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.
