchased for pennies on the dollar. But the Federal Trade Commission in 2010 concluded that the collection system is "broken."

Swanson said debt portfolios that buyers purchase can be flimsy and unreliable, noting that the companies selling the data often won't vouch for its accuracy or completeness, and include such disclaimers in their contracts with buyers.

Default judgments, or court orders for debtors to pay, are frequently issued because people don't show up in court, sometimes not realizing they've been sued or thinking the notification is a prank.

When mistakes occur, consumers often must go to court and prove it. Their money already taken, they typically cannot afford an attorney and must navigate the court system alone. Cases get bogged down while checks bounce and bills go unpaid.

Ron Elwood, supervising attorney at the St. Paul-based Legal Services Advocacy Project, which represents the interests of low-income Minnesotans, called the legislation "incredibly important."

"Many, many people don't even know they're defendants in these cases ... until their wages get garnished," he said. "The burden has been shifted to the defendant, which is wrong."

Swanson was joined at the news conference by House Judiciary Chair Debra Hilstrom, DFL-Brooklyn Park, Senate Judiciary Chair Ron Latz, DFL-St. Louis Park, and state Rep. Jim Abeler, R-Anoka, all co-authors of the bill.

A number of victims shared stories of being unfairly harassed by collectors.

Scrutiny of the industry has increased on several fronts. As of Jan. 2, any company with more than $10 million in annual receipts from consumer debt collection is under the supervision of the Consumer Financial Protection Bureau, the government watchdog. That covers about 175 debt collectors, the agency said.

Last month Midland Funding LLC, one of the country's largest debt buyers, agreed to overhaul its practices and pay $500,000 to Minnesota to settle a lawsuit Swanson filed over robo-signing paperwork in collections lawsuits that frequently targeted the wrong person.

Tom Gavinski, president of the Minnesota Association of Collectors, which represents about 80 companies in the state, said his group has spoken with the authors of the proposed legislation and is combing through the language.

"There may be a few things in there we want to clarify, but on the surface it looks like something that we would certainly work with the authors [on]," he said.

Gavinski said that raising the standard of proof in court may be more cumbersome and slow down collections, "but it's probably the right thing to do."

He said that in his opinion, debt buyers, and not collections companies that get their work directly from the companies originally owed the money, are to blame for many of the worst abuses in the industry. Most of his organization's members are not debt buyers, he said.

Jennifer Bjorhus • 612-673-4683