Cornerstone Support has established a reputation over time as the premier licensing service provider to the collection industry. The nature of the services that we provide and the volume of organizations we serve has uniquely positioned Cornerstone in the ARM Industry. While we are not a law firm and do not provide legal advice, we find ourselves at the forefront of legislative changes and/or enforcement trends related to state licensing - even at times licensing outside our core competency of debt collection licensing.
In that capacity, it has come to our attention that several chapters of the Texas Finance Code have language that would require licensing or registration for buyers of certain regulated asset classes. The following link to the Texas Credit Laws should help in determining what registration might be required for your debt buying operation. While no statutory code should be overlooked, please pay particular attention to the following chapters:
Chapter 342 - Consumer Loans
Chapter 345 - Retail Installment Sales
Chapter 348 - Motor Vehicle Installment Sales
Should you have any questions or issues concerning this matter or should you wish to engage Cornerstone Support's assistance in obtaining specific state licenses or registrations, contact a Cornerstone Support licensing consultant today at 770-587-4595 or e-mail us at info@cornerstonesupport.com.
THIS INFORMATION IS NOT INTENDED TO BE, NOR IS IT LEGAL ADVICE. IT IS INTENDED FOR INFORMATION PURPOSES ONLY. WE MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR RELIABILITY OF THIS INFORMATION. WE ARE NOT ATTORNEYS. YOU MUST RETAIN YOUR OWN ATTORNEY TO RECEIVE LEGAL ADVICE. WHILE CORNERSTONE STRIVES TO PROVIDE THE MOST CURRENT AND ACCURATE STATE LICENSING INFORMATION, THE RESPONSIBILITY FOR ANY DECISION RELATED TO STATE LICENSING OR AGENCY COMPLIANCE IS SOLELY YOURS.
Wednesday, February 2, 2011
Thursday, January 13, 2011
Significant Licensing Changes in 2010
The collection industry is not a static legislative environment. 2010 was a year of many changes that had an impact on many agencies in California and around the country. Here at Cornerstone Support we have been keeping up with these changes and alerting our clients and followers of these changes. We have compiled some of these changes from the past year below so that you can be sure that your business is in good-standing in the states that you’re active in.
Nevada License Annual Report Update
There is a requirement modification to the 2010 Nevada Collection Agency Annual Report to Commissioner. Nevada is now required to enforce NAC 649.081, which requires each collection agency and foreign collection agency to provide to the Commissioner of Financial Institutions a report of its financial standing which must be prepared by a licensed certified public accountant [CPA] who is in good standing in the state where the report is prepared. The CPA must be independent of the agency.
Colorado HB10-1222
Colorado HB10-1222 passed both chambers of the state legislature and was signed on April 30, 2010 by Governor Bill Ritter. Effective July 1, 2010, the new law states that your company will be required to include BOTH the address and phone number of your in-state office on all written communication to Colorado consumers.
We are carefully monitoring any additional rules that the Collection Agency Board may implement. It is likely that this change will result in an increase in call received and walk-in payments accepted by your local Colorado manager.
Maryland Collection Agency Licenses
On May 5, 2010, the Maryland Office of the Commissioner of Financial Regulation issued an Advisory Notice stating that "a Consumer Debt Purchaser that collects consumer claims through civil litigation is a 'collection agency' under Maryland law, and required to be licensed as such." The Advisory is in response to a June 2007 letter, in which certain consumer debt buyers claimed confusion as to whether they were required to be licensed as a collection agency when collecting claims through civil litigation.
Under the clarified conditions, Consumer Debt Purchasers are required to have a Maryland Collection Agency License.
Supervised Loan Licenses for Debt Buyers
A Supervised Loan License is now required for any business that engages in making supervised loans or taking assignment of and directly or indirectly, including through the use of servicing contracts or otherwise, undertaking collection of payments from or enforcement of rights against debtors arising from supervised loans from consumers in Kansas, Oklahoma, South Carolina, or Wyoming.
Considered a Supervised Loan if APR exceeds:
Kansas - 12%
Oklahoma - 10%
South Carolina - 12%
Wyoming - 10%
West Virginia Regulated Consumer Loan License - Debt Buyers
A Regulated Consumer Loan License is required for any business that engages in making a regulated consumer loan or taking assignment of and undertaking direct collection of payments from or enforcement of rights against consumers arising from regulated consumer loans.
A Regulated Consumer Loan is defined in West Virginia as a consumer loan, including a loan made pursuant to a revolving loan account, in which the rate of the loan finance charge exceeds 18% per year, except where the loan qualifies for federal law preemption from state interest rate limitations, including federal law bank parity provisions, or where the lender is specifically permitted by state law to make the loan at the rate without a requirement the lender hold a regulated consumer lender license.
Because debt buyers take assignment of the loan they are required to obtain this license if they purchase West Virginia "regulated consumer loans."
Wisconsin Consumer Credit Transaction Licenses - Collection Agencies and Debt Buyers
A Consumer Credit Transaction License is required for any business that engages in making or soliciting consumer credit transactions or directly collects payments from or enforcement of rights against customers arising from such transactions, wherever made.
A Consumer Credit Transaction is defined in Wisconsin as a consumer transaction between a merchant and a customer in which real or personal property, services or money is acquired on credit and the customer's obligation is payable in installments or for which credit a finance charge is or may be imposed, whether such transaction is pursuant to an open-end credit plan or is a transaction involving other than open-end credit. The term includes consumer credit sales, consumer loans, consumer leases and transactions pursuant to open-end credit plans.
Cornerstone Support is uniquely positioned in the collection industry. Our relationships with each of the 50 states make us among the first to know about regulatory changes that affect you. Each month, we send out our Companion Newsletter, which features the latest developments in the state regulatory environment, along with helpful feature articles relevant to collectors, debt buyers, and attorneys nationwide. If you would like to receive our Companion Newsletter, simply sign up at www.cornerstonesupport.com to be put on our mailing list. And if you have any questions about the states mentioned here or any others, give one of our licensing consultants a call at 770-587-4595 or e-mail us at info@cornerstonesupport.com.
Nevada License Annual Report Update
There is a requirement modification to the 2010 Nevada Collection Agency Annual Report to Commissioner. Nevada is now required to enforce NAC 649.081, which requires each collection agency and foreign collection agency to provide to the Commissioner of Financial Institutions a report of its financial standing which must be prepared by a licensed certified public accountant [CPA] who is in good standing in the state where the report is prepared. The CPA must be independent of the agency.
Colorado HB10-1222
Colorado HB10-1222 passed both chambers of the state legislature and was signed on April 30, 2010 by Governor Bill Ritter. Effective July 1, 2010, the new law states that your company will be required to include BOTH the address and phone number of your in-state office on all written communication to Colorado consumers.
We are carefully monitoring any additional rules that the Collection Agency Board may implement. It is likely that this change will result in an increase in call received and walk-in payments accepted by your local Colorado manager.
Maryland Collection Agency Licenses
On May 5, 2010, the Maryland Office of the Commissioner of Financial Regulation issued an Advisory Notice stating that "a Consumer Debt Purchaser that collects consumer claims through civil litigation is a 'collection agency' under Maryland law, and required to be licensed as such." The Advisory is in response to a June 2007 letter, in which certain consumer debt buyers claimed confusion as to whether they were required to be licensed as a collection agency when collecting claims through civil litigation.
Under the clarified conditions, Consumer Debt Purchasers are required to have a Maryland Collection Agency License.
Supervised Loan Licenses for Debt Buyers
A Supervised Loan License is now required for any business that engages in making supervised loans or taking assignment of and directly or indirectly, including through the use of servicing contracts or otherwise, undertaking collection of payments from or enforcement of rights against debtors arising from supervised loans from consumers in Kansas, Oklahoma, South Carolina, or Wyoming.
Considered a Supervised Loan if APR exceeds:
Kansas - 12%
Oklahoma - 10%
South Carolina - 12%
Wyoming - 10%
West Virginia Regulated Consumer Loan License - Debt Buyers
A Regulated Consumer Loan License is required for any business that engages in making a regulated consumer loan or taking assignment of and undertaking direct collection of payments from or enforcement of rights against consumers arising from regulated consumer loans.
A Regulated Consumer Loan is defined in West Virginia as a consumer loan, including a loan made pursuant to a revolving loan account, in which the rate of the loan finance charge exceeds 18% per year, except where the loan qualifies for federal law preemption from state interest rate limitations, including federal law bank parity provisions, or where the lender is specifically permitted by state law to make the loan at the rate without a requirement the lender hold a regulated consumer lender license.
Because debt buyers take assignment of the loan they are required to obtain this license if they purchase West Virginia "regulated consumer loans."
Wisconsin Consumer Credit Transaction Licenses - Collection Agencies and Debt Buyers
A Consumer Credit Transaction License is required for any business that engages in making or soliciting consumer credit transactions or directly collects payments from or enforcement of rights against customers arising from such transactions, wherever made.
A Consumer Credit Transaction is defined in Wisconsin as a consumer transaction between a merchant and a customer in which real or personal property, services or money is acquired on credit and the customer's obligation is payable in installments or for which credit a finance charge is or may be imposed, whether such transaction is pursuant to an open-end credit plan or is a transaction involving other than open-end credit. The term includes consumer credit sales, consumer loans, consumer leases and transactions pursuant to open-end credit plans.
Cornerstone Support is uniquely positioned in the collection industry. Our relationships with each of the 50 states make us among the first to know about regulatory changes that affect you. Each month, we send out our Companion Newsletter, which features the latest developments in the state regulatory environment, along with helpful feature articles relevant to collectors, debt buyers, and attorneys nationwide. If you would like to receive our Companion Newsletter, simply sign up at www.cornerstonesupport.com to be put on our mailing list. And if you have any questions about the states mentioned here or any others, give one of our licensing consultants a call at 770-587-4595 or e-mail us at info@cornerstonesupport.com.
Thursday, November 18, 2010
New Mississippi Requirement for LLCs
IMPORTANT NEW FILING REQUIREMENT
LIMITED LIABILITY COMPANIES
MUST FILE ANNUAL REPORTS STARTING IN 2011
Pursuant to Section 79-29-215 Miss. Code Ann. (1972), all limited liability companies operating in Mississippi will be required to file an Annual Report with the Secretary of State beginning in 2011.
What are the deadlines for filing my LLC’s 2010 Annual Report?
The new LLC Annual Reporting Forms will be available to the public on Monday, Jan. 3, 2011, on the Secretary of State’s web site at www.sos.ms.gov. The deadline for completing the report is April 15, 2011.
How will I access my LLC’s information?
Each LLC should use their Mississippi business identification number to access their information. Your company’s business ID number can be found on your company’s webpage on the Secretary of State’s website.
What is the cost to file the Annual Report?
For Mississippi LLCs, there is no cost for online filing. The process for completing the form online will involve filling out the necessary information and hitting “submit.” As an alternative, the form may be printed out, completed, and mailed in to the Secretary of State’s office at P.O. Box 136, Jackson, MS 39205.
There is a $250 annual fee for out-of-state or ‘foreign’ LLCs. There is no online filing allowed for these LLCs. Foreign LLCs must complete the form online, print it out and submit it with their $250 annual fee to the Secretary of State’s office at P.O. Box 1020, Jackson, MS 39215-1020.
What information will be required on the Annual Report?
A sample LLC Annual Report can be found here: http://www.sos.ms.gov/links/business/LLC%20Info/Sample%20LLC%20AR%20with%20watermark.pdf
What if I do not have computer or internet access?
For those without computer or internet access, a paper copy of the LLC Annual Report form may be completed and mailed to the Secretary of State’s office by the deadline of April 15, 2011. You may have a blank copy of the form mailed or faxed to you by calling (601) 359-1633.
LIMITED LIABILITY COMPANIES
MUST FILE ANNUAL REPORTS STARTING IN 2011
Pursuant to Section 79-29-215 Miss. Code Ann. (1972), all limited liability companies operating in Mississippi will be required to file an Annual Report with the Secretary of State beginning in 2011.
What are the deadlines for filing my LLC’s 2010 Annual Report?
The new LLC Annual Reporting Forms will be available to the public on Monday, Jan. 3, 2011, on the Secretary of State’s web site at www.sos.ms.gov. The deadline for completing the report is April 15, 2011.
How will I access my LLC’s information?
Each LLC should use their Mississippi business identification number to access their information. Your company’s business ID number can be found on your company’s webpage on the Secretary of State’s website.
What is the cost to file the Annual Report?
For Mississippi LLCs, there is no cost for online filing. The process for completing the form online will involve filling out the necessary information and hitting “submit.” As an alternative, the form may be printed out, completed, and mailed in to the Secretary of State’s office at P.O. Box 136, Jackson, MS 39205.
There is a $250 annual fee for out-of-state or ‘foreign’ LLCs. There is no online filing allowed for these LLCs. Foreign LLCs must complete the form online, print it out and submit it with their $250 annual fee to the Secretary of State’s office at P.O. Box 1020, Jackson, MS 39215-1020.
What information will be required on the Annual Report?
A sample LLC Annual Report can be found here: http://www.sos.ms.gov/links/business/LLC%20Info/Sample%20LLC%20AR%20with%20watermark.pdf
What if I do not have computer or internet access?
For those without computer or internet access, a paper copy of the LLC Annual Report form may be completed and mailed to the Secretary of State’s office by the deadline of April 15, 2011. You may have a blank copy of the form mailed or faxed to you by calling (601) 359-1633.
Tuesday, November 16, 2010
Massachusetts Branch Licensing Change
Contrary to statutory language (209 CMR §18.07(1)), it has been the longstanding position of the Massachusetts Division of Banks that collection agencies with a presence in the state of Massachusetts are not required to license out-of-state branch locations. Although there has been no official statement changing this position, recent conversations with leadership within the Massachusetts Division of Banks have shown that there is no longer consensus on this position.
In that regard, it is our position that effective immediately all locations from which Massachusetts debtors are contacted must hold a valid license with the Massachusetts Division of Banks. For questions or issues related to this change contact Cornerstone Support at (770) 587-4595 or email us at info@cornerstonesupport.com.
In that regard, it is our position that effective immediately all locations from which Massachusetts debtors are contacted must hold a valid license with the Massachusetts Division of Banks. For questions or issues related to this change contact Cornerstone Support at (770) 587-4595 or email us at info@cornerstonesupport.com.
Tuesday, October 19, 2010
Finding Optimal E&O Insurance for Your Agency
by Matt Pridemore, Vice President
In recent months I have received hundreds of phone calls and emails from agency owners (3rd party, debt buyer, attorney) faced with significant price or coverage issues related to their E&O policy. Fortunately, there are insurance solutions that specifically deal with the unique needs of the collection industry.
Price Issues:
It is common for agency owners to face a situation where their insurance policies are not renewed or where their premiums are high and their current agent has limited options for them. The renewal premiums make the coverage unaffordable and their current broker is unable or unwilling to provide them with options. If your broker is simply submitting a renewal application to your current carrier, demand that they do more. Introducing competition into your annual renewal process will provide you the assurance that you are paying a fair market price/premium for your particular policy needs. If your current broker still is unable or unwilling to market your account to multiple insurance providers find someone who will.
Coverage Issues:
Unfortunately, it is equally common for agency owners to select a vendor who is willing to market their account to multiple insurance providers, but lacks the experience necessary to understand the risks specific to the collection industry. In my experience, collection agencies many times rely on their insurance broker/agent and do not always read the policy in its entirety to understand what is covered and what is not. I have seen a number of policy forms over the years that specifically excluded FDCPA, TCPA or FCRA violations.
Here is an example of how an agency that understands your industry and places accounts with multiple carriers can help:
I recently assisted a large collection law firm that for years had been struggling to find a policy that appropriately addressed their specific operational risks. While they are indeed a law firm and it is imperative that they are covered for legal malpractice claims, they also maintained a significant collection floor that carried risk more closely resembling that of a standard 3rd party collection agency. The standard lawyer’s professional liability (LPL) policy did not do a very good job of addressing both areas of risk.
That is where we came in. We were able to assist them in obtaining an errors & omissions policy form that appropriately addressed their specific operational risks. Their firm also provided legal services outside of debt collection, so we assisted them in obtaining a secondary LPL policy for those risks. Both policies combined to form a better risk management strategy for the firm, helping them to address and settle claims more efficiently.
It is easy to service an account when everything is going well. You need to be certain that you have partnered with a vendor that can take care of you when the times get tough. In my opinion, that is when we truly earn your business anyway.
Cornerstone Support is the premier licensing and insurance provider to the collection industry. If you have any questions regarding state licensing or insurance please email info@cornerstonesupport.com or call (770) 587-4595.
Thursday, July 29, 2010
The Uniform Consumer Credit Code
by Matt Pridemore, Vice President
Cornerstone Support has established a reputation over time as the premier licensing service provider to the collection industry. The nature of the services that we provide and the volume of organizations we serve has uniquely positioned Cornerstone in the ARM Industry. While we are not a law firm and do not provide legal advice, we find ourselves at the forefront of legislative changes and/or enforcement trends related to state licensing.
One of the more recent enforcement trends pertains to the language in various states' uniform consumer credit code ("UCCC"). While UCCC is generally intended to regulate consumer credit, the statutory language seems to include those in the ARM Industry in certain specific circumstances. Below are relevant excerpts for your review. While this may not be an exhaustive list, it represents the statutes we have found to be enforced at this time.
Kansas Supervised Loan License - Debt Buyers:
A Supervised Loan License is required for any business that engages in making supervised loans or taking assignment of and directly or indirectly, including through the use of servicing contracts or otherwise, undertaking collection of payments from or enforcement of rights against debtors arising from supervised loans from Kansas consumers.
A Supervised Loan is defined in Kansas as a consumer loan including a loan made pursuant to open end credit to which the annual percentage rate exceeds 12% per year.
Because debt buyers take assignment of the loan they are required to obtain this license if they purchase Kansas "supervised loans."
Read KS Statute 16a-2-301 Here
Oklahoma Supervised Loan License - Debt Buyers:
A Supervised Loan License is required for any business that engages in making supervised loans or taking assignment of and undertaking direct collection of payments from or enforcement of rights against debtors arising from supervised loans from Oklahoma consumers.
A Supervised Loan is defined in Oklahoma as a consumer loan in which the rate of the loan finance charge exceeds 10% per year.
Because debt buyers take assignment of the loan they are required to obtain this license if they purchase Oklahoma "supervised loans."
Read OK Statute 14A O.S. 1-101 Here
South Carolina Supervised Loan License - Debt Buyers:
A Supervised Loan License is required for any business that engages in making supervised loans or taking assignment of and undertaking direct collection of payments from or enforcement of rights against debtors arising from supervised loans from South Carolina consumers.
A Supervised Loan is defined in South Carolina as a consumer loan in which the rate of the loan finance charge exceeds 12% per year. Please note that a supervised loan does not include a mortgage loan.
Because debt buyers take assignment of the loan they are required to obtain this license if they purchase South Carolina "supervised loans."
Read SC Title 37 Ch 3 Here
West Virginia Regulated Consumer Loan License - Debt Buyers:
A Regulated Consumer Loan License is required for any business that engages in making a regulated consumer loan or taking assignment of and undertaking direct collection of payments from or enforcement of rights against consumers arising from regulated consumer loans.
A Regulated Consumer Loan is defined in West Virginia as a consumer loan, including a loan made pursuant to a revolving loan account, in which the rate of the loan finance charge exceeds 18% per year, except where the loan qualifies for federal law preemption from state interest rate limitations, including federal law bank parity provisions, or where the lender is specifically permitted by state law to make the loan at the rate without a requirement the lender hold a regulated consumer lender license
Because debt buyers take assignment of the loan they are required to obtain this license if they purchase West Virginia "regulated consumer loans."
Read WV Statute 46A-4-101 Here
Wisconsin Consumer Credit Transaction License - Collection Agencies and Debt Buyers:
A Consumer Credit Transaction License is required for any business that engages in making or soliciting consumer credit transactions or directly collects payments from or enforcement of rights against customers arising from such transactions, wherever made.
A Consumer Credit Transaction is defined in Wisconsin as a consumer transaction between a merchant and a customer in which real or personal property, services or money is acquired on credit and the customer's obligation is payable in installments or for which credit a finance charge is or may be imposed, whether such transaction is pursuant to an open-end credit plan or is a transaction involving other than open-end credit. The term includes consumer credit sales, consumer loans, consumer leases and transactions pursuant to open-end credit plans.
Read WI Chapters 421 & 426 Here
Wyoming Supervised Loan License - Debt Buyers:
A Supervised Loan License is required for any business that engages in making supervised loans or taking assignment of and undertaking direct collection of payments from or enforcement of rights against debtors arising from supervised loans from Wyoming consumers.
A Supervised Loan is defined in Wyoming as a consumer loan in which the rate of the loan finance charge exceeds 10% per year.
Because debt buyers take assignment of the loan they are required to obtain this license if they purchase Wyoming "supervised loans."
Read WY Statute 40-14-342 Here
Should you have any questions or issues concerning these matters or should you wish to engage Cornerstone Support's assistance in obtaining these licenses/registrations, contact a Cornerstone Support licensing consultant today at 770-587-4595 or e-mail us at info@cornerstonesupport.com
Friday, June 11, 2010
Pending Licensing Legislation
Every week, the licensing specialists of Cornerstone Support are interacting with regulators in all 50 states, hundreds of collection agencies, and other industry professionals across the country. One of the many benefits of this constant communication is that we are quickly aware of new legislation that is passed or even simply being discussed. There are currently several states that are developing new legislation that, if passed, will directly affect licensing and registration for agencies, attorneys, and debt buyers all over the country. We’ve compiled the latest info below on several jurisdictions so that you can be prepared for the pending changes ahead.
Florida
Florida S.B. 2724 has been proposed, which would require an application to be submitted to the Office of Insurance Regulation. The application would be required to include everything from business and residential addresses to branch addresses to fingerprints for all control persons. Read the bill in its entirety at http://www.flsenate.gov/cgi-bin/view_page.pl?Tab=session&Submenu=1&FT=D&File=sb2724.html&Directory=session/2010/Senate/bills/billtext/html/
South Carolina
South Carolina H. 4228 currently sits in the House Committee on Labor, Commerce, and Industry. If passed, the state will establish debt collection licensing requirements. The proposed enactment date is 9-1-10. To track the progress of this bill, go to http://www.scstatehouse.gov/sess118_2009-2010/bills/4228.htm.
New York
New York S.B. 7071 has been proposed by Senator Eric Schneiderman to the Senate Consumer Protection Committee. If passed, it will require debt collection agencies to be licensed by the state, will require bonding, and will allow for penalties as well. As the bill stands now, it will take effect 180 days after being passed into law. To track this bill, go to http://assembly.state.ny.us/leg/?default_fld=&bn=SB7071%09%09&Summary=Y&Text=Y
West Virginia
West Virginia H.B. 4308 is currently being considered for legislation. This bill would broaden the definition of “debt collector” to include any private debt collection agencies, public agencies engaged in debt collection, and the employees of any public or private debt collection agency. It also proposes increased criminal penalties for fraudulent or misleading collection activities. Read the full bill at http://www.legis.state.wv.us/bill_Status/bills_text.cfm?billdoc=hb4308%20intr.htm&yr=2010&sesstype=RS&i=4308
Florida
Florida S.B. 2724 has been proposed, which would require an application to be submitted to the Office of Insurance Regulation. The application would be required to include everything from business and residential addresses to branch addresses to fingerprints for all control persons. Read the bill in its entirety at http://www.flsenate.gov/cgi-bin/view_page.pl?Tab=session&Submenu=1&FT=D&File=sb2724.html&Directory=session/2010/Senate/bills/billtext/html/
South Carolina
South Carolina H. 4228 currently sits in the House Committee on Labor, Commerce, and Industry. If passed, the state will establish debt collection licensing requirements. The proposed enactment date is 9-1-10. To track the progress of this bill, go to http://www.scstatehouse.gov/sess118_2009-2010/bills/4228.htm.
New York
New York S.B. 7071 has been proposed by Senator Eric Schneiderman to the Senate Consumer Protection Committee. If passed, it will require debt collection agencies to be licensed by the state, will require bonding, and will allow for penalties as well. As the bill stands now, it will take effect 180 days after being passed into law. To track this bill, go to http://assembly.state.ny.us/leg/?default_fld=&bn=SB7071%09%09&Summary=Y&Text=Y
West Virginia
West Virginia H.B. 4308 is currently being considered for legislation. This bill would broaden the definition of “debt collector” to include any private debt collection agencies, public agencies engaged in debt collection, and the employees of any public or private debt collection agency. It also proposes increased criminal penalties for fraudulent or misleading collection activities. Read the full bill at http://www.legis.state.wv.us/bill_Status/bills_text.cfm?billdoc=hb4308%20intr.htm&yr=2010&sesstype=RS&i=4308
Subscribe to:
Posts (Atom)