2002 Legislation
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SENATE BILL NO. 1288 – Collection agency, permits, pnlty

SENATE BILL NO. 1288

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S1288aa.....................................by COMMERCE AND HUMAN RESOURCES
COLLECTION AGENCIES - Amends existing law relating to collection agencies
to revise a definition; to revise prohibited conduct; to revise the
requirements for permit applications; to require that an application for
renewal of a permit be postmarked on or before a certain date; to provide
for the cost of examinations; to provide for certain cease and desist
orders; to increase the monetary civil penalty; to provide additional civil
penalties; to extend the director's authority to bring an action to enjoin
certain violations; to provide for additional remedies; and to clarify the
effective date of permit cancellation.
                                                                        
01/16    Senate intro - 1st rdg - to printing
01/17    Rpt prt - to Com/HuRes
01/24    Rpt out - to 14th Ord
02/08    Rpt out amen - to engros
02/11    Rpt engros - 1st rdg - to 2nd rdg as amen
02/12    2nd rdg - to 3rd rdg as amen
02/13    3rd rdg as amen - PASSED - 34-0-1
      AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
      Burtenshaw, Darrington, Davis, Deide, Dunklin, Frasure, Geddes,
      Goedde, Hawkins, Hill, Ingram, Ipsen, Keough, King-Barrutia, Little,
      Lodge, Marley, Noh, Richardson, Risch, Sandy, Schroeder, Sims,
      Sorensen, Stegner, Stennett, Thorne, Wheeler, Williams
      NAYS -- None
      Absent and excused -- Cameron
    Floor Sponsor - Brandt
    Title apvd - to House
02/14    House intro - 1st rdg - to Bus
02/28    Rpt out - rec d/p - to 2nd rdg
03/01    2nd rdg - to 3rd rdg
03/06    3rd rdg - PASSED - 58-2-10
      AYES -- Aikele, Barraclough, Barrett, Bell, Bieter, Black, Block,
      Boe, Bolz, Bradford, Bruneel, Callister, Campbell, Clark, Collins,
      Crow, Cuddy, Denney, Ellsworth, Eskridge, Field(13), Field(20),
      Gould, Hadley, Hammond, Henbest, Higgins, Hornbeck, Jaquet, Jones,
      Kellogg(Duncan), Kendell, Kunz, Lake, Langford, Loertscher, Mader,
      Martinez, Montgomery, Mortensen, Moyle, Pearce, Pischner, Pomeroy,
      Raybould, Roberts, Robison, Sali, Schaefer, Sellman, Shepherd,
      Smith(33), Smith(23), Smylie, Stevenson, Stone, Tilman, Wheeler
      NAYS -- Harwood, McKague
      Absent and excused -- Bedke, Deal, Ellis, Gagner, Meyer, Ridinger,
      Trail, Wood, Young, Mr. Speaker
    Floor Sponsor - Smith(33)
    Title apvd - to Senate
03/07    To enrol
03/08    Rpt enrol - Pres signed
03/11    Sp signed
03/12    To Governor
03/21    Governor signed
         Session Law Chapter 190
         Effective: 07/01/02

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                                    SENATE BILL NO. 1288
                                                                        
                         BY COMMERCE AND HUMAN RESOURCES COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO COLLECTION AGENCIES; AMENDING  SECTION  26-2222,  IDAHO  CODE,  TO
  3        REVISE  A  DEFINITION  AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION
  4        26-2223, IDAHO CODE, TO REVISE CONDUCT PROHIBITED ABSENT  COMPLIANCE  WITH
  5        THE  PROVISIONS  OF  CHAPTER 22, TITLE 26, IDAHO CODE, AND OBTAINMENT OF A
  6        PERMIT FROM THE DIRECTOR OF THE DEPARTMENT OF FINANCE AND TO MAKE A  TECH-
  7        NICAL  CORRECTION;  AMENDING  SECTION  26-2224,  IDAHO CODE, TO REVISE THE
  8        REQUIREMENTS FOR PERMIT APPLICATIONS AND TO  MAKE  TECHNICAL  CORRECTIONS;
  9        AMENDING  SECTION  26-2231, IDAHO CODE, TO REQUIRE THAT AN APPLICATION FOR
 10        RENEWAL OF A PERMIT BE POSTMARKED ON OR BEFORE A CERTAIN DATE AND TO  MAKE
 11        TECHNICAL  CORRECTIONS;  AMENDING  SECTION 26-2244, IDAHO CODE, TO PROVIDE
 12        FOR CERTAIN CEASE AND DESIST ORDERS, TO INCREASE THE MONETARY  CIVIL  PEN-
 13        ALTY  THAT  MAY BE IMPOSED BY THE DIRECTOR AND TO PROVIDE ADDITIONAL CIVIL
 14        PENALTIES THAT MAY BE IMPOSED; AMENDING SECTION 26-2245,  IDAHO  CODE,  TO
 15        EXTEND  THE  DIRECTOR'S  AUTHORITY  TO  BRING  AN ACTION TO ENJOIN CERTAIN
 16        VIOLATIONS TO VIOLATIONS OF ORDERS ISSUED PURSUANT TO  CHAPTER  22,  TITLE
 17        26,  IDAHO CODE, TO PROVIDE FOR ADDITIONAL REMEDIES THAT MAY BE GRANTED TO
 18        THE DIRECTOR AND TO  MAKE  TECHNICAL  CORRECTIONS;  AND  AMENDING  SECTION
 19        26-2251,  IDAHO CODE, TO CLARIFY THE EFFECTIVE DATE OF PERMIT CANCELLATION
 20        FOR ANY PERMITTEE FAILING TO APPLY FOR RENEWAL OF A  PERMIT  IN  A  TIMELY
 21        MANNER AND TO MAKE TECHNICAL CORRECTIONS.
                                                                        
 22    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 23        SECTION  1.  That  Section 26-2222, Idaho Code, be, and the same is hereby
 24    amended to read as follows:
                                                                        
 25        26-2222.  DEFINITIONS. As used in this chapter:
 26        (1)  "Agent" means any person who is compensated on a commission basis  or
 27    by salary, or both, by any permittee and who either contacts debtors or credi-
 28    tors in connection with the collection agency business of the permittee.
 29        (2)  "Business  funds"  means all moneys belonging to or due the permittee
 30    in connection with the operation of a collection agency business.
 31        (3)  "Collection agency," "collection bureau" or "collection office" shall
 32    be a person who engages  in  any  of  the  activities  enumerated  in  section
 33    26-2223, Idaho Code.
 34        (4)  "Director" means the director of the department of finance.
 35        (5)  "Creditor" means any person who transfers to a permittee accounts due
 36    and owing for collection purposes.
 37        (6)  "Creditors'  account" means all funds due and owing a creditor within
 38    the definition of this chapter.
 39        (7)  "Net collections" means all funds that are due to creditors from  the
 40    permittee pursuant to the contract between the permittee and creditor, or per-
 41    mittee and debtor without taking into account any offset or funds due from the
 42    creditor  to  the permittee, because of the creditor having collected any part
 43    of the account due, plus all funds that the  permittee  agreed  to  return  to
                                                                        
                                           2
                                                                        
  1    debtors or that were not to be applied to debts.
  2        (8)  "Permittee"  means a person who has a permit to do business as a col-
  3    lection agency, or debt counselor, or credit counselor in Idaho.
  4        (9)  "Person" means any permittee, agent, solicitor, individual,  corpora-
  5    tion,  association,  copartnership, trust, company or unincorporated organiza-
  6    tion.
  7        (10) "Debt counselor" means any person engaged in any  of  the  activities
  8    enumerated in subsection (6) of section 26-2223, Idaho Code.
  9        (11) "Credit  counselor" means any person engaged in any of the activities
 10    enumerated in subsections (6) and or (7)  of  section  26-2223,  Idaho  Code.,
 11    which  is  exempt from federal income taxes as provided in No credit counselor
 12    shall be granted a permit pursuant to this  chapter  unless  qualified  as  an
 13    exempt organization under section 501(c)(3) of the iInternal rRevenue cCode.
                                                                        
 14        SECTION  2.  That  Section 26-2223, Idaho Code, be, and the same is hereby
 15    amended to read as follows:
                                                                        
 16        26-2223.  COLLECTION AGENCY, DEBT COUNSELOR, OR CREDIT COUNSELOR  PERMITS.
 17    No  person  shall  without  complying  with  the terms of this act chapter and
 18    obtaining a permit from the director:
 19        (1)  Operate as a collection agency, collection bureau, collection office,
 20    debt counselor, or credit counselor in this state.
 21        (2)  Engage, either directly or indirectly in this state in  the  business
 22    of  collecting  or receiving payment for others of any account, bill, claim or
 23    other indebtedness.
 24        (3)  Solicit or advertise for the right to collect or receive payment  for
 25    another of any account, bill, claim or other indebtedness.
 26        (4)  Sell or otherwise distribute any system or systems of collection let-
 27    ters  and  similar  printed matter where the name of any person other than the
 28    particular creditor to whom the debt is owed appears.
 29        (5)  Engage in any activity which indicates, directly or indirectly,  that
 30    a third party may be involved in effecting any collections.
 31        (6)  Engage  or  offer  to  engage in the business of receiving money from
 32    debtors for application to or payment of or prorating of any creditor or cred-
 33    itors of such debtor.
 34        (7)  Engage or offer to engage for compensation in the business of  credit
 35    providing  counseling  or other services to debtors in the management of their
 36    debts, and contracting with the debtor to effect the  adjustment,  compromise,
 37    or discharge of any account, note or other indebtedness of the debtor.
 38        (8)  Engage  or  offer  to  engage  in the business of credit repair which
 39    includes obtaining, for others, improvements in credit records, extensions  of
 40    credit  for  clients,  or  causing  the  removal  of documents from the credit
 41    records of a client maintained by a credit reporting agency.
 42        (9)  Engage or offer to engage in this state, directly or  indirectly,  in
 43    the  business  of  collecting  any  form of indebtedness for that person's own
 44    account if the indebtedness was  acquired  from  another  person  and  if  the
 45    indebtedness was either delinquent or in default at the time it was acquired.
                                                                        
 46        SECTION  3.  That  Section 26-2224, Idaho Code, be, and the same is hereby
 47    amended to read as follows:
                                                                        
 48        26-2224.  FORM OF APPLICATION. Every applicant for such permit shall  file
 49    in  the  department  of finance an application in form to be prescribed by the
 50    director setting forth:
 51        (1)  The name of the applicant if an individual; if  the  applicant  is  a
                                                                        
                                           3
                                                                        
  1    corporation a list of its officers and directors and their addresses.; iIf the
  2    applicant is a partnership, then a list of the members of said partnership and
  3    their  addresses;  must be filed with the application or if the applicant is a
  4    limited liability company  a  list  of  its  members  or  managers  and  their
  5    addresses. Every partnership in its application for a permit corporation shall
  6    designate  and  appoint  one (1) or more of its members officers or employees,
  7    and every corporation in its application for a permit partnership shall desig-
  8    nate and appoint one (1) or more of its officers or  employees  partners,  and
  9    every limited liability company shall designate and appoint one (1) or more of
 10    its  members  or  managers  who  shall  submit  to the examination hereinafter
 11    required. No permit shall be issued to any corporation, partnership or  corpo-
 12    ration  or limited liability company unless and until the persons and officers
 13    so designated by the partnership or corporation shall submit to and  pass  the
 14    examination required by this act chapter.
 15        (2)  The  location  of  the  principal  office or place of business of the
 16    applicant.
 17        (3)  Other names, if any, by which the applicant conducts, engages  in  or
 18    solicits business.
 19        (4)  The  names  of all persons and organizations with which the applicant
 20    is affiliated in such business, and the location of the  principal  office  or
 21    place of business of each such affiliation.
 22        (5)  A  complete  description  of the business to be conducted, or plan of
 23    operation contemplated, by the applicant in this state.
 24        (6)  A list of all papers and filings used by  the  applicant  which  must
 25    accompany the application and be identified as exhibits by number.
 26        (7)  A  financial  statement showing the applicant to have a financial net
 27    worth of not less than two  thousand  five  hundred  dollars  ($2,500),  which
 28    statement  shall  be  subject  to  disclosure according to chapter 3, title 9,
 29    Idaho Code. The financial statement shall specify assets and liabilities, pro-
 30    viding detailed reference to each item listed to inform the  director  of  the
 31    nature  and  extent  of  such assets and liabilities. This financial statement
 32    shall be signed by the applicant or its proper agent. The net worth shall  not
 33    include  any  notes, accounts, bills, and judgments held for collection by the
 34    applicant nor shall it include good will or other assets the value of which is
 35    speculative and not susceptible to prompt liquidation.
 36        (8)  Such other information concerning the  applicant's  business  as  the
 37    director  may reasonably require. Such application shall be executed and veri-
 38    fied by the applicant or applicants personally, or by the president or  secre-
 39    tary  where  an  individual associated with the applicant is an association or
 40    corporation as designated by the director.
                                                                        
 41        SECTION 4.  That Section 26-2231, Idaho Code, be, and the same  is  hereby
 42    amended to read as follows:
                                                                        
 43        26-2231.  RENEWAL  OF PERMIT. Upon application made prior to postmarked on
 44    or before the fifteenth day of March of each year, the holder  of  any  permit
 45    issued under the provisions of this act chapter shall be entitled to have such
 46    permit  renewed  for  the  succeeding calendar year upon payment of the annual
 47    permit fee as fixed by the director, but not to exceed fifty dollars ($50.00),
 48    compliance with the bond requirements of this act chapter,  the  filing  of  a
 49    financial  statement  in  the form required by section 26-2224(7), Idaho Code,
 50    showing a net worth of at least two thousand five hundred dollars ($2,500) for
 51    each place of business for which a permit is sought, filing of all other docu-
 52    ments required by section 26-2224, Idaho Code, and approval by the director of
 53    all literature to be employed by the permittee during the course of the  busi-
                                                                        
                                           4
                                                                        
  1    ness  year,  except  no  annual permit renewal fee need be paid by a nonprofit
  2    corporation or association conducting  credit  counseling  or  debt  prorating
  3    activities.
                                                                        
  4        SECTION  5.  That  Section 26-2244, Idaho Code, be, and the same is hereby
  5    amended to read as follows:
                                                                        
  6        26-2244.  CEASE AND DESIST ORDERS, PENALTY. (1) Whenever it appears to the
  7    director that it is in the public interest, he may order any person  to  cease
  8    and  desist from acts, practices, or omissions which constitute a violation of
  9    this chapter.
 10        (2)  Whenever, after notice and a hearing, the  director  finds  that  any
 11    person  has violated any provision of this chapter, the director may order the
 12    person to cease and desist from acts, practices or omissions which  constitute
 13    a violation of this chapter and:
 14        (a)  Iimpose  a  civil penalty of not more than one two thousand five hun-
 15        dred dollars ($1,02,500) for each violation upon any person found to  have
 16        violated any provision of this chapter;
 17        (b)  Issue  an order restoring to any person in interest any consideration
 18        that may have been acquired or transferred in violation of  this  chapter;
 19        or
 20        (c)  Issue  an  order  that  the  person violating this chapter pay costs,
 21        which in the discretion of the director may include an amount representing
 22        reasonable attorney's fees and reimbursement for investigative efforts.
                                                                        
 23        SECTION 6.  That Section 26-2245, Idaho Code, be, and the same  is  hereby
 24    amended to read as follows:
                                                                        
 25        26-2245.  DIRECTOR'S  POWER  TO ENJOIN VIOLATIONS. (1) Whenever it appears
 26    to the director that any person, or employee or agent thereof, has engaged  in
 27    or is about to engage in any act or practice or omission constituting a viola-
 28    tion  of any provision of this act chapter, or any rule or order hereunder, he
 29    may in his discretion bring an action in any court of  competent  jurisdiction
 30    to  enjoin  any such acts or practices and to enforce compliance with this act
 31    chapter or any rules hereunder. Upon a showing that a person, or  employee  or
 32    agent  of  any person, has engaged in or is about to engage in an act or prac-
 33    tice constituting a violation of this act chapter or any rule or order hereun-
 34    der, a permanent or  temporary  injunction,  or  restraining  order  shall  be
 35    granted  and  a  receiver  or conservator may be appointed for the defendant's
 36    assets. The director shall not be required to furnish bond.
 37        (2)  In addition to the foregoing, the director,  in  his  discretion  and
 38    upon  a  showing in any court of competent jurisdiction that a person has vio-
 39    lated the provisions of this chapter  or  rule  or  order  hereunder,  may  be
 40    granted the following additional remedies:
 41        (a)  An  order  restoring to any person in interest any consideration that
 42        may have been acquired or transferred in violation of this chapter;
 43        (b)  An order that the person violating this chapter, rule or order  here-
 44        under,  pay  a  civil penalty to the department in an amount not to exceed
 45        two thousand five hundred dollars ($2,500) for each violation;
 46        (c)  An order allowing the director to recover costs, which in the discre-
 47        tion of the court may include an amount representing reasonable attorney's
 48        fees and reimbursement for investigative efforts;
 49        (d)  An order granting other appropriate remedies upon a proper showing.
                                                                        
 50        SECTION 7.  That Section 26-2251, Idaho Code, be, and the same  is  hereby
                                                                        
                                           5
                                                                        
  1    amended to read as follows:
                                                                        
  2        26-2251.  CANCELLATION OF PERMIT. Any permittee or foreign permittee fail-
  3    ing to apply in a timely manner for renewal of a permit shall have said permit
  4    cancelled  on  canceled  effective  the day following the last day for renewal
  5    applications to be filed. Engaging in collection agency business with  a  can-
  6    celled canceled permit shall be a violation of the provisions of this chapter.
  7    To  restore  a  cancelled canceled permit the fee shall be two hundred dollars
  8    ($200). A cancelled canceled permit may be restored only before the expiration
  9    of six (6) months following the date of annual renewal.

Amendment


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                                                        
                                                                        
                                                     Moved by    Davis               
                                                                        
                                                     Seconded by Brandt              
                                                                        
                                                                        
                                       IN THE SENATE
                             SENATE AMENDMENT TO S.B. NO. 1288
                                                                        
                                                                        
  1                                AMENDMENTS TO THE BILL
  2        On page 4 of the printed bill, following line 3, insert:
  3        "SECTION 5.  That Section 26-2234, Idaho Code, be, and the same is  hereby
  4    amended to read as follows:
                                                                        
  5        26-2234.  INVESTIGATIONS,  RECORDS  AND PAYMENT OF FUNDS. (1) The director
  6    or his duly authorized representatives may make an annual examination, or more
  7    frequently in the director's discretion, of the place of business of each per-
  8    mittee and foreign permittee and for that purpose the director shall have free
  9    access to the offices and places  of  business,  books,  creditors'  accounts,
 10    trust accounts, business accounts, records, papers, files, safes and vaults of
 11    all such permittees.
 12        (2)  The director may, upon his own motion, and shall, upon the sworn com-
 13    plaint  in writing of any person, investigate the action of any person or per-
 14    sons claimed to have violated the provisions of this  chapter,  and  for  that
 15    purpose the director shall have free access to the offices and places of busi-
 16    ness,  books, creditors' accounts, trust accounts, business accounts, records,
 17    papers, files, safes and vaults of all such persons.
 18        (3)  Every permittee and foreign permittee shall execute to  the  director
 19    an  agreement  of  consent  to examination of any and all bank accounts of the
 20    permittee providing the director with authority to make  such  examination  at
 21    any  time the director, in his discretion, deems it to be in the public inter-
 22    est.
 23        (4)  The actual cost of examination for the first annual examination  each
 24    year  and any investigation shall be paid to the director by each permittee so
 25    examined or investigated and the director  may  maintain  an  action  for  the
 26    recovery  of  such costs against the permittee or against the surety providing
 27    the bond to indemnify the state for such  expenditures  as  required  by  this
 28    chapter.  The  cost  shall  be  fixed  annually by the director, but shall not
 29    exceed twenty-five dollars ($25.00) per examination hour.
 30        (5)  Each permittee shall acknowledge in writing each account received for
 31    collection and shall maintain a record  of  such  account,  make  a  permanent
 32    record  of  all  sums  collected  by him and of all disbursements made by him.
 33    Every permittee shall keep and  preserve  all  records  relating  to  accounts
 34    received  for  collection, collections, receipts, and disposal or disbursement
 35    of all creditors' funds for a period of five (5) years after the final  dispo-
 36    sition  of  any  account. It shall be unlawful for any person to intentionally
 37    make any false entry, omit to make a necessary entry, mutilate, secrete  away,
 38    destroy  or otherwise dispose of any record mentioned in this subsection, pro-
 39    vided a record may be disposed of after the five (5)  year  period  heretofore
 40    provided.
 41        (6)  Every  permittee  shall,  within  thirty (30) days after the close of
 42    each calendar month, pay to his creditors the net proceeds of all  collections
                                                                        
                                          2
                                                                        
  1    made  by the permittee during said calendar month. Each permittee shall report
  2    to the creditor all collections made by him and/or any payments  made  to  the
  3    creditor within thirty (30) days after the close of each calendar month.
  4        (7)  Every  permittee  shall  maintain his books and records in accordance
  5    with generally accepted accounting practices subject to such rules and regula-
  6    tions as adopted by the director.
  7        (8)  The director, may impound the creditors' accounts, or trust  accounts
  8    of  any  permittee if it shall be deemed in the general public interest."; and
  9    renumber subsequent sections accordingly.
                                                                        
 10                                 CORRECTION TO TITLE
 11        On page 1, in line 11, following "CORRECTIONS;" insert: "AMENDING  SECTION
 12    26-2234, IDAHO CODE, TO PROVIDE FOR COST OF EXAMINATIONS;".

Engrossed Bill (Original Bill with Amendment(s) Incorporated)


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                              SENATE BILL NO. 1288, As Amended
                                                                        
                         BY COMMERCE AND HUMAN RESOURCES COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO COLLECTION AGENCIES; AMENDING  SECTION  26-2222,  IDAHO  CODE,  TO
  3        REVISE  A  DEFINITION  AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION
  4        26-2223, IDAHO CODE, TO REVISE CONDUCT PROHIBITED ABSENT  COMPLIANCE  WITH
  5        THE  PROVISIONS  OF  CHAPTER 22, TITLE 26, IDAHO CODE, AND OBTAINMENT OF A
  6        PERMIT FROM THE DIRECTOR OF THE DEPARTMENT OF FINANCE AND TO MAKE A  TECH-
  7        NICAL  CORRECTION;  AMENDING  SECTION  26-2224,  IDAHO CODE, TO REVISE THE
  8        REQUIREMENTS FOR PERMIT APPLICATIONS AND TO  MAKE  TECHNICAL  CORRECTIONS;
  9        AMENDING  SECTION  26-2231, IDAHO CODE, TO REQUIRE THAT AN APPLICATION FOR
 10        RENEWAL OF A PERMIT BE POSTMARKED ON OR BEFORE A CERTAIN DATE AND TO  MAKE
 11        TECHNICAL  CORRECTIONS;  AMENDING  SECTION 26-2234, IDAHO CODE, TO PROVIDE
 12        FOR COST OF EXAMINATIONS; AMENDING SECTION 26-2244, IDAHO CODE, TO PROVIDE
 13        FOR CERTAIN CEASE AND DESIST ORDERS, TO INCREASE THE MONETARY  CIVIL  PEN-
 14        ALTY  THAT  MAY BE IMPOSED BY THE DIRECTOR AND TO PROVIDE ADDITIONAL CIVIL
 15        PENALTIES THAT MAY BE IMPOSED; AMENDING SECTION 26-2245,  IDAHO  CODE,  TO
 16        EXTEND  THE  DIRECTOR'S  AUTHORITY  TO  BRING  AN ACTION TO ENJOIN CERTAIN
 17        VIOLATIONS TO VIOLATIONS OF ORDERS ISSUED PURSUANT TO  CHAPTER  22,  TITLE
 18        26,  IDAHO CODE, TO PROVIDE FOR ADDITIONAL REMEDIES THAT MAY BE GRANTED TO
 19        THE DIRECTOR AND TO  MAKE  TECHNICAL  CORRECTIONS;  AND  AMENDING  SECTION
 20        26-2251,  IDAHO CODE, TO CLARIFY THE EFFECTIVE DATE OF PERMIT CANCELLATION
 21        FOR ANY PERMITTEE FAILING TO APPLY FOR RENEWAL OF A  PERMIT  IN  A  TIMELY
 22        MANNER AND TO MAKE TECHNICAL CORRECTIONS.
                                                                        
 23    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 24        SECTION  1.  That  Section 26-2222, Idaho Code, be, and the same is hereby
 25    amended to read as follows:
                                                                        
 26        26-2222.  DEFINITIONS. As used in this chapter:
 27        (1)  "Agent" means any person who is compensated on a commission basis  or
 28    by salary, or both, by any permittee and who either contacts debtors or credi-
 29    tors in connection with the collection agency business of the permittee.
 30        (2)  "Business  funds"  means all moneys belonging to or due the permittee
 31    in connection with the operation of a collection agency business.
 32        (3)  "Collection agency," "collection bureau" or "collection office" shall
 33    be a person who engages  in  any  of  the  activities  enumerated  in  section
 34    26-2223, Idaho Code.
 35        (4)  "Director" means the director of the department of finance.
 36        (5)  "Creditor" means any person who transfers to a permittee accounts due
 37    and owing for collection purposes.
 38        (6)  "Creditors'  account" means all funds due and owing a creditor within
 39    the definition of this chapter.
 40        (7)  "Net collections" means all funds that are due to creditors from  the
 41    permittee pursuant to the contract between the permittee and creditor, or per-
 42    mittee and debtor without taking into account any offset or funds due from the
 43    creditor  to  the permittee, because of the creditor having collected any part
                                                                        
                                           2
                                                                        
  1    of the account due, plus all funds that the  permittee  agreed  to  return  to
  2    debtors or that were not to be applied to debts.
  3        (8)  "Permittee"  means a person who has a permit to do business as a col-
  4    lection agency, or debt counselor, or credit counselor in Idaho.
  5        (9)  "Person" means any permittee, agent, solicitor, individual,  corpora-
  6    tion,  association,  copartnership, trust, company or unincorporated organiza-
  7    tion.
  8        (10) "Debt counselor" means any person engaged in any  of  the  activities
  9    enumerated in subsection (6) of section 26-2223, Idaho Code.
 10        (11) "Credit  counselor" means any person engaged in any of the activities
 11    enumerated in subsections (6) and or (7)  of  section  26-2223,  Idaho  Code.,
 12    which  is  exempt from federal income taxes as provided in No credit counselor
 13    shall be granted a permit pursuant to this  chapter  unless  qualified  as  an
 14    exempt organization under section 501(c)(3) of the iInternal rRevenue cCode.
                                                                        
 15        SECTION  2.  That  Section 26-2223, Idaho Code, be, and the same is hereby
 16    amended to read as follows:
                                                                        
 17        26-2223.  COLLECTION AGENCY, DEBT COUNSELOR, OR CREDIT COUNSELOR  PERMITS.
 18    No  person  shall  without  complying  with  the terms of this act chapter and
 19    obtaining a permit from the director:
 20        (1)  Operate as a collection agency, collection bureau, collection office,
 21    debt counselor, or credit counselor in this state.
 22        (2)  Engage, either directly or indirectly in this state in  the  business
 23    of  collecting  or receiving payment for others of any account, bill, claim or
 24    other indebtedness.
 25        (3)  Solicit or advertise for the right to collect or receive payment  for
 26    another of any account, bill, claim or other indebtedness.
 27        (4)  Sell or otherwise distribute any system or systems of collection let-
 28    ters  and  similar  printed matter where the name of any person other than the
 29    particular creditor to whom the debt is owed appears.
 30        (5)  Engage in any activity which indicates, directly or indirectly,  that
 31    a third party may be involved in effecting any collections.
 32        (6)  Engage  or  offer  to  engage in the business of receiving money from
 33    debtors for application to or payment of or prorating of any creditor or cred-
 34    itors of such debtor.
 35        (7)  Engage or offer to engage for compensation in the business of  credit
 36    providing  counseling  or other services to debtors in the management of their
 37    debts, and contracting with the debtor to effect the  adjustment,  compromise,
 38    or discharge of any account, note or other indebtedness of the debtor.
 39        (8)  Engage  or  offer  to  engage  in the business of credit repair which
 40    includes obtaining, for others, improvements in credit records, extensions  of
 41    credit  for  clients,  or  causing  the  removal  of documents from the credit
 42    records of a client maintained by a credit reporting agency.
 43        (9)  Engage or offer to engage in this state, directly or  indirectly,  in
 44    the  business  of  collecting  any  form of indebtedness for that person's own
 45    account if the indebtedness was  acquired  from  another  person  and  if  the
 46    indebtedness was either delinquent or in default at the time it was acquired.
                                                                        
 47        SECTION  3.  That  Section 26-2224, Idaho Code, be, and the same is hereby
 48    amended to read as follows:
                                                                        
 49        26-2224.  FORM OF APPLICATION. Every applicant for such permit shall  file
 50    in  the  department  of finance an application in form to be prescribed by the
 51    director setting forth:
                                                                        
                                           3
                                                                        
  1        (1)  The name of the applicant if an individual; if  the  applicant  is  a
  2    corporation a list of its officers and directors and their addresses.; iIf the
  3    applicant is a partnership, then a list of the members of said partnership and
  4    their  addresses;  must be filed with the application or if the applicant is a
  5    limited liability company  a  list  of  its  members  or  managers  and  their
  6    addresses. Every partnership in its application for a permit corporation shall
  7    designate  and  appoint  one (1) or more of its members officers or employees,
  8    and every corporation in its application for a permit partnership shall desig-
  9    nate and appoint one (1) or more of its officers or  employees  partners,  and
 10    every limited liability company shall designate and appoint one (1) or more of
 11    its  members  or  managers  who  shall  submit  to the examination hereinafter
 12    required. No permit shall be issued to any corporation, partnership or  corpo-
 13    ration  or limited liability company unless and until the persons and officers
 14    so designated by the partnership or corporation shall submit to and  pass  the
 15    examination required by this act chapter.
 16        (2)  The  location  of  the  principal  office or place of business of the
 17    applicant.
 18        (3)  Other names, if any, by which the applicant conducts, engages  in  or
 19    solicits business.
 20        (4)  The  names  of all persons and organizations with which the applicant
 21    is affiliated in such business, and the location of the  principal  office  or
 22    place of business of each such affiliation.
 23        (5)  A  complete  description  of the business to be conducted, or plan of
 24    operation contemplated, by the applicant in this state.
 25        (6)  A list of all papers and filings used by  the  applicant  which  must
 26    accompany the application and be identified as exhibits by number.
 27        (7)  A  financial  statement showing the applicant to have a financial net
 28    worth of not less than two  thousand  five  hundred  dollars  ($2,500),  which
 29    statement  shall  be  subject  to  disclosure according to chapter 3, title 9,
 30    Idaho Code. The financial statement shall specify assets and liabilities, pro-
 31    viding detailed reference to each item listed to inform the  director  of  the
 32    nature  and  extent  of  such assets and liabilities. This financial statement
 33    shall be signed by the applicant or its proper agent. The net worth shall  not
 34    include  any  notes, accounts, bills, and judgments held for collection by the
 35    applicant nor shall it include good will or other assets the value of which is
 36    speculative and not susceptible to prompt liquidation.
 37        (8)  Such other information concerning the  applicant's  business  as  the
 38    director  may reasonably require. Such application shall be executed and veri-
 39    fied by the applicant or applicants personally, or by the president or  secre-
 40    tary  where  an  individual associated with the applicant is an association or
 41    corporation as designated by the director.
                                                                        
 42        SECTION 4.  That Section 26-2231, Idaho Code, be, and the same  is  hereby
 43    amended to read as follows:
                                                                        
 44        26-2231.  RENEWAL  OF PERMIT. Upon application made prior to postmarked on
 45    or before the fifteenth day of March of each year, the holder  of  any  permit
 46    issued under the provisions of this act chapter shall be entitled to have such
 47    permit  renewed  for  the  succeeding calendar year upon payment of the annual
 48    permit fee as fixed by the director, but not to exceed fifty dollars ($50.00),
 49    compliance with the bond requirements of this act chapter,  the  filing  of  a
 50    financial  statement  in  the form required by section 26-2224(7), Idaho Code,
 51    showing a net worth of at least two thousand five hundred dollars ($2,500) for
 52    each place of business for which a permit is sought, filing of all other docu-
 53    ments required by section 26-2224, Idaho Code, and approval by the director of
                                                                        
                                           4
                                                                        
  1    all literature to be employed by the permittee during the course of the  busi-
  2    ness  year,  except  no  annual permit renewal fee need be paid by a nonprofit
  3    corporation or association conducting  credit  counseling  or  debt  prorating
  4    activities.
                                                                        
  5        SECTION  5.  That  Section 26-2234, Idaho Code, be, and the same is hereby
  6    amended to read as follows:
                                                                        
  7        26-2234.  INVESTIGATIONS, RECORDS AND PAYMENT OF FUNDS. (1)  The  director
  8    or his duly authorized representatives may make an annual examination, or more
  9    frequently in the director's discretion, of the place of business of each per-
 10    mittee and foreign permittee and for that purpose the director shall have free
 11    access  to  the  offices  and  places of business, books, creditors' accounts,
 12    trust accounts, business accounts, records, papers, files, safes and vaults of
 13    all such permittees.
 14        (2)  The director may, upon his own motion, and shall, upon the sworn com-
 15    plaint in writing of any person, investigate the action of any person or  per-
 16    sons  claimed  to  have  violated the provisions of this chapter, and for that
 17    purpose the director shall have free access to the offices and places of busi-
 18    ness, books, creditors' accounts, trust accounts, business accounts,  records,
 19    papers, files, safes and vaults of all such persons.
 20        (3)  Every  permittee  and foreign permittee shall execute to the director
 21    an agreement of consent to examination of any and all  bank  accounts  of  the
 22    permittee  providing  the  director with authority to make such examination at
 23    any time the director, in his discretion, deems it to be in the public  inter-
 24    est.
 25        (4)  The  actual cost of examination for the first annual examination each
 26    year and any investigation shall be paid to the director by each permittee  so
 27    examined  or  investigated  and  the  director  may maintain an action for the
 28    recovery of such costs against the permittee or against the  surety  providing
 29    the  bond  to  indemnify  the  state for such expenditures as required by this
 30    chapter. The cost shall be fixed annually  by  the  director,  but  shall  not
 31    exceed twenty-five dollars ($25.00) per examination hour.
 32        (5)  Each permittee shall acknowledge in writing each account received for
 33    collection  and  shall  maintain  a  record  of such account, make a permanent
 34    record of all sums collected by him and of  all  disbursements  made  by  him.
 35    Every  permittee  shall  keep  and  preserve  all records relating to accounts
 36    received for collection, collections, receipts, and disposal  or  disbursement
 37    of  all creditors' funds for a period of five (5) years after the final dispo-
 38    sition of any account. It shall be unlawful for any  person  to  intentionally
 39    make  any false entry, omit to make a necessary entry, mutilate, secrete away,
 40    destroy or otherwise dispose of any record mentioned in this subsection,  pro-
 41    vided  a  record  may be disposed of after the five (5) year period heretofore
 42    provided.
 43        (6)  Every permittee shall, within thirty (30) days  after  the  close  of
 44    each  calendar month, pay to his creditors the net proceeds of all collections
 45    made by the permittee during said calendar month. Each permittee shall  report
 46    to  the  creditor  all collections made by him and/or any payments made to the
 47    creditor within thirty (30) days after the close of each calendar month.
 48        (7)  Every permittee shall maintain his books and  records  in  accordance
 49    with generally accepted accounting practices subject to such rules and regula-
 50    tions as adopted by the director.
 51        (8)  The  director, may impound the creditors' accounts, or trust accounts
 52    of any permittee if it shall be deemed in the general public interest.
                                                                        
                                           5
                                                                        
  1        SECTION 6.  That Section 26-2244, Idaho Code, be, and the same  is  hereby
  2    amended to read as follows:
                                                                        
  3        26-2244.  CEASE AND DESIST ORDERS, PENALTY. (1) Whenever it appears to the
  4    director  that  it is in the public interest, he may order any person to cease
  5    and desist from acts, practices, or omissions which constitute a violation  of
  6    this chapter.
  7        (2)  Whenever,  after  notice  and  a hearing, the director finds that any
  8    person has violated any provision of this chapter, the director may order  the
  9    person  to cease and desist from acts, practices or omissions which constitute
 10    a violation of this chapter and:
 11        (a)  Iimpose a civil penalty of not more than one two thousand  five  hun-
 12        dred  dollars ($1,02,500) for each violation upon any person found to have
 13        violated any provision of this chapter;
 14        (b)  Issue an order restoring to any person in interest any  consideration
 15        that  may  have been acquired or transferred in violation of this chapter;
 16        or
 17        (c)  Issue an order that the person  violating  this  chapter  pay  costs,
 18        which in the discretion of the director may include an amount representing
 19        reasonable attorney's fees and reimbursement for investigative efforts.
                                                                        
 20        SECTION  7.  That  Section 26-2245, Idaho Code, be, and the same is hereby
 21    amended to read as follows:
                                                                        
 22        26-2245.  DIRECTOR'S POWER TO ENJOIN VIOLATIONS. (1) Whenever  it  appears
 23    to  the director that any person, or employee or agent thereof, has engaged in
 24    or is about to engage in any act or practice or omission constituting a viola-
 25    tion of any provision of this act chapter, or any rule or order hereunder,  he
 26    may  in  his discretion bring an action in any court of competent jurisdiction
 27    to enjoin any such acts or practices and to enforce compliance with  this  act
 28    chapter  or  any rules hereunder. Upon a showing that a person, or employee or
 29    agent of any person, has engaged in or is about to engage in an act  or  prac-
 30    tice constituting a violation of this act chapter or any rule or order hereun-
 31    der,  a  permanent  or  temporary  injunction,  or  restraining order shall be
 32    granted and a receiver or conservator may be  appointed  for  the  defendant's
 33    assets. The director shall not be required to furnish bond.
 34        (2)  In  addition  to  the  foregoing, the director, in his discretion and
 35    upon a showing in any court of competent jurisdiction that a person  has  vio-
 36    lated  the  provisions  of  this  chapter  or  rule or order hereunder, may be
 37    granted the following additional remedies:
 38        (a)  An order restoring to any person in interest any  consideration  that
 39        may have been acquired or transferred in violation of this chapter;
 40        (b)  An  order that the person violating this chapter, rule or order here-
 41        under, pay a civil penalty to the department in an amount  not  to  exceed
 42        two thousand five hundred dollars ($2,500) for each violation;
 43        (c)  An order allowing the director to recover costs, which in the discre-
 44        tion of the court may include an amount representing reasonable attorney's
 45        fees and reimbursement for investigative efforts;
 46        (d)  An order granting other appropriate remedies upon a proper showing.
                                                                        
 47        SECTION  8.  That  Section 26-2251, Idaho Code, be, and the same is hereby
 48    amended to read as follows:
                                                                        
 49        26-2251.  CANCELLATION OF PERMIT. Any permittee or foreign permittee fail-
 50    ing to apply in a timely manner for renewal of a permit shall have said permit
                                                                        
                                           6
                                                                        
  1    cancelled on canceled effective the day following the  last  day  for  renewal
  2    applications  to  be filed. Engaging in collection agency business with a can-
  3    celled canceled permit shall be a violation of the provisions of this chapter.
  4    To restore a cancelled canceled permit the fee shall be  two  hundred  dollars
  5    ($200). A cancelled canceled permit may be restored only before the expiration
  6    of six (6) months following the date of annual renewal.

Statement of Purpose / Fiscal Impact


                         STATEMENT OF PURPOSE

                              RS 11414C1



The primary purposes of this legislation are to (1) clarify the 
definition of "credit counseling" in the Idaho Collection Agency 
Act; (2) amend the application process to recognize that limited 
liability companies may apply to become collection agencies; (3) 
amend the Department's cease and desist, and injunctive authority 
to allow orders for restitution and increase the fine amount, and 
(4) amend the renewal provisions to allow renewal applications to 
be postmarked by the last renewal date.

                         FISCAL IMPACT

No fiscal impact.

CONTACT
Name:     Mary E. Hughes
Agency:   Finance, Dept. of
Phone:    208-332-8060

Statement of Purpose/Fiscal Impact                    S 1288