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HOUSE BILL NO. 451

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H0451aa.........................................................by BUSINESS
COLLECTION AGENCIES - Amends, adds to and repeals existing law to revise
definitions; to revise activities that require a license; to provide that
licensees maintain a licensed home office; to provide for a license
application and fees; to provide for the director's approval of license
applications; to provide for the denial of license applications or the
suspension or revocation of a license; to revise powers of the director of
the Department of Finance; to delete provisions relating to permits and
applications; to provide requirements for collection agency contracts; to
revise provisions requiring open, fair and honest dealings; to revise
filing of a bond; to revise alternate bonding; to revise trust accounts; to
provide for investigations and examinations of licensees; to revise
violations and penalties; to revise exemptions; to revise civil penalties;
and to provide that the director may issue orders.

02/01    House intro - 1st rdg - to printing
02/04    Rpt prt - to Bus
03/06    Rpt out - to Gen Ord
03/11    Rpt out amen - to engros
03/12    Rpt engros - 1st rdg - to 2nd rdg as amen
03/13    2nd rdg - to 3rd rdg as amen
03/14    3rd rdg as amen - PASSED - 64-4-2
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
      Block, Bock, Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon,
      Chavez, Chew, Clark, Collins, Crane, Eskridge, Hagedorn, Hart,
      Harwood, Henderson, Jaquet, Killen, King, Kren, Labrador, Lake,
      Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer, Moyle,
      Nielsen, Nonini, Pasley-Stuart, Patrick, Pence, Raybould, Roberts,
      Ruchti, Rusche, Sayler, Schaefer, Shepherd(02), Shepherd(08),
      Shirley, Shively, Smith(30), Smith(24), Snodgrass, Stevenson, Thayn,
      Thomas, Vander Woude, Wood(27), Wood(35), Mr. Speaker
      NAYS -- Durst, LeFavour, Ringo, Trail
      Absent and excused -- Henbest, Wills
    Floor Sponsor - Rusche
    Title apvd - to Senate
03/17    Senate intro - 1st rdg - to Com/HuRes
03/24    Rpt out - rec d/p - to 2nd rdg
03/25    2nd rdg - to 3rd rdg
03/26    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
      Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Gannon(Gannon),
      Geddes, Goedde, Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough,
      Langhorst, Little, Lodge, Malepeai(Sagness), McGee, McKague,
      McKenzie, Pearce, Richardson, Schroeder, Siddoway, Stegner, Stennett,
      Werk
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Andreason
    Title apvd - to House
03/26    To enrol - Rpt enrol - Sp signed
03/27    Pres signed
03/28    To Governor
04/01    Governor signed
         Session Law Chapter 347
         Effective: 07/01/08

Bill Text

                                                                       
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008

                                                                       

                              IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 451

                                   BY BUSINESS COMMITTEE

  1                                        AN ACT
  2    RELATING TO THE IDAHO COLLECTION AGENCY ACT; AMENDING SECTION  26-2222,  IDAHO
  3        CODE, TO REVISE AND ADD DEFINITIONS; AMENDING SECTION 26-2223, IDAHO CODE,
  4        TO PROVIDE CORRECT TERMINOLOGY, TO REVISE CREDIT REPAIR ACTIVITIES REQUIR-
  5        ING  A  LICENSE,  AND  TO  MAKE  TECHNICAL  CORRECTIONS;  AMENDING SECTION
  6        26-2223A, IDAHO CODE, TO  MAKE  TECHNICAL  CORRECTIONS,  TO  REQUIRE  THAT
  7        LICENSEES MAINTAIN A LICENSED HOME OFFICE AS A PRINCIPAL LOCATION FOR COL-
  8        LECTION  ACTIVITIES AND TO REVISE PROVISIONS FOR A  DESIGNATED RESPONSIBLE
  9        PERSON; AMENDING SECTION 26-2224, IDAHO CODE, TO REVISE  LICENSE  APPLICA-
 10        TION  REQUIREMENTS;  REPEALING  SECTION  26-2225,  IDAHO CODE, RELATING TO
 11        INFORMATION AND MATERIALS REQUIRED WITH APPLICATION, EXAMINATION  FEE  AND
 12        CONSENT  TO  SERVICE;  AMENDING  CHAPTER  22, TITLE 26, IDAHO CODE, BY THE
 13        ADDITION OF A  NEW  SECTION  26-2225,  IDAHO  CODE,  TO  PROVIDE  FOR  THE
 14        DIRECTOR'S  APPROVAL  OF  LICENSE APPLICATIONS; AMENDING CHAPTER 22, TITLE
 15        26, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 26-2227, IDAHO  CODE,  TO
 16        PROVIDE  FOR THE DENIAL OF LICENSE APPLICATIONS OR THE SUSPENSION OR REVO-
 17        CATION OF A LICENSE; AMENDING  SECTION  26-2228,  IDAHO  CODE,  TO  REVISE
 18        POWERS  OF  THE  DIRECTOR  OF  THE DEPARTMENT OF FINANCE; AMENDING SECTION
 19        26-2229, IDAHO CODE, TO DELETE PROVISIONS PROVIDING FOR PERMITS AND APPLI-
 20        CATIONS AND TO REVISE REQUIREMENTS FOR COLLECTION AGENCY CONTRACTS; AMEND-
 21        ING SECTION 26-2229A, IDAHO  CODE,  TO  PROVIDE  CORRECT  TERMINOLOGY,  TO
 22        REVISE  PROVISIONS REQUIRING OPEN, FAIR AND HONEST DEALINGS, TO MAKE TECH-
 23        NICAL CHANGES AND TO PROHIBIT CERTAIN PRACTICES; AMENDING SECTION 26-2230,
 24        IDAHO CODE, TO REVISE PROVISIONS FOR REGISTRATION OF ADDITIONAL PLACES  OF
 25        BUSINESS AND TO DELETE PROVISIONS PERMITTING LIMITED COLLECTION ACTIVITIES
 26        AT CERTAIN LOCATIONS; AMENDING SECTION 26-2231, IDAHO CODE, TO PROVIDE FOR
 27        LICENSE  RENEWAL  AND  TO ESTABLISH A FEE; AMENDING SECTION 26-2232, IDAHO
 28        CODE, TO MAKE TECHNICAL CORRECTIONS, TO PROVIDE  CORRECT  TERMINOLOGY,  TO
 29        REVISE  PROVISIONS  FOR FILING A BOND AND TO DELETE A REQUIREMENT RELATING
 30        TO INDEMNIFICATION OF THE DEPARTMENT; REPEALING  SECTION  26-2232A,  IDAHO
 31        CODE,  RELATING TO ALTERNATE BONDING; AMENDING CHAPTER 22, TITLE 26, IDAHO
 32        CODE, BY THE ADDITION OF A NEW SECTION 26-2232A, IDAHO  CODE,  TO  PROVIDE
 33        BONDING  REQUIREMENTS  FOR  DEBT  COUNSELORS, CREDIT COUNSELORS AND CREDIT
 34        ORGANIZATIONS; AMENDING SECTION 26-2233, IDAHO CODE,  TO  PROVIDE  CORRECT
 35        TERMINOLOGY  AND  TO  REVISE PROVISIONS REQUIRING TRUST ACCOUNTS; AMENDING
 36        SECTION 26-2234, IDAHO CODE, TO PROVIDE CORRECT TERMINOLOGY, TO MAKE TECH-
 37        NICAL CORRECTIONS, TO REVISE  PROVISIONS  RELATING  TO  INVESTIGATION  AND
 38        EXAMINATION  OF LICENSEES, TO REVISE PROVISIONS FOR RECORDKEEPING, TO PRO-
 39        VIDE FOR REMITTANCE OF FUNDS AND  TO  REVISE  PROVISIONS  AUTHORIZING  THE
 40        DIRECTOR  TO  IMPOUND  ACCOUNTS  OF A LICENSEE; REPEALING SECTION 26-2235,
 41        IDAHO CODE, RELATING TO  DENIAL,  SUSPENSION  AND  REVOCATION  OF  PERMIT;
 42        AMENDING  SECTION  26-2236,  IDAHO  CODE, TO REVISE PROVISIONS RELATING TO
 43        SUBPOENAS, TO PROVIDE CORRECT TERMINOLOGY AND TO  MAKE  TECHNICAL  CORREC-
 44        TIONS;  AMENDING SECTION 26-2237, IDAHO CODE, TO PROVIDE CORRECT TERMINOL-
 45        OGY; AMENDING SECTION 26-2238, IDAHO CODE, TO MAKE  TECHNICAL  CORRECTIONS
 46        AND  TO  REVISE  PROVISIONS FOR VIOLATIONS AND PENALTIES; AMENDING SECTION

                                       2

  1        26-2239, IDAHO CODE, TO PROVIDE CORRECT TERMINOLOGY AND TO  REVISE  PROVI-
  2        SIONS  RELATING  TO  EXEMPTIONS;  AMENDING SECTION 26-2240, IDAHO CODE, TO
  3        PROVIDE CORRECT TERMINOLOGY  AND  TO  REVISE  PROVISIONS  FOR  IDENTIFYING
  4        AGENTS AND FOR FEES; AMENDING SECTION 26-2243, IDAHO CODE, TO PROVIDE COR-
  5        RECT TERMINOLOGY; AMENDING SECTION 26-2244, IDAHO CODE, TO PROVIDE CORRECT
  6        TERMINOLOGY,  TO  REVISE  PROVISIONS  FOR  CEASE  AND DESIST ORDERS AND TO
  7        REVISE CIVIL PENALTIES; AMENDING SECTION 26-2245, IDAHO CODE,  TO  PROVIDE
  8        CORRECT  TERMINOLOGY,  TO  MAKE  TECHNICAL CORRECTIONS AND TO REVISE CIVIL
  9        PENALTIES; REPEALING SECTION 26-2246, IDAHO CODE, RELATING TO  DISCONTINU-
 10        ANCE  OF  OPERATIONS;  AMENDING  CHAPTER  22, TITLE 26, IDAHO CODE, BY THE
 11        ADDITION OF A NEW SECTION 26-2246, IDAHO CODE, TO PROVIDE REQUIREMENTS FOR
 12        COLLECTION AGENCY CLOSURE OR DISCONTINUANCE OF OPERATIONS;  AMENDING  SEC-
 13        TION  26-2248,  IDAHO  CODE,  TO MAKE TECHNICAL CORRECTIONS AND TO PROVIDE
 14        THAT THE DIRECTOR MAY ISSUE ORDERS; REPEALING SECTION 26-2250, IDAHO CODE,
 15        RELATING TO FOREIGN PERMITTEES AND SECTION 26-2251, IDAHO  CODE,  RELATING
 16        TO  CANCELLATION OF PERMITS; AMENDING CHAPTER 22, TITLE 26, IDAHO CODE, BY
 17        THE ADDITION OF A NEW SECTION 26-2251, IDAHO CODE, TO  PROVIDE  SEVERABIL-
 18        ITY;  AND  AMENDING SECTION 1-2301A, IDAHO CODE, TO PROVIDE CORRECT TERMI-
 19        NOLOGY AND TO PROVIDE A CORRECT CODE REFERENCE.

 20    Be It Enacted by the Legislature of the State of Idaho:

 21        SECTION 1.  That Section 26-2222, Idaho Code, be, and the same  is  hereby
 22    amended to read as follows:

 23        26-2222.  DEFINITIONS. As used in this chapter act:
 24        (1)  "Agent" means any person who, is compensated on a commission basis or
 25    by  salary, or both, by any permittee and who either for compensation or gain,
 26    or in the expectation of compensation or gain, contacts debtors  or  creditors
 27    persons  in Idaho in connection with the collection agency business activities
 28    of the permittee a licensee or person required to be licensed under this act.
 29        (2)  "Business funds" means all moneys belonging to or due the permittee a
 30    licensee or person required to be licensed in connection with the operation of
 31    a collection agency business activities authorized under this act.
 32        (3)  "Collection activities" means the activities  enumerated  in  subsec-
 33    tions (2) through (6) of section 26-2223, Idaho Code.
 34        (4)  "Collection agency," "collection bureau" or "collection office" shall
 35    be  means  a person who engages in any of the activities enumerated in subsec-
 36    tions (2) through (6) of section 26-2223, Idaho Code.
 37        (4)  "Director" means the director of the department of finance.
 38        (5)  "Credit repair organization" means any person engaged in any  of  the
 39    activities enumerated in subsection (8) of section 26-2223, Idaho Code.
 40        (56)  "Creditor"  means  any  person who transfers to a permittee accounts
 41    due and owing for collection purposes offers or extends credit creating a debt
 42    or to whom a debt is owed.
 43        (7)  "Creditor client" means any person who transfers or assigns to a col-
 44    lection agency licensee or person required to be so licensed under  this  act,
 45    any account, bill, claim or other indebtedness for collection purposes.
 46        (68)  "Creditors' account "Creditor funds" means all funds due and owing a
 47    creditor  within  the  definition  of  this  chapter  by  a licensee or person
 48    required to be licensed under this act.
 49        (9)  "Debt counselor" or "credit counselor" means any  person  engaged  in
 50    any  of  the activities enumerated in subsection (7) of section 26-2223, Idaho
 51    Code.
 52        (10) "Department" means the Idaho department of finance.

                                       3

  1        (11) "Director" means the director of the Idaho department of finance.
  2        (12) "Licensee" means a person who has obtained a license under this act.
  3        (713) "Net collections" means all funds that are due to creditors from the
  4    permittee licensee pursuant to the contract between the permittee licensee and
  5    creditor, or permittee licensee and debtor without  taking  into  account  any
  6    offset  or  funds  due from the creditor to the permittee licensee, because of
  7    the creditor having collected any part of the account due, plus all funds that
  8    the permittee licensee agreed to return to debtors or  that  were  not  to  be
  9    applied to debts.
 10        (8)  "Permittee"  means a person who has a permit to do business as a col-
 11    lection agency, or debt counselor, or credit counselor in Idaho.
 12        (914) "Person" means any permittee, agent, solicitor, individual, corpora-
 13    tion, association, copartnership partnership, limited  liability  partnership,
 14    trust,  company,  limited  liability  company,  or unincorporated organization
 15    association.
 16        (10) "Debt counselor" means any person engaged in any  of  the  activities
 17    enumerated in subsection (6) of section 26-2223, Idaho Code.
 18        (11) "Credit  counselor" means any person engaged in any of the activities
 19    enumerated in subsection (6) or (7) of section 26-2223, Idaho Code. No  credit
 20    counselor  shall be granted a permit pursuant to this chapter unless qualified
 21    as an exempt organization under section  501(c)(3)  of  the  Internal  Revenue
 22    Code.

 23        SECTION  2.  That  Section 26-2223, Idaho Code, be, and the same is hereby
 24    amended to read as follows:

 25        26-2223.  COLLECTION AGENCY, DEBT COUNSELOR, OR CREDIT COUNSELOR,  PERMITS
 26    OR  CREDIT  REPAIR  ORGANIZATION  -- LICENSE REQUIRED. No person shall without
 27    complying with the terms of this chapter act and obtaining  a  permit  license
 28    from the director:
 29        (1)  Operate as a collection agency, collection bureau, collection office,
 30    debt  counselor,  or  credit  counselor, or credit repair organization in this
 31    state.
 32        (2)  Engage, either directly or indirectly, in this state in the  business
 33    of  collecting  or receiving payment for others of any account, bill, claim or
 34    other indebtedness.
 35        (3)  Solicit or advertise for the  right  in  this  state  to  collect  or
 36    receive payment for another of any account, bill, claim or other indebtedness.
 37        (4)  Sell  or  otherwise distribute in this state any system or systems of
 38    collection letters and or similar printed matter where the name of any  person
 39    other than the particular creditor to whom the debt is owed appears.
 40        (5)  Engage  in  any  activity  in this state which indicates, directly or
 41    indirectly, that a third party is or may be involved in effecting any  collec-
 42    tions.
 43        (6)  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        (7)  Engage or offer to engage in this state in the business of  receiving
 48    money  from debtors for application to or payment of to or prorating of a debt
 49    owed to, any creditor or creditors of such debtor., or
 50        (7)  Eengage or offer to engage in this state in the business of providing
 51    counseling or other services to debtors in the management of their debts,  and
 52    or  contracting  with the debtor to effect the adjustment, compromise, or dis-
 53    charge of any account, note or other indebtedness of the debtor.

                                       4

  1        (8)  Engage or offer to engage in this state in  the  business  of  credit
  2    repair  which  includes obtaining, for others, improvements in credit records,
  3    extensions of credit for clients, or causing the removal of documents from the
  4    credit records of a client maintained by a credit reporting agency.
  5        (9)  Engage or offer to engage in this state, directly or  indirectly,  in
  6    the  business  of  collecting  any  form of indebtedness for that person's own
  7    account if the indebtedness was  acquired  from  another  person  and  if  the
  8    indebtedness  was  either delinquent or in default at the time it was acquired
  9    selling, providing or performing services to  improve  any  consumer's  credit
 10    record,  credit history or credit rating, or providing advice or assistance to
 11    any consumer with regard to  his  credit  record,  credit  history  or  credit
 12    rating.

 13        SECTION  3.  That Section 26-2223A, Idaho Code, be, and the same is hereby
 14    amended to read as follows:

 15        26-2223A.  OFFICE TO BE  MAINTAINED  IN  STATE  COLLECTION  AGENCY  OFFICE
 16    REQUIREMENTS  -- DESIGNATION OF RESPONSIBLE PERSON. Every permittee under this
 17    chapter must maintain an office in the state of Idaho, staffed with  at  least
 18    one (1) natural person who passed the examination required in section 26-2229,
 19    Idaho  Code, or is exempt from the provisions of this chapter pursuant to sec-
 20    tion 26-2239(1), Idaho Code, at each branch or facility.
 21        (1)  Each permittee licensee shall maintain a home office  licensed  under
 22    this act as the licensee's principal location for collection activities.  Each
 23    licensee   must have maintain a listed Idaho telephone number and must be open
 24    to the public during normal business hours on  each  business  day,  provided,
 25    however, that the director may in his discretion approve a request for opening
 26    at  during  hours  other than normal business hours or a portion of a business
 27    day. A business day within the meaning of this section does not include Satur-
 28    days, Sundays, or legal holidays.
 29        (2)  Each permittee under this chapter must  licensee  shall  designate  a
 30    natural  person,  who  need  not be a resident of the state of Idaho meets the
 31    experience requirement of section 26-2224(6), Idaho Code,  to  be  responsible
 32    for  the  business collection activities carried on at the each office and who
 33    has passed the examination for a permit required  by  section  26-2229,  Idaho
 34    Code  of the licensee. If the person designated by the permittee to be respon-
 35    sible for business carried on at the office licensee for such purpose  is  not
 36    normally    available  in  at the Idaho office licensee's designated location,
 37    then the permittee's licensee's  collection activities with debtors  in  Idaho
 38    must  begin  with  a  written  notice  to  each debtor setting forth a mailing
 39    address and a toll-free telephone number whereby a debtor may contact the des-
 40    ignated responsible person during normal business hours.

 41        SECTION 4.  That Section 26-2224, Idaho Code, be, and the same  is  hereby
 42    amended to read as follows:

 43        26-2224.  FORM  OF  LICENSE APPLICATION. Every applicant for such permit a
 44    license under this act shall file in the department of finance with the direc-
 45    tor  an application in a form to be prescribed by the director  setting  forth
 46    that shall include:
 47        (1)  The  name  of  the applicant; if an individual; if the applicant is a
 48    corporation, a list of its officers and directors and their addresses; if  the
 49    applicant  is a partnership, a list of the partners and their addresses; or if
 50    the applicant is a limited liability company, a list of its  members  or  man-
 51    agers  and  their addresses. Every corporation shall designate and appoint one

                                       5

  1    (1) or more of its officers or employees, every  partnership  shall  designate
  2    and  appoint one (1) or more of its partners, and every limited liability com-
  3    pany shall designate and appoint one (1) or more of its  members  or  managers
  4    who  shall submit to the examination hereinafter required.  No permit shall be
  5    issued to any corporation, partnership or limited liability company unless and
  6    until the persons so designated shall  submit  to  and  pass  the  examination
  7    required by this chapter.
  8        (2)  The  street  address  of  the  applicant's principal location. of the
  9    principal office or place of business of the applicant.
 10        (3)  Other All names, if any, by which the applicant conducts, engages  in
 11    or solicits business collection activities.
 12        (4)  The  names  of all persons and organizations with which the applicant
 13    is affiliated, in such business, and the location of the principal  office  or
 14    place of business of each such affiliation affiliate.
 15        (5)  A  complete  description  of the business to be conducted, or plan of
 16    operation contemplated, by the applicant in this state.
 17        (6)  The name, address and qualifications of a natural person possessing a
 18    minimum of three (3) years of experience related to the business  to  be  con-
 19    ducted under this act who will supervise the applicant's office locations from
 20    which business activities in this state will be conducted.
 21        (7)  A  list  Copies of all papers and filings contracts, forms, form let-
 22    ters, and advertisements or solicitations to be used by the applicant  in  its
 23    business  activities  under this act, which must accompany the application and
 24    be identified as exhibits by number.
 25        (7)  A financial statement showing the applicant to have a  financial  net
 26    worth  of  not  less  than  two  thousand five hundred dollars ($2,500), which
 27    statement shall be subject to disclosure according  to  chapter  3,  title  9,
 28    Idaho Code. The financial statement shall specify assets and liabilities, pro-
 29    viding  detailed  reference  to each item listed to inform the director of the
 30    nature and extent of such assets and  liabilities.  This  financial  statement
 31    shall  be signed by the applicant or its proper agent. The net worth shall not
 32    include any notes, accounts, bills, and judgments held for collection  by  the
 33    applicant nor shall it include good will or other assets the value of which is
 34    speculative and not susceptible to prompt liquidation.
 35        (8)  If the applicant is a corporation, a limited liability company, part-
 36    nership,  or limited liability partnership, a copy of its articles of incorpo-
 37    ration, articles of organization, partnership agreement, or  operating  agree-
 38    ment, duly authenticated.
 39        (9)  A  list of the names, business addresses and telephone numbers of all
 40    agents who will contact persons or solicit business for the applicant in  this
 41    state.
 42        (10) The name and business address of the applicant's agent for service of
 43    process located in this state.
 44        (11) A nonrefundable application fee of one hundred fifty dollars ($150).
 45        (12) An  agreement  of consent authorizing the director to examine any and
 46    all of the applicant's financial accounts used for business  activities  under
 47    this act.
 48        (813) Such  other  information  concerning the applicant's business as the
 49    director may reasonably require. Such application shall be executed and  veri-
 50    fied  by  the  by  the applicant or applicants personally, or by an individual
 51    associated with the applicant as designated by the director  on  oath  by  the
 52    applicant.  Information required at the time of application, except for adver-
 53    tisements and solicitations, shall be updated and filed with the  director  as
 54    necessary to keep the information current.

                                       6

  1        SECTION  5.  That  Section 26-2225, Idaho Code, be, and the same is hereby
  2    repealed.

  3        SECTION 6.  That Chapter 22, Title 26, Idaho Code, be,  and  the  same  is
  4    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
  5    ignated as Section 26-2225, Idaho Code, and to read as follows:

  6        26-2225.  APPROVAL OF LICENSE APPLICATION. (1) The director shall act upon
  7    all applications for a license under this act. If the director determines that
  8    the requirements of this act have been met and all applicable fees  paid,  and
  9    the  applicant  is not otherwise unqualified for licensure, the director shall
 10    issue a license to the applicant.
 11        (2)  Each license issued under this section shall remain in full force and
 12    effect unless the licensee fails to satisfy the renewal requirements  of  this
 13    act, or the license is relinquished, suspended, terminated or revoked.

 14        SECTION  7.  That  Chapter  22,  Title 26, Idaho Code, be, and the same is
 15    hereby amended by the addition thereto of a NEW SECTION, to be known and  des-
 16    ignated as Section 26-2227, Idaho Code, and to read as follows:

 17        26-2227.  DENIAL,  SUSPENSION OR REVOCATION OF LICENSE. (1) An application
 18    for a license may be denied or, after notice and the opportunity for  a  hear-
 19    ing,  a  license  may be suspended or revoked by the director if he finds that
 20    facts or conditions exist which would have justified the director in  refusing
 21    to  grant  a  license  had such facts or conditions been known to exist at the
 22    time the license was issued, or that the licensee or  the  applicant,  or  any
 23    officer, member, owner, manager or agent of a licensee or applicant:
 24        (a)  Has violated any provision of this act, the federal fair debt collec-
 25        tion  practices  act,  15 U.S.C. section 1692, et seq., as amended, or any
 26        rule or order of the director under this act;
 27        (b)  Is not legally qualified to do business in this state;
 28        (c)  Has failed to retain a natural person with three (3) years of experi-
 29        ence related to the type of business conducted by the licensee under  this
 30        act  to supervise each office from which business activities are conducted
 31        under this act;
 32        (d)  Has failed, refused or neglected to pay or remit to any creditor cli-
 33        ent the agreed portion of any sum collected by the applicant  or  licensee
 34        on any bill, claim, account or other indebtedness entrusted to such appli-
 35        cant or licensee for collection;
 36        (e)  Has  failed  to return to a debtor an amount that was not owed on his
 37        debt;
 38        (f)  Has made a material misstatement in the application for such  license
 39        or renewal;
 40        (g)  Has  obtained or attempted to obtain a license or renewal by fraud or
 41        misrepresentation;
 42        (h)  Has misappropriated or converted to his own use or  improperly  with-
 43        held  moneys collected or held for any other person, except that a collec-
 44        tion agency licensee may convert into business funds his  portion  of  any
 45        moneys  collected  on  behalf  of a creditor client, pursuant to a written
 46        agreement with the creditor client and in compliance with this act;
 47        (i)  Has falsely represented himself as a  licensee  for  the  purpose  of
 48        soliciting for or representing any business covered in this act;
 49        (j)  Has  been  convicted  of,  or  a  court of competent jurisdiction has
 50        entered a withheld judgment for any felony, or for a misdemeanor involving
 51        financial wrongdoing or moral turpitude;

                                       7

  1        (k)  Has had a license substantially equivalent to a  license  under  this
  2        act issued by another state revoked, suspended or denied; or
  3        (l)  Demonstrates  a  lack  of  fitness  to  engage in business activities
  4        authorized for a licensee under this act.
  5        (2)  The director may, after notice and the  opportunity  for  a  hearing,
  6    impose  upon any licensee, or person required to be licensed under this act, a
  7    civil penalty of not more than five thousand dollars ($5,000) for each  viola-
  8    tion of this act.
  9        (3)  The  director  may,  after  notice and the opportunity for a hearing,
 10    impose upon a licensee, or person required to be licensed under this act,  any
 11    sanction authorized by this section if the director finds that an agent of the
 12    licensee,  or  person required to be licensed under this act, has violated any
 13    provision of this act.
 14        (4)  The director may, in his discretion, and by an order issued in accor-
 15    dance with chapter 52, title 67, Idaho Code, prohibit a licensee from using an
 16    individual as an agent if the individual has violated any  provision  of  this
 17    act, or any similar statute or rule of another state.
 18        (5)  Any denial, suspension or revocation of any license issued under this
 19    act shall be governed by chapter 52, title 67, Idaho Code.

 20        SECTION  8.  That  Section 26-2228, Idaho Code, be, and the same is hereby
 21    amended to read as follows:

 22        26-2228.  POWERS OF THE DIRECTOR. The director shall  have  the  power  to
 23    provide  the  manner  and method for conducting examinations. Applications for
 24    examination shall be filed with the director at least ten (10) days  prior  to
 25    the examination date.
 26        The examination shall be uniformly given, may be written or oral or a com-
 27    bination of both and shall be practical in nature. The examination may include
 28    questions  on  bookkeeping,  credit adjusting, business law, collection proce-
 29    dure, business ethics, agency, debtor and creditor relationship, trust  funds,
 30    creditors'  funds, business funds, fiduciary relationships, and the provisions
 31    of this act and the rules duly issued by the director pursuant  to  this  act,
 32    and  such other subject matter as the director by rule may specify. The exami-
 33    nation shall be given twice each year or at such more  frequent  intervals  as
 34    the director may direct In addition to any other duties authorized by law, the
 35    director shall:
 36        (1)  Administer and enforce the provisions and requirements of this act;
 37        (2)  Conduct  investigations and issue subpoenas as necessary to determine
 38    whether a person has violated any provision of this act, rule or order hereun-
 39    der;
 40        (3)  Conduct examinations of the books and records of licensees related to
 41    business activities authorized under this act and  conduct  investigations  as
 42    necessary  and proper for the enforcement of the provisions of this act, rules
 43    or orders hereunder;
 44        (4)  Pursuant to chapter 52, title 67, Idaho Code, issue orders  and  pro-
 45    mulgate  rules that, in the opinion of the director, are necessary to execute,
 46    enforce and effectuate the purposes of this act; and
 47        (5)  Require that all funds collected by the department under this act  be
 48    deposited into the finance administrative account pursuant to section 67-2702,
 49    Idaho Code.

 50        SECTION  9.  That  Section 26-2229, Idaho Code, be, and the same is hereby
 51    amended to read as follows:

                                       8

  1        26-2229.  EXAMINATION -- PERMIT CONTRACTS. (1) The director shall  examine
  2    each  application  for  a  permit  and accompanying papers and investigate the
  3    qualifications of the applicant and if he finds therefrom that the same are in
  4    proper form, that the literature proposed to be circulated does  not  tend  to
  5    conceal  or  misrepresent any fact to the detriment of any person dealing with
  6    the applicant, that the contract or contracts proposed to be entered into  for
  7    the  collection  or  payment  or prorating of accounts, bills, claims or other
  8    indebtedness by the applicant, or prorating or receiving money for payment  to
  9    creditors are equitable, fair and reasonable, and that the applicant meets all
 10    other requirements and qualifications of this act, he shall examine the appli-
 11    cant  if  an individual, or the designated officer or officers or employees of
 12    any corporation and the designated member or members of  any  partnership,  in
 13    the  manner described in section 26-2225, Idaho Code, and if such applicant or
 14    designee passes a satisfactory examination, he shall  cause  a  permit  to  be
 15    issued authorizing the applicant to conduct such a business in this state sub-
 16    ject  to  the  provisions  of  this act, until the fifteenth day of March next
 17    thereafter.
 18        (2)  If the director finds that the applicant does not qualify  under  the
 19    provisions  of  this  act,  the  application  shall be denied. If he finds the
 20    applicant is qualified he must issue a permit upon the  filing  of  the  bonds
 21    required  by  this act and the payment of an annual permit fee as fixed by the
 22    director, but not to exceed fifty dollars ($50), except  that  no  permit  fee
 23    need be paid by a nonprofit corporation or association conducting credit coun-
 24    seling or debt prorating activities.
 25        (31)  Contracts between collection agency licensees or collection agencies
 26    required  to be licensed under this act and creditor clients shall be in writ-
 27    ing.
 28        (2)  No It shall be a violation of this act for any collection agency con-
 29    tract shall be deemed equitable, fair or reasonable within the meaning of this
 30    section which in substance either to:
 31        (a)  Permits the applicant Authorize a  collection agency  to  retain  any
 32        sums due the collected on behalf of a creditor on any account, bill, claim
 33        or other indebtedness collected for him by the applicant on account of, or
 34        as  a setoff against, any fee, commission, charge, expense or compensation
 35        claimed client, other than the regular collection fees or commissions,  to
 36        be due from such creditor on any other account whatever.
 37        (b)  Penalizes  the creditor for failure to produce evidence in support of
 38        any account, bill, claim or item of indebtedness placed with the applicant
 39        for collection in addition to that delivered upon the  execution  of  such
 40        contract. authorized by this act;
 41        (cb)  Penalizes  such  a creditor client for any unintentional error, mis-
 42        take or omission in furnishing  to  the  applicant  the  correct  name  or
 43        address of any debtor. to a collection agency; or
 44        (dc)  Stipulates,  directly  or indirectly, for Require the payment of any
 45        fee, commission or compensation in excess of fifty per cent percent  (50%)
 46        of  the  amount  actually  collected  on any account, bill, claim or other
 47        indebtedness entrusted to the applicant collection agency for collection.,
 48        provided, hHowever, that in the case of that a collection agency  collects
 49        interest  collected  by a permittee on an account, the creditor client and
 50        the permittee by agreement between  them  collection  agency  may  provide
 51        agree  in  writing for division of such interest between them without such
 52        percentage limitation.; and provided further that Furthermore, in the case
 53        of the collection of checks dishonored by nonacceptance or nonpayment, the
 54        creditor client and the permittee collection agency, by written  agreement
 55        between  them,  may provide, in place of a percentage fee, for the payment

                                       9

  1        of a set dollar amount collection fee not to exceed the amount provided in
  2        section 28-22-105, Idaho Code, which shall not be subject to the fifty per
  3        cent percent (50%) limitation. Collection agreements to proceed under sec-
  4        tion 1-2301A, Idaho Code, shall be subject to the fifty per  cent  percent
  5        (50%) limitation.
  6        (43)  A  permit  holder,  engaging in the business of receiving money from
  7    debtors for application to or payment or prorating the account or accounts  of
  8    any creditor or creditors of such debtor, for compensation or otherwise, or in
  9    the  business of acting as the assignee for the benefit of creditors as a pri-
 10    mary or secondary object, No debt counselor, credit counselor or credit repair
 11    organization licensed or required to be licensed under this act shall not take
 12    or receive for services performed by such permit holder for any one (1) person
 13    more than fifteen per cent percent (15%) of the amount received by it  at  any
 14    one  (1)  time  from  or  on behalf of that person for payment or prorating to
 15    creditors, and no other charges shall be made or received for  any  such  ser-
 16    vice.

 17        SECTION 10.  That Section 26-2229A, Idaho Code, be, and the same is hereby
 18    amended to read as follows:

 19        26-2229A.  REQUIREMENT  OF  FAIR,  OPEN  AND  HONEST DEALING -- PROHIBITED
 20    PRACTICES. (1) Every permittee, foreign permittee licensee or person  required
 21    to  be  licensed  under this act and its agents shall deal openly, fairly, and
 22    honestly without deception in the conduct of the collection agency  its  busi-
 23    ness activities in this state under this act.
 24        (2)  When not inconsistent with the statutes of this state, the provisions
 25    of  the federal fair debt collection practices act, 15 U.S.C. section 1692, et
 26    seq., as amended, may be enforced by the director against  agents,  permittees
 27    and foreign permittees collection agencies licensed or required to be licensed
 28    under the provisions of this chapter act.
 29        (23)  In  any  and  every instance where the permittee a collection agency
 30    licensee has a managerial or financial interest in the a creditor  client,  or
 31    where the a creditor client has a managerial or financial interest in the per-
 32    mittee  a collection agency licensee, disclosure of such interest must be made
 33    on each and every contact with a debtor in seeking to make a collection of any
 34    account, claim, or other indebtedness. where  such  interest  or  relationship
 35    exists between creditor and permittee.
 36        (34)  No  permittee, foreign permittee collection agency licensee, or col-
 37    lection agency required to be licensed under this act, or agent of  such  col-
 38    lection  agency  shall  collect  or  attempt  to collect any interest or other
 39    charges, fees, or expenses incidental to the principal obligation unless  such
 40    interest or incidental fees, charges, or expenses: are:
 41             (a)  Are eExpressly authorized by statute;
 42             (b)  Are aAllowed by court rule ruling against the debtor;
 43             (c)  Have been judicially determined; or
 44             (d)  Are  provided  for  in a written form agreement, to be signed by
 45             both the debtor and the permittee licensee, and which has  the  prior
 46             approval  of  the director with respect to the terms of the agreement
 47             and amounts of the fees, interest, charges and expenses; or
 48             (e)  Reasonably relate to the actual cost associated with  processing
 49             a  demand  draft  or  other form of electronic payment on behalf of a
 50             debtor for a debt payment, provided that the debtor has preauthorized
 51             the method of payment and has been notified in advance that such pay-
 52             ment may be made by reasonable alternative means that will not result
 53             in additional charges, fees or expenses to the debtor.

                                       10

  1        (45)  No person shall sell, distribute or make use of solicitations,  col-
  2    lection  letters,  demand forms or other printed matter which are made similar
  3    to or resemble governmental forms or documents, or legal forms used  in  civil
  4    or criminal proceedings.
  5        (56)  No  person  shall  use  any  trade name, address, insignia, picture,
  6    emblem or any other means which creates any impression  that  such  person  is
  7    connected with or is an agency of government.
  8        (7)  No  person licensed, or required to be licensed under this act, shall
  9    misappropriate, transfer, or convert to his own use or benefit, funds  belong-
 10    ing  to  or  held  for  another  person in connection with business activities
 11    authorized under this act.
 12        (8)  No credit repair organization licensed, or required  to  be  licensed
 13    under  this act, shall charge or receive money or other valuable consideration
 14    for the performance of any service which the credit  repair  organization  has
 15    agreed to perform for any consumer before such service is fully performed.
 16        (9)  No  person  licensed  or required to be licensed under this act shall
 17    make a representation or statement of material fact, or omit to state a  mate-
 18    rial  fact,  in  connection with the offer, sale or performance of any service
 19    authorized under this act, if the representation,  statement  or  omission  is
 20    false or misleading or has the tendency or capacity to be misleading.

 21        SECTION  11.  That Section 26-2230, Idaho Code, be, and the same is hereby
 22    amended to read as follows:

 23        26-2230.  BRANCH OFFICES. (1) The director may authorize a permittee, upon
 24    request, to conduct collection activities authorized in this chapter at  addi-
 25    tional  locations.  The  additional A licensee must register, in a manner pre-
 26    scribed by the director, each additional place of business from which  activi-
 27    ties  authorized  under  this act are directly or indirectly conducted in this
 28    state. Registered locations shall be  considered  branches  of  the  permittee
 29    licensee.  The  licensee  shall  inform  the director shall be informed of the
 30    opening and closing of all branch locations operated by permittees of a branch
 31    location at least thirty (30) days prior thereto, and  no  later  than  thirty
 32    (30) days after the closing of any branch location.
 33        (2)  The director may authorize a permittee, upon written request, to con-
 34    duct limited collection activities at locations other than the principal loca-
 35    tion  of  the permittee or branches. The facilities may be at the domiciles of
 36    the agents employed by the permit holder. Collection activities at  facilities
 37    shall  be  limited to telecommunications with creditors, clients, debtors, and
 38    the permittee's offices and branches. The director shall be  informed  of  the
 39    opening and closing of all facility locations operated by permittees.

 40        SECTION  12.  That Section 26-2231, Idaho Code, be, and the same is hereby
 41    amended to read as follows:

 42        26-2231.  RENEWAL OF PERMIT LICENSE. Upon application postmarked
 43        (1)  Oon or before the fifteenth day of March of each year, the holder  of
 44    any  permit issued under the provisions of this chapter each licensee shall be
 45    entitled to have such permit renewed for the  succeeding  calendar  year  upon
 46    payment  of  the annual permit fee as fixed by the director, but not to exceed
 47    fifty dollars ($50.00), compliance with the bond requirements of this chapter,
 48    the  filing  of  a  financial  statement  in  the  form  required  by  section
 49    26-2224(7), Idaho Code, showing a net worth of at least two thousand five hun-
 50    dred dollars ($2,500) for each place of business for which a permit is sought,
 51    filing of all other documents required by section  26-2224,  Idaho  Code,  and

                                       11

  1    approval  by  the  director  of all literature to be employed by the permittee
  2    during the course of the business year, except no annual  permit  renewal  fee
  3    need be paid by a nonprofit corporation or association conducting credit coun-
  4    seling  or  debt  prorating  activities  pay  to  the director a nonrefundable
  5    license renewal fee of one hundred dollars ($100)  and  shall  file  with  the
  6    director  a license renewal form providing complete information as required by
  7    the director.
  8        (2)  Failure to fully comply with the license renewal requirements of this
  9    section by the fifteenth day of March of each year shall result  in  automatic
 10    expiration of the license as of that date.

 11        SECTION  13.  That Section 26-2232, Idaho Code, be, and the same is hereby
 12    amended to read as follows:

 13        26-2232.  COLLECTION AGENCY SURETY BONDS. (1)  Upon approval of the appli-
 14    cation and prior to the issuance of the permit a license under this  act,  the
 15    applicant must shall file in the department of finance two (2) a surety bonds.
 16    Both  bonds  shall be in a form provided prescribed by the attorney general of
 17    this state, and director. The bond shall be executed by the applicant as prin-
 18    cipal and by some a surety company authorized to do business in this state, as
 19    surety, and shall be for the term of any permit  the  license  issued  to  the
 20    applicant. Each permittee shall be required to have the two (2) bonds for each
 21    permit as hereinafter provided. In lieu of the bonds required by this section,
 22    a  certificate  of  deposit issued by an a financial institution authorized to
 23    conduct business in Idaho bank and made payable to the director  may  be  pro-
 24    vided  to the director in the same principal amount as required for the bonds.
 25    The interest on the certificate of deposit shall be payable to  the  permittee
 26    licensee.  The  certificate of deposit shall be maintained at all times during
 27    which the permittee licensee is authorized to do business under Idaho law, and
 28    this act. The certificate of deposit must  provide  that  it  will  remain  in
 29    effect  for  at  least three (3) years following discontinuance of operations,
 30    unless released earlier by the director when all statutory  requirements  have
 31    been met.
 32        (a2)  A The surety bond shall be executed to the state of Idaho in the sum
 33    of  fifteen  thousand  dollars ($15,000) or upon renewal in such larger sum as
 34    hereinafter provided. In any case where a permittee licensee or its  represen-
 35    tatives  has  have failed to account for and pay over the proceeds of any col-
 36    lection made or money received for payment or prorating to creditors,  or  has
 37    have  failed to return to a debtor any sum received that was not to be applied
 38    to his debts, the creditor or debtor shall have in addition to all other legal
 39    remedies a right of action in his own name on such bond without the  necessity
 40    of joining the permittee licensee in such action. The bond shall be continuous
 41    in  form  and  shall  remain  in  full force and effect for the permit license
 42    period. The surety may cancel the bond provided that the surety shall in  such
 43    event provide the permittee licensee and the director with notice no less than
 44    thirty  (30)  days prior to cancelation cancellation of said bond. Such notice
 45    shall be by registered or certified  mail with request for  a  return  receipt
 46    and  addressed  to the permittee licensee at its main office and to the direc-
 47    tor. In no event shall the liability of the surety  for  any  and  all  claims
 48    against the bond exceed the face amount of such bond.
 49        (3)  Upon  renewal  of any permit a license, the permittee  licensee shall
 50    supply the director with a statement of the preceding year's net  collections.
 51    The amount of the bond upon renewal shall be in the amount of fifteen thousand
 52    dollars  ($15,000),  or  two (2) times the average monthly net collections for
 53    the preceding year computed to the next highest one thousand dollars ($1,000),

                                       12

  1    whichever sum is greater, up to a maximum  of  one  hundred  thousand  dollars
  2    ($100,000).
  3        (b)  A  bond  shall  be  executed  to the state of Idaho in the sum of two
  4    thousand dollars ($2,000), which shall be limited to  the  indemnification  of
  5    the  department  of  finance  for any and all expenses incurred as a result of
  6    investigations, administrative proceedings, and prosecutions  which  shall  be
  7    instituted  by  the  director against a permittee or licensee pursuant to this
  8    act. The bond shall be continuous in form and remain in full force and  effect
  9    and  run  concurrently  with  the  permit  period and any renewal thereof. The
 10    surety may cancel the bond provided that the surety shall in such  event  pro-
 11    vide  the  permittee  and  the  director with notice thirty (30) days prior to
 12    cancelation of said bond. Such notice shall be registered  or  certified  mail
 13    with  request  for a return receipt and addressed to the permittee at its main
 14    office and to the director. In no event shall the liability of the surety  for
 15    any and all claims against the bond exceed the face amount of such bond.

 16        SECTION 14.  That Section 26-2232A, Idaho Code, be, and the same is hereby
 17    repealed.

 18        SECTION  15.  That  Chapter  22, Title 26, Idaho Code, be, and the same is
 19    hereby amended by the addition thereto of a NEW SECTION, to be known and  des-
 20    ignated as Section 26-2232A, Idaho Code, and to read as follows:

 21        26-2232A.  DEBT COUNSELORS, CREDIT COUNSELORS, CREDIT REPAIR ORGANIZATIONS
 22    --  BONDS. (1) Upon approval of the application and prior to the issuance of a
 23    license under this act, an applicant for a license as a debt counselor, credit
 24    counselor or credit repair  organization  shall  file  in  the  department  of
 25    finance  a surety bond in a form prescribed by the director. The bond shall be
 26    executed by the applicant as principal and by a surety company  authorized  to
 27    do  business in this state, and shall be for the term of the license issued to
 28    the applicant. In lieu of the bond required by this section, a certificate  of
 29    deposit  issued  by  a financial institution authorized to conduct business in
 30    Idaho may be provided to the director in the same principal amount as required
 31    for the bond. The interest on the certificate of deposit shall be  payable  to
 32    the licensee. The certificate of deposit shall be maintained at all times dur-
 33    ing  which  the licensee is authorized to do business under this act. The cer-
 34    tificate of deposit must provide that it will remain in effect  for  at  least
 35    three  (3)  years following discontinuance of operations, unless released ear-
 36    lier by the director when all statutory requirements have been met.
 37        (2)  The surety bond shall be executed to the state of Idaho in the sum of
 38    fifteen thousand dollars ($15,000) or upon renewal in such larger sum as here-
 39    inafter provided. In any case where a licensee  or  its  representatives  have
 40    failed  to  account  for  and  pay  over moneys accepted, received or held for
 41    another in the licensee's conduct of business authorized by this act, a person
 42    injured thereby shall have, in addition to all other legal remedies,  a  right
 43    of  action  in  his own name on such bond without the necessity of joining the
 44    licensee in such action. The bond shall be continuous in form and shall remain
 45    in full force and effect for the license period. The  surety  may  cancel  the
 46    bond provided that the surety shall in such event provide the licensee and the
 47    director  with  notice  no less than thirty (30) days prior to cancellation of
 48    the bond. Such notice shall be by registered or certified  mail  with  request
 49    for  a  return receipt and addressed to the licensee at its main office and to
 50    the director.  In no event shall the liability of the surety for any  and  all
 51    claims against the bond exceed the face amount of such bond.
 52        (3)  Upon  renewal  of  a  license, the licensee shall supply the director

                                       13

  1    with a statement of the moneys accepted, received or held for another  in  the
  2    licensee's  conduct of business authorized by this act. The amount of the bond
  3    upon renewal shall be in the amount of fifteen thousand dollars ($15,000),  or
  4    two  (2)  times  the  average monthly amount over the preceding year of moneys
  5    accepted, received or held for another in the licensee's conduct  of  business
  6    authorized  by  this  act  computed  to  the next highest one thousand dollars
  7    ($1,000), whichever sum is greater, up to a maximum of  one  hundred  thousand
  8    dollars ($100,000).

  9        SECTION  16.  That Section 26-2233, Idaho Code, be, and the same is hereby
 10    amended to read as follows:

 11        26-2233.  PERMITTEE LICENSEE ACCOUNTS REQUIRED. A permittee shall  in  its
 12    own name:
 13        (1)  Every  licensee under this act that receives or holds funds belonging
 14    to another in connection with the business activities authorized by  this  act
 15    shall,  in  its own name, eEstablish and maintain a separate trust account for
 16    deposit and remittance of creditors' such funds in  a  financial  institution,
 17    the  deposits  of  which are insured by the federal deposit insurance corpora-
 18    tion. A licensee may not, directly or indirectly, misappropriate, misapply  or
 19    borrow money held in trust.
 20        (2)  Every  licensee  under this act shall eEstablish and maintain a sepa-
 21    rate business account for the licensee's business funds and moneys in a finan-
 22    cial institution, the deposits of which are insured  by  the  federal  deposit
 23    insurance corporation.

 24        SECTION  17.  That Section 26-2234, Idaho Code, be, and the same is hereby
 25    amended to read as follows:

 26        26-2234.  EXAMINATIONS, INVESTIGATIONS, RECORDS AND PAYMENT OF FUNDS.  (1)
 27    The  director or his duly authorized representatives may make an annual exami-
 28    nation, or more frequently in the  director's  discretion,  of  the  place  of
 29    licensee's  business  of  each  permittee and foreign permittee locations from
 30    which activities authorized under this act are conducted, and for that purpose
 31    the director shall have free access during normal business hours to the  offi-
 32    ces  and  places  of  business,  and  to the books, creditors' accounts, trust
 33    accounts, business accounts, records, papers, files, safes and vaults  of  all
 34    such permittees used by a licensee for its operations under this act.
 35        (2)  The director may, upon his own motion, and shall, upon the sworn com-
 36    plaint  in writing of any person, investigate the action of any person or per-
 37    sons claimed to have violated the provisions of this chapter, and conduct pub-
 38    lic or private investigations and examinations within or outside of this state
 39    which the director considers necessary or appropriate to determine  whether  a
 40    person  has  violated, is violating, or is about to violate this act or a rule
 41    adopted or order issued under this act, or to aid in the enforcement  of  this
 42    act. Ffor that purpose the director shall have free access during normal busi-
 43    ness hours to the offices and places of business, and to the books, creditors'
 44    accounts, trust accounts, business accounts, records, papers, files, safes and
 45    vaults  of  all  such persons used by a licensee for its operations under this
 46    act.
 47        (3)  Every permittee and foreign permittee shall execute to  the  director
 48    an  agreement  of  consent  to examination of any and all bank accounts of the
 49    permittee providing the director with authority to make  such  examination  at
 50    any  time the director, in his discretion, deems it to be in the public inter-
 51    est.

                                       14

  1        (4)  The cost of examination for the first annual  examination  each  year
  2    and any investigation shall be paid to the director by each permittee licensee
  3    so  examined  or  investigated and the director may maintain an action for the
  4    recovery of such costs against the permittee licensee or  against  the  surety
  5    providing the bond to indemnify the state for such expenditures as required by
  6    this  chapter act. The cost shall be fixed annually by the director, but shall
  7    not exceed twenty-five fifty dollars ($250.00) per examination hour.
  8        (54)  Each permittee collection agency licensee shall acknowledge in writ-
  9    ing each account received for collection and shall maintain a record  of  such
 10    account, and shall make a permanent record of all sums collected by him and of
 11    all  disbursements  made.  by  him. Every permittee collection agency licensee
 12    shall keep and preserve all records relating to accounts received for  collec-
 13    tion,  collections moneys collected, receipts, and disposal or disbursement of
 14    all creditors' funds for a period of five three (53)  years  after  the  final
 15    disposition  of any account. It shall be unlawful for any person to intention-
 16    ally make any false entry, omit to make a necessary entry,  mutilate,  secrete
 17    away,  destroy or otherwise dispose of any record mentioned referenced in this
 18    subsection, provided a record may be disposed of after  the  five  three  (53)
 19    year period heretofore provided.
 20        (65)  Every permittee collection agency licensee shall, within thirty (30)
 21    days  after  the  close  following  the end of each calendar month, pay to his
 22    creditors the net proceeds of remit to his creditor clients all funds due them
 23    resulting from collections made by the permittee licensee during said calendar
 24    month. Each permittee shall report to the creditor all collections made by him
 25    and/or any payments made to the creditor within thirty  (30)  days  after  the
 26    close  Such  licensees  shall provide each of their creditor clients a written
 27    statement of all moneys collected on behalf of such creditor clients  and  any
 28    payments  made  to such creditor clients within thirty (30) days following the
 29    end of each calendar month.
 30        (76)  Every permittee shall maintain his books and records  in  accordance
 31    with generally accepted accounting practices subject to such rules and regula-
 32    tions  as  adopted  by  the  director  Every licensee shall maintain books and
 33    records, including financial records in  accordance  with  generally  accepted
 34    accounting  principles, in a manner that will enable the director to determine
 35    whether the licensee is complying with the provisions of this act.
 36        (87)  The director, may impound the creditors' accounts, or trust accounts
 37    of any permittee if  it  shall  be  deemed  in  the  general  public  interest
 38    accounts, including all financial institution operating and trust accounts, of
 39    any licensee or person required to be licensed under this act, if the director
 40    deems  it in the public interest and good cause exists therefor, in accordance
 41    with section 67-5247, Idaho Code.

 42        SECTION 18.  That Section 26-2235, Idaho Code, be, and the same is  hereby
 43    repealed.

 44        SECTION  19.  That Section 26-2236, Idaho Code, be, and the same is hereby
 45    amended to read as follows:

 46        26-2236.  SUBPOENAS. The director shall have the power to issue  subpoenas
 47    and  bring  before him any person, book, or writing in this state as necessary
 48    to determine whether a person has violated any provision of this act, rule  or
 49    order  thereunder,  to swear witnesses and to take the testimony of any person
 50    by deposition, with the same fees and mileage and in the same manner  as  pre-
 51    scribed by law in judicial procedure in district courts of this state in civil
 52    cases.  Any  party  to a proposed revocation or suspension of a permit license

                                       15

  1    shall have the right of subpoena to compel the  attendance  of  witnesses  and
  2    produce all reasonably necessary books and writings on his behalf. In case any
  3    witness  shall  fail  or refuse to comply with a subpoena to appear before the
  4    director, the clerk of the district court of the county in which the  adminis-
  5    trative  proceedings are held shall, upon demand of the director, issue a sub-
  6    poena reciting the demand therefor and summoning the  witness  to  appear  and
  7    testify at a time and place fixed; and violation of such subpoena or disobedi-
  8    ence  thereto  shall be deemed and punished as a violation of any other a sub-
  9    poena issued from by the district court. Any revocation or suspension  of  any
 10    permit  or  license  provided for by this chapter shall be governed by chapter
 11    52, title 67, Idaho Code.

 12        SECTION 20.  That Section 26-2237, Idaho Code, be, and the same is  hereby
 13    amended to read as follows:

 14        26-2237.  FEES  --  DISPOSITION  OF  FUNDS.  All fees provided for in this
 15    chapter act shall be paid to the director and by him  remitted  to  the  state
 16    treasurer pursuant to section 59-1014, Idaho Code, and all such funds shall be
 17    deposited  to  the  credit  of the finance administrative account in the state
 18    dedicated fund.

 19        SECTION 21.  That Section 26-2238, Idaho Code, be, and the same is  hereby
 20    amended to read as follows:

 21        26-2238.  VIOLATIONS  --  PENALTIES. (1)  Any person who shall do business
 22    within the state of Idaho as defined in this act, without  a  permit,  or  any
 23    permit  holder  engages  in activities authorized under this act, who fails to
 24    establish and maintain a separate trust account for such creditors' funds  for
 25    each  permit which he holds, or fails to make and keep the records as required
 26    by under this act, or fails to disburse funds in accordance with the  require-
 27    ments  of  this act, or misappropriates, transfers, or converts to his own use
 28    or benefit, funds belonging to or held for another person, shall, upon convic-
 29    tion, be guilty of a felony and punishable by a fine not exceeding  to  exceed
 30    five  thousand  dollars ($5,000) per violation or by imprisonment in the state
 31    penitentiary for not more than five (5) years, or both, and.
 32        (2)  Any person, except a person exempt under section 26-2239, Idaho Code,
 33    who engages in activities authorized under this act without first obtaining  a
 34    license  as required by this act shall, upon conviction, be guilty of a felony
 35    punishable by a fine not to  exceed  five  thousand  dollars  ($5,000)  or  by
 36    imprisonment for not more than five (5) years, or both.
 37        (3)  Aany person who shall fail to comply with any of the other provisions
 38    of this act shall, upon conviction, be guilty of a misdemeanor.

 39        SECTION  22.  That Section 26-2239, Idaho Code, be, and the same is hereby
 40    amended to read as follows:

 41        26-2239.  EXEMPTIONS. The provisions of this chapter act shall  not  apply
 42    to the following:
 43        (1)  Any  attorney-at-law duly authorized Persons licensed to practice law
 44    in this state, to the extent that they are retained by their clients to engage
 45    in activities authorized by this act, and such activities  are  incidental  to
 46    the  practice of law. Such exemption shall not apply to an attorney engaged in
 47    a separate business conducting the activities authorized by this act;
 48        (2)  Any regulated lender as defined in section 28-41-301(37), Idaho Code,
 49    nor any and its subsidiary, affiliate or agent of such a regulated  lender  to

                                       16

  1    the  extent that the regulated lender, subsidiary, affiliate or agent collects
  2    for the regulated lender or engages in acts governed by  this  act  which  are
  3    incidental to the business of a regulated lender;
  4        (3)  Any  bank,  trust  company, credit union, insurance company or indus-
  5    trial loan company authorized to do business in this state;
  6        (4)  Any federal, state or local governmental agency or instrumentality;
  7        (5)  Any real estate broker or real estate  salesman  licensed  under  the
  8    laws of and residing within this state when while engaged in the regular prac-
  9    tice of a real estate business acts authorized by his real estate license;
 10        (6)  Any abstract and title companies doing an person authorized to engage
 11    in escrow business in this state while engaged in authorized escrow business;
 12        (7)  Any  mortgage  company  to  the  extent that such mortgage company is
 13    engaged in the regular business of a mortgage company as  defined  in  section
 14    26-2802,  Idaho Code, except a mortgage company engaged in a separate business
 15    conducting the activities authorized by this act;
 16        (8)  Any court appointed trustee, receiver or conservator;
 17        (9)  Any telephone corporation, as defined in subsection (10)  of  section
 18    62-603,  Idaho Code, whose initial request for payment on behalf of such tele-
 19    phone corporation or on behalf of another person is made by the telephone cor-
 20    poration as a part of regular telecommunications billings to its customers and
 21    at a time before the account, bill, claim or other indebtedness  becomes  past
 22    due or delinquent;
 23        (10) Any  person while acting as a debt collector for another person, both
 24    of whom are related by common ownership or affiliated by corporate control, if
 25    the person acting as a debt collector does so only for persons to whom  he  is
 26    so  related  or affiliated and if the principal business of such person is not
 27    the collection of debts.

 28        SECTION 23.  That Section 26-2240, Idaho Code, be, and the same is  hereby
 29    amended to read as follows:

 30        26-2240.  AGENT  IDENTIFICATION  --  QUARTERLY  NOTICE -- FEE. Each permit
 31    holder shall applicant for a license under this act, with its initial  license
 32    application, and each licensee at annual renewal, shall file with the director
 33    a  list of all agents including the name of the each agent and any other iden-
 34    tifying information the director may require. A fee of twenty dollars ($20.00)
 35    for each listed agent shall accompany the list.  Each  licensee  shall  notify
 36    tThe  director  shall be notified in writing of any additions to the its agent
 37    list no less often than every  calendar  quarter.  A  fee  of  twenty  dollars
 38    ($20.00)  shall be filed with paid to the director for each additionally iden-
 39    tified agent in the quarterly notification of additions to a  permit  holder's
 40    licensee's agent list. An agent is not required to be listed, nor the fee paid
 41    therefor,  unless the agent acted for the permit holder licensee for more than
 42    five thirty (530) business days.

 43        SECTION 24.  That Section 26-2243, Idaho Code, be, and the same is  hereby
 44    amended to read as follows:

 45        26-2243.  PROPERTY RIGHT IN ACCOUNTS -- PRACTICE OF LAW PROHIBITED. A per-
 46    mit  holder licensee under this act shall have a property right in any account
 47    assigned to it for collection; provided,  however,  no  right  herein  granted
 48    shall authorize such permit holder licensee to engage in the practice of law.

 49        SECTION  25.  That Section 26-2244, Idaho Code, be, and the same is hereby
 50    amended to read as follows:

                                       17

  1        26-2244.  CEASE AND DESIST ORDERS, PENALTY. (1) Whenever it appears to the
  2    director that it is in the public interest, he may order any person  to  cease
  3    and  desist from acts, practices, or omissions which constitute a violation of
  4    this chapter act or a rule adopted or an order issued under this act.
  5        (2)  Whenever, after notice and the opportunity for a hearing, the  direc-
  6    tor  finds that any person has violated engaged in any act, practice, or omis-
  7    sion constituting a violation of any provision of this chapter act or  a  rule
  8    adopted  or  an order issued under this act, the director may order the person
  9    to cease and desist from such acts, practices or omissions which constitute  a
 10    violation of this chapter and:
 11        (a)  Impose  a  civil  penalty  of not more than two thousand five hundred
 12        thousand dollars ($2,5005,000) for each violation upon any person found to
 13        have violated any provision of this chapter act or a rule  adopted  or  an
 14        order issued under this act;
 15        (b)  Issue  an order restoring to any person in interest any consideration
 16        that may have been acquired or transferred in violation  of  this  chapter
 17        act or a rule adopted or an order issued under this act; or and
 18        (c)  Issue  an  order that the person violating this chapter act or a rule
 19        adopted or an order issued under this act pay costs, which in the  discre-
 20        tion  of the director may include an amount representing reasonable attor-
 21        ney's fees and reimbursement for investigative efforts.

 22        SECTION 26.  That Section 26-2245, Idaho Code, be, and the same is  hereby
 23    amended to read as follows:

 24        26-2245.  DIRECTOR'S  POWER  TO ENJOIN VIOLATIONS. (1) Whenever it appears
 25    to the director that any person, or employee or agent thereof, has engaged  in
 26    or is about to engage in any act or practice or omission constituting a viola-
 27    tion of any provision of this chapter act, or any rule or order issued hereun-
 28    der, he may in his discretion bring an action in any court of competent juris-
 29    diction to enjoin any such acts, or practices or omissions and to enforce com-
 30    pliance  with this chapter act or any rules adopted or order issued hereunder.
 31    Upon a showing that a person, or employee or agent of any person, thereof, has
 32    engaged in or is about to engage in an act, or practice or omission constitut-
 33    ing a violation of this chapter act or any rule adopted or order issued  here-
 34    under,  a  permanent  or  temporary  injunction, or restraining order shall be
 35    granted and a receiver or conservator may  be  appointed,  which  may  be  the
 36    director,  for  the  defendant's assets. The director shall not be required to
 37    furnish a bond.
 38        (2)  In addition to the foregoing, the director,  in  his  discretion  and
 39    upon  a  showing in any court of competent jurisdiction that a person has vio-
 40    lated the any provisions of this chapter act or rule adopted or  order  issued
 41    hereunder, may be granted the following additional remedies:
 42        (a)  An  order  restoring to any person in interest any consideration that
 43        may have been acquired or transferred in violation of this chapter act;
 44        (b)  An order that the person violating this chapter act,  rule  or  order
 45        issued  hereunder,  pay a civil penalty to the department in an amount not
 46        to exceed two thousand five hundred  thousand  dollars  ($2,5005,000)  for
 47        each violation;
 48        (c)  An order allowing the director to recover costs, which in the discre-
 49        tion of the court may include an amount representing reasonable attorney's
 50        fees and reimbursement for investigative efforts; and
 51        (d)  An order granting other appropriate remedies upon a proper showing.

 52        SECTION  27.  That Section 26-2246, Idaho Code, be, and the same is hereby

                                       18

  1    repealed.

  2        SECTION 28.  That Chapter 22, Title 26, Idaho Code, be, and  the  same  is
  3    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
  4    ignated as Section 26-2246, Idaho Code, and to read as follows:

  5        26-2246.  CLOSURE OR DISCONTINUANCE OF  OPERATIONS  --  REQUIREMENTS.  (1)
  6    Whenever  the  operations  of  a collection agency licensee under this act are
  7    closed or discontinued due to revocation, termination, or relinquishment of  a
  8    collection  agency  license,  or  for  any other reason, the collection agency
  9    shall, within thirty (30) days following  the  closure  or  discontinuance  of
 10    operations,  furnish the director with sufficient proof in a form to be deter-
 11    mined by the director that:
 12        (a)  The collection agency has remitted to all of its creditor clients all
 13        moneys collected on their behalf and due such creditor clients;
 14        (b)  All collection accounts, judgments obtained, and other accounts  have
 15        been  returned  to  the  creditor  clients or other proper parties, and if
 16        appropriate, assigned by the collection agency to its creditor clients  or
 17        other proper parties; and
 18        (c)  All valuable papers, documents, judgments and other property provided
 19        to  the collection agency by its creditor clients or other parties in con-
 20        nection with the  collection  agency's  collection  activities  have  been
 21        returned to the creditor clients or other proper parties.
 22        (2)  A  collection  agency  which  holds a license issued pursuant to this
 23    act, upon closure or discontinuance of  its  operations,  shall  maintain  the
 24    bonds  required of such licensee to conduct a collection agency business until
 25    a final accounting of its affairs, as set forth in subsection (1) of this sec-
 26    tion, has been filed with and approved by the director.
 27        (3)  Whenever the operations of a collection agency are closed or  discon-
 28    tinued  as  set forth in subsection (1) of this section, in the event the col-
 29    lection agency does not complete all requirements of  such  subsection  within
 30    thirty  (30)  days following the closure or discontinuance of operations, upon
 31    demand by the director, the collection agency shall  permit  the  director  to
 32    take  possession  of  its  business records, bank accounts, including creditor
 33    client trust accounts, other property belonging to  its  creditor  clients  or
 34    third  parties, and its assets. The director may then liquidate the collection
 35    agency's business, return any moneys owed to the collection agency's  creditor
 36    clients,  return  the  collection  agency's  accounts to its creditor clients,
 37    return or assign any judgments to the agency's creditor clients, and take  any
 38    other actions which are reasonably necessary to cause the collection agency to
 39    liquidate its assets and to comply with subsection (1) of this section.
 40        (4)  If a collection agency refuses to permit the director to take posses-
 41    sion  of  its business records, bank accounts, creditor client trust accounts,
 42    other property belonging to its creditor clients  or  third  parties  and  its
 43    assets, as set forth in subsection (3) of this section, the director may apply
 44    to  a court of competent jurisdiction in the county of the collection agency's
 45    principal place of business for the appointment of a receiver  or  conservator
 46    as  set forth in section 26-2245(1), Idaho Code.  Such receiver or conservator
 47    may be the director.
 48        (5)  The expenses of the receiver or conservator and attorney's fees,  and
 49    all  expenses  necessarily  incurred  in liquidation of the collection agency,
 50    shall be paid out of the funds in the control of the director or  conservator,
 51    to  the  extent  those  funds  exceed any sums due and owing to the collection
 52    agency's creditor clients or other proper parties.  To the extent funds in the
 53    control of the receiver are not sufficient to pay all sums due  and  owing  to

                                       19

  1    the  collection  agency's  creditor clients or other proper parties and to pay
  2    the costs of a receiver or conservator and of liquidation  of  the  collection
  3    agency,  the collection agency and its owners, shareholders, or interest hold-
  4    ers shall be responsible for the balance of any reasonably necessary costs and
  5    fees of liquidation.

  6        SECTION 29.  That Section 26-2248, Idaho Code, be, and the same is  hereby
  7    amended to read as follows:

  8        26-2248.  ADMINISTRATION  OF  ACT. The administration of the provisions of
  9    this act shall be under the general supervision and control of  the  director,
 10    subject  to  chapter  52,  title 67, Idaho Code. The director may from time to
 11    time make adopt, amend, and rescind such  rules,  regulations  and  forms  and
 12    issue orders necessary to carry out the provisions of this act. No rule, regu-
 13    lation  or form order may be made unless the director finds that the action is
 14    necessary or appropriate for the public interest  or  for  the  protection  of
 15    creditors and debtors the public consistent with the purposes of this act.

 16        SECTION  30.  That  Sections  26-2250 and 26-2251, Idaho Code, be, and the
 17    same are hereby repealed.

 18        SECTION 31.  That Chapter 22, Title 26, Idaho Code, be, and  the  same  is
 19    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 20    ignated as Section 26-2251, Idaho Code, and to read as follows:

 21        26-2251.  SEVERABILITY. The provisions of this act are hereby declared  to
 22    be  severable and if any provision of this act or the application of such pro-
 23    vision to any person or circumstance is declared invalid for any reason,  such
 24    declaration  shall  not  affect the validity of the remaining portions of this
 25    act.

 26        SECTION 32.  That Section 1-2301A, Idaho Code, be, and the same is  hereby
 27    amended to read as follows:

 28        1-2301A.  DRAWING  CHECK WITHOUT FUNDS OR INSUFFICIENT FUNDS -- CIVIL LIA-
 29    BILITY. In any action filed in the small claims department  against  a  person
 30    who  makes  any  check, draft or order for the payment of money which has been
 31    dishonored for lack of funds or credit to pay the same, or because  the  maker
 32    has  no  account with the drawee, the plaintiff, or a collection agency with a
 33    permit license issued to it pursuant to section 26-22295, Idaho Code, which is
 34    attempting to collect the dishonored check under a written agreement with  the
 35    payee or holder of the check, may recover from the defendant the amount of the
 36    check,  draft  or order and, in addition thereto, the greater of the amount of
 37    one hundred dollars ($100) or three (3) times the amount for which the  check,
 38    draft or order is drawn. Except as provided in section 1-2304, Idaho Code, the
 39    plaintiff  or  collection  agency may recover no other costs, fees, charges or
 40    damages. However, damages recovered under the provisions of this section shall
 41    not exceed by more than five hundred dollars ($500) the value  of  the  check,
 42    draft or order and may be awarded only if the plaintiff made written demand of
 43    the  defendant for payment of the amount of the check, draft or order not less
 44    than ten (10) days before commencing the action, and if the  defendant  failed
 45    to  tender to the plaintiff, prior to commencement of the action, an amount of
 46    money not less than the amount demanded. The written demand required  by  this
 47    section  shall  be  sent  to  the  maker  by  certified mail at his last known
 48    address, or by regular mail, supported by an affidavit of service by  mailing,

                                       20

  1    to  the  address  printed  or  written  on  the  check  as provided in section
  2    28-22-106, Idaho Code, in which case the demand  shall  be  deemed  conclusive
  3    three  (3)  days  following  the  date  the affidavit is executed. The written
  4    demand shall fully advise the maker of the check, draft, or order of the  con-
  5    sequences  of failure to make prompt payment under this section. The plaintiff
  6    or collection agency must show proof of service  by  producing  a  copy  of  a
  7    signed return receipt or affidavit of personal service.

Amendment

                                                                       
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008

                                                                       

                                                     Moved by    Rusche

                                                     Seconded by Mathews


                              IN THE HOUSE OF REPRESENTATIVES
                              HOUSE AMENDMENTS TO H.B. NO. 451

  1                               AMENDMENTS TO SECTION 1
  2        On page 2 of the printed bill, in line 39  following  "Code."  insert:  "A
  3    credit repair organization does not include:
  4        (a)  A  consumer  reporting  agency,  as  defined  in  15  U.S.C.  section
  5        1681a(f), that provides consumer reports based on information furnished by
  6        creditors or any affiliate or subsidiary of such consumer reporting agency
  7        as defined by rule promulgated by the director;
  8        (b)  A  person  who has an ongoing contractual arrangement with a consumer
  9        reporting agency, as described in subsection (5)(a) of  this  section,  to
 10        obtain  consumer reports from a consumer reporting agency for the purposes
 11        of:
 12             (i)   Reselling such report,  or  any  information  contained  in  or
 13             derived from such report, to a consumer; or
 14             (ii)  Monitoring  information in such report on behalf of a consumer;
 15             or
 16        (c)  A person to the extent that such person advertises, markets, provides
 17        or facilitates consumer access to the products or services offered or pro-
 18        vided by:
 19             (i)   An entity described in subsection (5)(a) of this section; or
 20             (ii)  A person described in subsection (5)(b) of this section.".

 21                               AMENDMENTS TO SECTION 9
 22        On page 9, in line 6, following "(43) insert: "(a)";  and  following  line
 23    16, insert:
 24        "(b)  Debt  counselors  or  credit  counselors who do not receive, hold or
 25        disburse funds from debtors for payment to creditors shall not  charge  or
 26        accept  as  a fee for their services more than twenty percent (20%) of the
 27        principal amount of the debtor's unsecured debt at the time of contracting
 28        for services for the management of debt. In the event of  cancellation  of
 29        the  contract  by  the debtor prior to its successful completion, the debt
 30        counselor or credit counselor shall refund fifty percent (50%) of any col-
 31        lected fees associated with the amount of debt remaining unsettled at  the
 32        time of the termination of the contract.".

 33                               AMENDMENTS TO SECTION 17
 34        On  page  14, in line 38, delete "financial institution"; and also in line
 35    38, following "trust accounts" insert: "held in any financial institution"; in
 36    line 39 following "act" insert: "who receives,  holds  or  disburses  consumer
 37    funds".

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

                                                                       
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008

                                                                       

                              IN THE HOUSE OF REPRESENTATIVES

                               HOUSE BILL NO. 451, As Amended

                                   BY BUSINESS COMMITTEE

  1                                        AN ACT
  2    RELATING TO THE IDAHO COLLECTION AGENCY ACT; AMENDING SECTION  26-2222,  IDAHO
  3        CODE, TO REVISE AND ADD DEFINITIONS; AMENDING SECTION 26-2223, IDAHO CODE,
  4        TO PROVIDE CORRECT TERMINOLOGY, TO REVISE CREDIT REPAIR ACTIVITIES REQUIR-
  5        ING  A  LICENSE,  AND  TO  MAKE  TECHNICAL  CORRECTIONS;  AMENDING SECTION
  6        26-2223A, IDAHO CODE, TO  MAKE  TECHNICAL  CORRECTIONS,  TO  REQUIRE  THAT
  7        LICENSEES MAINTAIN A LICENSED HOME OFFICE AS A PRINCIPAL LOCATION FOR COL-
  8        LECTION  ACTIVITIES AND TO REVISE PROVISIONS FOR A  DESIGNATED RESPONSIBLE
  9        PERSON; AMENDING SECTION 26-2224, IDAHO CODE, TO REVISE  LICENSE  APPLICA-
 10        TION  REQUIREMENTS;  REPEALING  SECTION  26-2225,  IDAHO CODE, RELATING TO
 11        INFORMATION AND MATERIALS REQUIRED WITH APPLICATION, EXAMINATION  FEE  AND
 12        CONSENT  TO  SERVICE;  AMENDING  CHAPTER  22, TITLE 26, IDAHO CODE, BY THE
 13        ADDITION OF A  NEW  SECTION  26-2225,  IDAHO  CODE,  TO  PROVIDE  FOR  THE
 14        DIRECTOR'S  APPROVAL  OF  LICENSE APPLICATIONS; AMENDING CHAPTER 22, TITLE
 15        26, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 26-2227, IDAHO  CODE,  TO
 16        PROVIDE  FOR THE DENIAL OF LICENSE APPLICATIONS OR THE SUSPENSION OR REVO-
 17        CATION OF A LICENSE; AMENDING  SECTION  26-2228,  IDAHO  CODE,  TO  REVISE
 18        POWERS  OF  THE  DIRECTOR  OF  THE DEPARTMENT OF FINANCE; AMENDING SECTION
 19        26-2229, IDAHO CODE, TO DELETE PROVISIONS PROVIDING FOR PERMITS AND APPLI-
 20        CATIONS AND TO REVISE REQUIREMENTS FOR COLLECTION AGENCY CONTRACTS; AMEND-
 21        ING SECTION 26-2229A, IDAHO  CODE,  TO  PROVIDE  CORRECT  TERMINOLOGY,  TO
 22        REVISE  PROVISIONS REQUIRING OPEN, FAIR AND HONEST DEALINGS, TO MAKE TECH-
 23        NICAL CHANGES AND TO PROHIBIT CERTAIN PRACTICES; AMENDING SECTION 26-2230,
 24        IDAHO CODE, TO REVISE PROVISIONS FOR REGISTRATION OF ADDITIONAL PLACES  OF
 25        BUSINESS AND TO DELETE PROVISIONS PERMITTING LIMITED COLLECTION ACTIVITIES
 26        AT CERTAIN LOCATIONS; AMENDING SECTION 26-2231, IDAHO CODE, TO PROVIDE FOR
 27        LICENSE  RENEWAL  AND  TO ESTABLISH A FEE; AMENDING SECTION 26-2232, IDAHO
 28        CODE, TO MAKE TECHNICAL CORRECTIONS, TO PROVIDE  CORRECT  TERMINOLOGY,  TO
 29        REVISE  PROVISIONS  FOR FILING A BOND AND TO DELETE A REQUIREMENT RELATING
 30        TO INDEMNIFICATION OF THE DEPARTMENT; REPEALING  SECTION  26-2232A,  IDAHO
 31        CODE,  RELATING TO ALTERNATE BONDING; AMENDING CHAPTER 22, TITLE 26, IDAHO
 32        CODE, BY THE ADDITION OF A NEW SECTION 26-2232A, IDAHO  CODE,  TO  PROVIDE
 33        BONDING  REQUIREMENTS  FOR  DEBT  COUNSELORS, CREDIT COUNSELORS AND CREDIT
 34        ORGANIZATIONS; AMENDING SECTION 26-2233, IDAHO CODE,  TO  PROVIDE  CORRECT
 35        TERMINOLOGY  AND  TO  REVISE PROVISIONS REQUIRING TRUST ACCOUNTS; AMENDING
 36        SECTION 26-2234, IDAHO CODE, TO PROVIDE CORRECT TERMINOLOGY, TO MAKE TECH-
 37        NICAL CORRECTIONS, TO REVISE  PROVISIONS  RELATING  TO  INVESTIGATION  AND
 38        EXAMINATION  OF LICENSEES, TO REVISE PROVISIONS FOR RECORDKEEPING, TO PRO-
 39        VIDE FOR REMITTANCE OF FUNDS AND  TO  REVISE  PROVISIONS  AUTHORIZING  THE
 40        DIRECTOR  TO  IMPOUND  ACCOUNTS  OF A LICENSEE; REPEALING SECTION 26-2235,
 41        IDAHO CODE, RELATING TO  DENIAL,  SUSPENSION  AND  REVOCATION  OF  PERMIT;
 42        AMENDING  SECTION  26-2236,  IDAHO  CODE, TO REVISE PROVISIONS RELATING TO
 43        SUBPOENAS, TO PROVIDE CORRECT TERMINOLOGY AND TO  MAKE  TECHNICAL  CORREC-
 44        TIONS;  AMENDING SECTION 26-2237, IDAHO CODE, TO PROVIDE CORRECT TERMINOL-
 45        OGY; AMENDING SECTION 26-2238, IDAHO CODE, TO MAKE  TECHNICAL  CORRECTIONS
 46        AND  TO  REVISE  PROVISIONS FOR VIOLATIONS AND PENALTIES; AMENDING SECTION

                                       2

  1        26-2239, IDAHO CODE, TO PROVIDE CORRECT TERMINOLOGY AND TO  REVISE  PROVI-
  2        SIONS  RELATING  TO  EXEMPTIONS;  AMENDING SECTION 26-2240, IDAHO CODE, TO
  3        PROVIDE CORRECT TERMINOLOGY  AND  TO  REVISE  PROVISIONS  FOR  IDENTIFYING
  4        AGENTS AND FOR FEES; AMENDING SECTION 26-2243, IDAHO CODE, TO PROVIDE COR-
  5        RECT TERMINOLOGY; AMENDING SECTION 26-2244, IDAHO CODE, TO PROVIDE CORRECT
  6        TERMINOLOGY,  TO  REVISE  PROVISIONS  FOR  CEASE  AND DESIST ORDERS AND TO
  7        REVISE CIVIL PENALTIES; AMENDING SECTION 26-2245, IDAHO CODE,  TO  PROVIDE
  8        CORRECT  TERMINOLOGY,  TO  MAKE  TECHNICAL CORRECTIONS AND TO REVISE CIVIL
  9        PENALTIES; REPEALING SECTION 26-2246, IDAHO CODE, RELATING TO  DISCONTINU-
 10        ANCE  OF  OPERATIONS;  AMENDING  CHAPTER  22, TITLE 26, IDAHO CODE, BY THE
 11        ADDITION OF A NEW SECTION 26-2246, IDAHO CODE, TO PROVIDE REQUIREMENTS FOR
 12        COLLECTION AGENCY CLOSURE OR DISCONTINUANCE OF OPERATIONS;  AMENDING  SEC-
 13        TION  26-2248,  IDAHO  CODE,  TO MAKE TECHNICAL CORRECTIONS AND TO PROVIDE
 14        THAT THE DIRECTOR MAY ISSUE ORDERS; REPEALING SECTION 26-2250, IDAHO CODE,
 15        RELATING TO FOREIGN PERMITTEES AND SECTION 26-2251, IDAHO  CODE,  RELATING
 16        TO  CANCELLATION OF PERMITS; AMENDING CHAPTER 22, TITLE 26, IDAHO CODE, BY
 17        THE ADDITION OF A NEW SECTION 26-2251, IDAHO CODE, TO  PROVIDE  SEVERABIL-
 18        ITY;  AND  AMENDING SECTION 1-2301A, IDAHO CODE, TO PROVIDE CORRECT TERMI-
 19        NOLOGY AND TO PROVIDE A CORRECT CODE REFERENCE.

 20    Be It Enacted by the Legislature of the State of Idaho:

 21        SECTION 1.  That Section 26-2222, Idaho Code, be, and the same  is  hereby
 22    amended to read as follows:

 23        26-2222.  DEFINITIONS. As used in this chapter act:
 24        (1)  "Agent" means any person who, is compensated on a commission basis or
 25    by  salary, or both, by any permittee and who either for compensation or gain,
 26    or in the expectation of compensation or gain, contacts debtors  or  creditors
 27    persons  in Idaho in connection with the collection agency business activities
 28    of the permittee a licensee or person required to be licensed under this act.
 29        (2)  "Business funds" means all moneys belonging to or due the permittee a
 30    licensee or person required to be licensed in connection with the operation of
 31    a collection agency business activities authorized under this act.
 32        (3)  "Collection activities" means the activities  enumerated  in  subsec-
 33    tions (2) through (6) of section 26-2223, Idaho Code.
 34        (4)  "Collection agency," "collection bureau" or "collection office" shall
 35    be  means  a person who engages in any of the activities enumerated in subsec-
 36    tions (2) through (6) of section 26-2223, Idaho Code.
 37        (4)  "Director" means the director of the department of finance.
 38        (5)  "Credit repair organization" means any person engaged in any  of  the
 39    activities  enumerated  in  subsection  (8)  of section 26-2223, Idaho Code. A
 40    credit repair organization does not include:
 41        (a)  A  consumer  reporting  agency,  as  defined  in  15  U.S.C.  section
 42        1681a(f), that provides consumer reports based on information furnished by
 43        creditors or any affiliate or subsidiary of such consumer reporting agency
 44        as defined by rule promulgated by the director;
 45        (b)  A person who has an ongoing contractual arrangement with  a  consumer
 46        reporting  agency,  as  described in subsection (5)(a) of this section, to
 47        obtain consumer reports from a consumer reporting agency for the  purposes
 48        of:
 49             (i)   Reselling  such  report,  or  any  information  contained in or
 50             derived from such report, to a consumer; or
 51             (ii)  Monitoring information in such report on behalf of a  consumer;
 52             or

                                       3

  1        (c)  A person to the extent that such person advertises, markets, provides
  2        or facilitates consumer access to the products or services offered or pro-
  3        vided by:
  4             (i)   An entity described in subsection (5)(a) of this section; or
  5             (ii)  A person described in subsection (5)(b) of this section.
  6        (56)  "Creditor"  means  any  person who transfers to a permittee accounts
  7    due and owing for collection purposes offers or extends credit creating a debt
  8    or to whom a debt is owed.
  9        (7)  "Creditor client" means any person who transfers or assigns to a col-
 10    lection agency licensee or person required to be so licensed under  this  act,
 11    any account, bill, claim or other indebtedness for collection purposes.
 12        (68)  "Creditors' account "Creditor funds" means all funds due and owing a
 13    creditor  within  the  definition  of  this  chapter  by  a licensee or person
 14    required to be licensed under this act.
 15        (9)  "Debt counselor" or "credit counselor" means any  person  engaged  in
 16    any  of  the activities enumerated in subsection (7) of section 26-2223, Idaho
 17    Code.
 18        (10) "Department" means the Idaho department of finance.
 19        (11) "Director" means the director of the Idaho department of finance.
 20        (12) "Licensee" means a person who has obtained a license under this act.
 21        (713) "Net collections" means all funds that are due to creditors from the
 22    permittee licensee pursuant to the contract between the permittee licensee and
 23    creditor, or permittee licensee and debtor without  taking  into  account  any
 24    offset  or  funds  due from the creditor to the permittee licensee, because of
 25    the creditor having collected any part of the account due, plus all funds that
 26    the permittee licensee agreed to return to debtors or  that  were  not  to  be
 27    applied to debts.
 28        (8)  "Permittee"  means a person who has a permit to do business as a col-
 29    lection agency, or debt counselor, or credit counselor in Idaho.
 30        (914) "Person" means any permittee, agent, solicitor, individual, corpora-
 31    tion, association, copartnership partnership, limited  liability  partnership,
 32    trust,  company,  limited  liability  company,  or unincorporated organization
 33    association.
 34        (10) "Debt counselor" means any person engaged in any  of  the  activities
 35    enumerated in subsection (6) of section 26-2223, Idaho Code.
 36        (11) "Credit  counselor" means any person engaged in any of the activities
 37    enumerated in subsection (6) or (7) of section 26-2223, Idaho Code. No  credit
 38    counselor  shall be granted a permit pursuant to this chapter unless qualified
 39    as an exempt organization under section  501(c)(3)  of  the  Internal  Revenue
 40    Code.

 41        SECTION  2.  That  Section 26-2223, Idaho Code, be, and the same is hereby
 42    amended to read as follows:

 43        26-2223.  COLLECTION AGENCY, DEBT COUNSELOR, OR CREDIT COUNSELOR,  PERMITS
 44    OR  CREDIT  REPAIR  ORGANIZATION  -- LICENSE REQUIRED. No person shall without
 45    complying with the terms of this chapter act and obtaining  a  permit  license
 46    from the director:
 47        (1)  Operate as a collection agency, collection bureau, collection office,
 48    debt  counselor,  or  credit  counselor, or credit repair organization in this
 49    state.
 50        (2)  Engage, either directly or indirectly, in this state in the  business
 51    of  collecting  or receiving payment for others of any account, bill, claim or
 52    other indebtedness.
 53        (3)  Solicit or advertise for the  right  in  this  state  to  collect  or

                                       4

  1    receive payment for another of any account, bill, claim or other indebtedness.
  2        (4)  Sell  or  otherwise distribute in this state any system or systems of
  3    collection letters and or similar printed matter where the name of any  person
  4    other than the particular creditor to whom the debt is owed appears.
  5        (5)  Engage  in  any  activity  in this state which indicates, directly or
  6    indirectly, that a third party is or may be involved in effecting any  collec-
  7    tions.
  8        (6)  Engage  or  offer to engage in this state, directly or indirectly, in
  9    the business of collecting any form of  indebtedness  for  that  person's  own
 10    account  if  the  indebtedness  was  acquired  from  another person and if the
 11    indebtedness was either delinquent or in default at the time it was acquired.
 12        (7)  Engage or offer to engage in this state in the business of  receiving
 13    money  from debtors for application to or payment of to or prorating of a debt
 14    owed to, any creditor or creditors of such debtor., or
 15        (7)  Eengage or offer to engage in this state in the business of providing
 16    counseling or other services to debtors in the management of their debts,  and
 17    or  contracting  with the debtor to effect the adjustment, compromise, or dis-
 18    charge of any account, note or other indebtedness of the debtor.
 19        (8)  Engage or offer to engage in this state in  the  business  of  credit
 20    repair  which  includes obtaining, for others, improvements in credit records,
 21    extensions of credit for clients, or causing the removal of documents from the
 22    credit records of a client maintained by a credit reporting agency.
 23        (9)  Engage or offer to engage in this state, directly or  indirectly,  in
 24    the  business  of  collecting  any  form of indebtedness for that person's own
 25    account if the indebtedness was  acquired  from  another  person  and  if  the
 26    indebtedness  was  either delinquent or in default at the time it was acquired
 27    selling, providing or performing services to  improve  any  consumer's  credit
 28    record,  credit history or credit rating, or providing advice or assistance to
 29    any consumer with regard to  his  credit  record,  credit  history  or  credit
 30    rating.

 31        SECTION  3.  That Section 26-2223A, Idaho Code, be, and the same is hereby
 32    amended to read as follows:

 33        26-2223A.  OFFICE TO BE  MAINTAINED  IN  STATE  COLLECTION  AGENCY  OFFICE
 34    REQUIREMENTS  -- DESIGNATION OF RESPONSIBLE PERSON. Every permittee under this
 35    chapter must maintain an office in the state of Idaho, staffed with  at  least
 36    one (1) natural person who passed the examination required in section 26-2229,
 37    Idaho  Code, or is exempt from the provisions of this chapter pursuant to sec-
 38    tion 26-2239(1), Idaho Code, at each branch or facility.
 39        (1)  Each permittee licensee shall maintain a home office  licensed  under
 40    this act as the licensee's principal location for collection activities.  Each
 41    licensee   must have maintain a listed Idaho telephone number and must be open
 42    to the public during normal business hours on  each  business  day,  provided,
 43    however, that the director may in his discretion approve a request for opening
 44    at  during  hours  other than normal business hours or a portion of a business
 45    day. A business day within the meaning of this section does not include Satur-
 46    days, Sundays, or legal holidays.
 47        (2)  Each permittee under this chapter must  licensee  shall  designate  a
 48    natural  person,  who  need  not be a resident of the state of Idaho meets the
 49    experience requirement of section 26-2224(6), Idaho Code,  to  be  responsible
 50    for  the  business collection activities carried on at the each office and who
 51    has passed the examination for a permit required  by  section  26-2229,  Idaho
 52    Code  of the licensee. If the person designated by the permittee to be respon-
 53    sible for business carried on at the office licensee for such purpose  is  not

                                       5

  1    normally    available  in  at the Idaho office licensee's designated location,
  2    then the permittee's licensee's  collection activities with debtors  in  Idaho
  3    must  begin  with  a  written  notice  to  each debtor setting forth a mailing
  4    address and a toll-free telephone number whereby a debtor may contact the des-
  5    ignated responsible person during normal business hours.

  6        SECTION 4.  That Section 26-2224, Idaho Code, be, and the same  is  hereby
  7    amended to read as follows:

  8        26-2224.  FORM  OF  LICENSE APPLICATION. Every applicant for such permit a
  9    license under this act shall file in the department of finance with the direc-
 10    tor  an application in a form to be prescribed by the director  setting  forth
 11    that shall include:
 12        (1)  The  name  of  the applicant; if an individual; if the applicant is a
 13    corporation, a list of its officers and directors and their addresses; if  the
 14    applicant  is a partnership, a list of the partners and their addresses; or if
 15    the applicant is a limited liability company, a list of its  members  or  man-
 16    agers  and  their addresses. Every corporation shall designate and appoint one
 17    (1) or more of its officers or employees, every  partnership  shall  designate
 18    and  appoint one (1) or more of its partners, and every limited liability com-
 19    pany shall designate and appoint one (1) or more of its  members  or  managers
 20    who  shall submit to the examination hereinafter required.  No permit shall be
 21    issued to any corporation, partnership or limited liability company unless and
 22    until the persons so designated shall  submit  to  and  pass  the  examination
 23    required by this chapter.
 24        (2)  The  street  address  of  the  applicant's principal location. of the
 25    principal office or place of business of the applicant.
 26        (3)  Other All names, if any, by which the applicant conducts, engages  in
 27    or solicits business collection activities.
 28        (4)  The  names  of all persons and organizations with which the applicant
 29    is affiliated, in such business, and the location of the principal  office  or
 30    place of business of each such affiliation affiliate.
 31        (5)  A  complete  description  of the business to be conducted, or plan of
 32    operation contemplated, by the applicant in this state.
 33        (6)  The name, address and qualifications of a natural person possessing a
 34    minimum of three (3) years of experience related to the business  to  be  con-
 35    ducted under this act who will supervise the applicant's office locations from
 36    which business activities in this state will be conducted.
 37        (7)  A  list  Copies of all papers and filings contracts, forms, form let-
 38    ters, and advertisements or solicitations to be used by the applicant  in  its
 39    business  activities  under this act, which must accompany the application and
 40    be identified as exhibits by number.
 41        (7)  A financial statement showing the applicant to have a  financial  net
 42    worth  of  not  less  than  two  thousand five hundred dollars ($2,500), which
 43    statement shall be subject to disclosure according  to  chapter  3,  title  9,
 44    Idaho Code. The financial statement shall specify assets and liabilities, pro-
 45    viding  detailed  reference  to each item listed to inform the director of the
 46    nature and extent of such assets and  liabilities.  This  financial  statement
 47    shall  be signed by the applicant or its proper agent. The net worth shall not
 48    include any notes, accounts, bills, and judgments held for collection  by  the
 49    applicant nor shall it include good will or other assets the value of which is
 50    speculative and not susceptible to prompt liquidation.
 51        (8)  If the applicant is a corporation, a limited liability company, part-
 52    nership,  or limited liability partnership, a copy of its articles of incorpo-
 53    ration, articles of organization, partnership agreement, or  operating  agree-

                                       6

  1    ment, duly authenticated.
  2        (9)  A  list of the names, business addresses and telephone numbers of all
  3    agents who will contact persons or solicit business for the applicant in  this
  4    state.
  5        (10) The name and business address of the applicant's agent for service of
  6    process located in this state.
  7        (11) A nonrefundable application fee of one hundred fifty dollars ($150).
  8        (12) An  agreement  of consent authorizing the director to examine any and
  9    all of the applicant's financial accounts used for business  activities  under
 10    this act.
 11        (813) Such  other  information  concerning the applicant's business as the
 12    director may reasonably require. Such application shall be executed and  veri-
 13    fied  by  the  by  the applicant or applicants personally, or by an individual
 14    associated with the applicant as designated by the director  on  oath  by  the
 15    applicant.  Information required at the time of application, except for adver-
 16    tisements and solicitations, shall be updated and filed with the  director  as
 17    necessary to keep the information current.

 18        SECTION  5.  That  Section 26-2225, Idaho Code, be, and the same is hereby
 19    repealed.

 20        SECTION 6.  That Chapter 22, Title 26, Idaho Code, be,  and  the  same  is
 21    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 22    ignated as Section 26-2225, Idaho Code, and to read as follows:

 23        26-2225.  APPROVAL OF LICENSE APPLICATION. (1) The director shall act upon
 24    all applications for a license under this act. If the director determines that
 25    the requirements of this act have been met and all applicable fees  paid,  and
 26    the  applicant  is not otherwise unqualified for licensure, the director shall
 27    issue a license to the applicant.
 28        (2)  Each license issued under this section shall remain in full force and
 29    effect unless the licensee fails to satisfy the renewal requirements  of  this
 30    act, or the license is relinquished, suspended, terminated or revoked.

 31        SECTION  7.  That  Chapter  22,  Title 26, Idaho Code, be, and the same is
 32    hereby amended by the addition thereto of a NEW SECTION, to be known and  des-
 33    ignated as Section 26-2227, Idaho Code, and to read as follows:

 34        26-2227.  DENIAL,  SUSPENSION OR REVOCATION OF LICENSE. (1) An application
 35    for a license may be denied or, after notice and the opportunity for  a  hear-
 36    ing,  a  license  may be suspended or revoked by the director if he finds that
 37    facts or conditions exist which would have justified the director in  refusing
 38    to  grant  a  license  had such facts or conditions been known to exist at the
 39    time the license was issued, or that the licensee or  the  applicant,  or  any
 40    officer, member, owner, manager or agent of a licensee or applicant:
 41        (a)  Has violated any provision of this act, the federal fair debt collec-
 42        tion  practices  act,  15 U.S.C. section 1692, et seq., as amended, or any
 43        rule or order of the director under this act;
 44        (b)  Is not legally qualified to do business in this state;
 45        (c)  Has failed to retain a natural person with three (3) years of experi-
 46        ence related to the type of business conducted by the licensee under  this
 47        act  to supervise each office from which business activities are conducted
 48        under this act;
 49        (d)  Has failed, refused or neglected to pay or remit to any creditor cli-
 50        ent the agreed portion of any sum collected by the applicant  or  licensee

                                       7

  1        on any bill, claim, account or other indebtedness entrusted to such appli-
  2        cant or licensee for collection;
  3        (e)  Has  failed  to return to a debtor an amount that was not owed on his
  4        debt;
  5        (f)  Has made a material misstatement in the application for such  license
  6        or renewal;
  7        (g)  Has  obtained or attempted to obtain a license or renewal by fraud or
  8        misrepresentation;
  9        (h)  Has misappropriated or converted to his own use or  improperly  with-
 10        held  moneys collected or held for any other person, except that a collec-
 11        tion agency licensee may convert into business funds his  portion  of  any
 12        moneys  collected  on  behalf  of a creditor client, pursuant to a written
 13        agreement with the creditor client and in compliance with this act;
 14        (i)  Has falsely represented himself as a  licensee  for  the  purpose  of
 15        soliciting for or representing any business covered in this act;
 16        (j)  Has  been  convicted  of,  or  a  court of competent jurisdiction has
 17        entered a withheld judgment for any felony, or for a misdemeanor involving
 18        financial wrongdoing or moral turpitude;
 19        (k)  Has had a license substantially equivalent to a  license  under  this
 20        act issued by another state revoked, suspended or denied; or
 21        (l)  Demonstrates  a  lack  of  fitness  to  engage in business activities
 22        authorized for a licensee under this act.
 23        (2)  The director may, after notice and the  opportunity  for  a  hearing,
 24    impose  upon any licensee, or person required to be licensed under this act, a
 25    civil penalty of not more than five thousand dollars ($5,000) for each  viola-
 26    tion of this act.
 27        (3)  The  director  may,  after  notice and the opportunity for a hearing,
 28    impose upon a licensee, or person required to be licensed under this act,  any
 29    sanction authorized by this section if the director finds that an agent of the
 30    licensee,  or  person required to be licensed under this act, has violated any
 31    provision of this act.
 32        (4)  The director may, in his discretion, and by an order issued in accor-
 33    dance with chapter 52, title 67, Idaho Code, prohibit a licensee from using an
 34    individual as an agent if the individual has violated any  provision  of  this
 35    act, or any similar statute or rule of another state.
 36        (5)  Any denial, suspension or revocation of any license issued under this
 37    act shall be governed by chapter 52, title 67, Idaho Code.

 38        SECTION  8.  That  Section 26-2228, Idaho Code, be, and the same is hereby
 39    amended to read as follows:

 40        26-2228.  POWERS OF THE DIRECTOR. The director shall  have  the  power  to
 41    provide  the  manner  and method for conducting examinations. Applications for
 42    examination shall be filed with the director at least ten (10) days  prior  to
 43    the examination date.
 44        The examination shall be uniformly given, may be written or oral or a com-
 45    bination of both and shall be practical in nature. The examination may include
 46    questions  on  bookkeeping,  credit adjusting, business law, collection proce-
 47    dure, business ethics, agency, debtor and creditor relationship, trust  funds,
 48    creditors'  funds, business funds, fiduciary relationships, and the provisions
 49    of this act and the rules duly issued by the director pursuant  to  this  act,
 50    and  such other subject matter as the director by rule may specify. The exami-
 51    nation shall be given twice each year or at such more  frequent  intervals  as
 52    the director may direct In addition to any other duties authorized by law, the
 53    director shall:

                                       8

  1        (1)  Administer and enforce the provisions and requirements of this act;
  2        (2)  Conduct  investigations and issue subpoenas as necessary to determine
  3    whether a person has violated any provision of this act, rule or order hereun-
  4    der;
  5        (3)  Conduct examinations of the books and records of licensees related to
  6    business activities authorized under this act and  conduct  investigations  as
  7    necessary  and proper for the enforcement of the provisions of this act, rules
  8    or orders hereunder;
  9        (4)  Pursuant to chapter 52, title 67, Idaho Code, issue orders  and  pro-
 10    mulgate  rules that, in the opinion of the director, are necessary to execute,
 11    enforce and effectuate the purposes of this act; and
 12        (5)  Require that all funds collected by the department under this act  be
 13    deposited into the finance administrative account pursuant to section 67-2702,
 14    Idaho Code.

 15        SECTION  9.  That  Section 26-2229, Idaho Code, be, and the same is hereby
 16    amended to read as follows:

 17        26-2229.  EXAMINATION -- PERMIT CONTRACTS. (1) The director shall  examine
 18    each  application  for  a  permit  and accompanying papers and investigate the
 19    qualifications of the applicant and if he finds therefrom that the same are in
 20    proper form, that the literature proposed to be circulated does  not  tend  to
 21    conceal  or  misrepresent any fact to the detriment of any person dealing with
 22    the applicant, that the contract or contracts proposed to be entered into  for
 23    the  collection  or  payment  or prorating of accounts, bills, claims or other
 24    indebtedness by the applicant, or prorating or receiving money for payment  to
 25    creditors are equitable, fair and reasonable, and that the applicant meets all
 26    other requirements and qualifications of this act, he shall examine the appli-
 27    cant  if  an individual, or the designated officer or officers or employees of
 28    any corporation and the designated member or members of  any  partnership,  in
 29    the  manner described in section 26-2225, Idaho Code, and if such applicant or
 30    designee passes a satisfactory examination, he shall  cause  a  permit  to  be
 31    issued authorizing the applicant to conduct such a business in this state sub-
 32    ject  to  the  provisions  of  this act, until the fifteenth day of March next
 33    thereafter.
 34        (2)  If the director finds that the applicant does not qualify  under  the
 35    provisions  of  this  act,  the  application  shall be denied. If he finds the
 36    applicant is qualified he must issue a permit upon the  filing  of  the  bonds
 37    required  by  this act and the payment of an annual permit fee as fixed by the
 38    director, but not to exceed fifty dollars ($50), except  that  no  permit  fee
 39    need be paid by a nonprofit corporation or association conducting credit coun-
 40    seling or debt prorating activities.
 41        (31)  Contracts between collection agency licensees or collection agencies
 42    required  to be licensed under this act and creditor clients shall be in writ-
 43    ing.
 44        (2)  No It shall be a violation of this act for any collection agency con-
 45    tract shall be deemed equitable, fair or reasonable within the meaning of this
 46    section which in substance either to:
 47        (a)  Permits the applicant Authorize a  collection agency  to  retain  any
 48        sums due the collected on behalf of a creditor on any account, bill, claim
 49        or other indebtedness collected for him by the applicant on account of, or
 50        as  a setoff against, any fee, commission, charge, expense or compensation
 51        claimed client, other than the regular collection fees or commissions,  to
 52        be due from such creditor on any other account whatever.
 53        (b)  Penalizes  the creditor for failure to produce evidence in support of

                                       9

  1        any account, bill, claim or item of indebtedness placed with the applicant
  2        for collection in addition to that delivered upon the  execution  of  such
  3        contract. authorized by this act;
  4        (cb)  Penalizes  such  a creditor client for any unintentional error, mis-
  5        take or omission in furnishing  to  the  applicant  the  correct  name  or
  6        address of any debtor. to a collection agency; or
  7        (dc)  Stipulates,  directly  or indirectly, for Require the payment of any
  8        fee, commission or compensation in excess of fifty per cent percent  (50%)
  9        of  the  amount  actually  collected  on any account, bill, claim or other
 10        indebtedness entrusted to the applicant collection agency for collection.,
 11        provided, hHowever, that in the case of that a collection agency  collects
 12        interest  collected  by a permittee on an account, the creditor client and
 13        the permittee by agreement between  them  collection  agency  may  provide
 14        agree  in  writing for division of such interest between them without such
 15        percentage limitation.; and provided further that Furthermore, in the case
 16        of the collection of checks dishonored by nonacceptance or nonpayment, the
 17        creditor client and the permittee collection agency, by written  agreement
 18        between  them,  may provide, in place of a percentage fee, for the payment
 19        of a set dollar amount collection fee not to exceed the amount provided in
 20        section 28-22-105, Idaho Code, which shall not be subject to the fifty per
 21        cent percent (50%) limitation. Collection agreements to proceed under sec-
 22        tion 1-2301A, Idaho Code, shall be subject to the fifty per  cent  percent
 23        (50%) limitation.
 24        (43)  (a) A  permit  holder,  engaging  in the business of receiving money
 25        from debtors for application to or payment or  prorating  the  account  or
 26        accounts  of any creditor or creditors of such debtor, for compensation or
 27        otherwise, or in the business of acting as the assignee for the benefit of
 28        creditors as a primary or secondary  object,  No  debt  counselor,  credit
 29        counselor  or  credit  repair  organization  licensed  or  required  to be
 30        licensed under this act shall not take or receive for  services  performed
 31        by  such  permit  holder for any one (1) person more than fifteen per cent
 32        percent (15%) of the amount received by it at any one (1) time from or  on
 33        behalf  of that person for payment or prorating to creditors, and no other
 34        charges shall be made or received for any such service.
 35        (b)  Debt counselors or credit counselors who do not receive, hold or dis-
 36        burse funds from debtors for payment to  creditors  shall  not  charge  or
 37        accept  as  a fee for their services more than twenty percent (20%) of the
 38        principal amount of the debtor's unsecured debt at the time of contracting
 39        for services for the management of debt. In the event of  cancellation  of
 40        the  contract  by  the debtor prior to its successful completion, the debt
 41        counselor or credit counselor shall refund fifty percent (50%) of any col-
 42        lected fees associated with the amount of debt remaining unsettled at  the
 43        time of the termination of the contract.

 44        SECTION 10.  That Section 26-2229A, Idaho Code, be, and the same is hereby
 45    amended to read as follows:

 46        26-2229A.  REQUIREMENT  OF  FAIR,  OPEN  AND  HONEST DEALING -- PROHIBITED
 47    PRACTICES. (1) Every permittee, foreign permittee licensee or person  required
 48    to  be  licensed  under this act and its agents shall deal openly, fairly, and
 49    honestly without deception in the conduct of the collection agency  its  busi-
 50    ness activities in this state under this act.
 51        (2)  When not inconsistent with the statutes of this state, the provisions
 52    of  the federal fair debt collection practices act, 15 U.S.C. section 1692, et
 53    seq., as amended, may be enforced by the director against  agents,  permittees

                                       10

  1    and foreign permittees collection agencies licensed or required to be licensed
  2    under the provisions of this chapter act.
  3        (23)  In  any  and  every instance where the permittee a collection agency
  4    licensee has a managerial or financial interest in the a creditor  client,  or
  5    where the a creditor client has a managerial or financial interest in the per-
  6    mittee  a collection agency licensee, disclosure of such interest must be made
  7    on each and every contact with a debtor in seeking to make a collection of any
  8    account, claim, or other indebtedness. where  such  interest  or  relationship
  9    exists between creditor and permittee.
 10        (34)  No  permittee, foreign permittee collection agency licensee, or col-
 11    lection agency required to be licensed under this act, or agent of  such  col-
 12    lection  agency  shall  collect  or  attempt  to collect any interest or other
 13    charges, fees, or expenses incidental to the principal obligation unless  such
 14    interest or incidental fees, charges, or expenses: are:
 15             (a)  Are eExpressly authorized by statute;
 16             (b)  Are aAllowed by court rule ruling against the debtor;
 17             (c)  Have been judicially determined; or
 18             (d)  Are  provided  for  in a written form agreement, to be signed by
 19             both the debtor and the permittee licensee, and which has  the  prior
 20             approval  of  the director with respect to the terms of the agreement
 21             and amounts of the fees, interest, charges and expenses; or
 22             (e)  Reasonably relate to the actual cost associated with  processing
 23             a  demand  draft  or  other form of electronic payment on behalf of a
 24             debtor for a debt payment, provided that the debtor has preauthorized
 25             the method of payment and has been notified in advance that such pay-
 26             ment may be made by reasonable alternative means that will not result
 27             in additional charges, fees or expenses to the debtor.
 28        (45)  No person shall sell, distribute or make use of solicitations,  col-
 29    lection  letters,  demand forms or other printed matter which are made similar
 30    to or resemble governmental forms or documents, or legal forms used  in  civil
 31    or criminal proceedings.
 32        (56)  No  person  shall  use  any  trade name, address, insignia, picture,
 33    emblem or any other means which creates any impression  that  such  person  is
 34    connected with or is an agency of government.
 35        (7)  No  person licensed, or required to be licensed under this act, shall
 36    misappropriate, transfer, or convert to his own use or benefit, funds  belong-
 37    ing  to  or  held  for  another  person in connection with business activities
 38    authorized under this act.
 39        (8)  No credit repair organization licensed, or required  to  be  licensed
 40    under  this act, shall charge or receive money or other valuable consideration
 41    for the performance of any service which the credit  repair  organization  has
 42    agreed to perform for any consumer before such service is fully performed.
 43        (9)  No  person  licensed  or required to be licensed under this act shall
 44    make a representation or statement of material fact, or omit to state a  mate-
 45    rial  fact,  in  connection with the offer, sale or performance of any service
 46    authorized under this act, if the representation,  statement  or  omission  is
 47    false or misleading or has the tendency or capacity to be misleading.

 48        SECTION  11.  That Section 26-2230, Idaho Code, be, and the same is hereby
 49    amended to read as follows:

 50        26-2230.  BRANCH OFFICES. (1) The director may authorize a permittee, upon
 51    request, to conduct collection activities authorized in this chapter at  addi-
 52    tional  locations.  The  additional A licensee must register, in a manner pre-
 53    scribed by the director, each additional place of business from which  activi-

                                       11

  1    ties  authorized  under  this act are directly or indirectly conducted in this
  2    state. Registered locations shall be  considered  branches  of  the  permittee
  3    licensee.  The  licensee  shall  inform  the director shall be informed of the
  4    opening and closing of all branch locations operated by permittees of a branch
  5    location at least thirty (30) days prior thereto, and  no  later  than  thirty
  6    (30) days after the closing of any branch location.
  7        (2)  The director may authorize a permittee, upon written request, to con-
  8    duct limited collection activities at locations other than the principal loca-
  9    tion  of  the permittee or branches. The facilities may be at the domiciles of
 10    the agents employed by the permit holder. Collection activities at  facilities
 11    shall  be  limited to telecommunications with creditors, clients, debtors, and
 12    the permittee's offices and branches. The director shall be  informed  of  the
 13    opening and closing of all facility locations operated by permittees.

 14        SECTION  12.  That Section 26-2231, Idaho Code, be, and the same is hereby
 15    amended to read as follows:

 16        26-2231.  RENEWAL OF PERMIT LICENSE. Upon application postmarked
 17        (1)  Oon or before the fifteenth day of March of each year, the holder  of
 18    any  permit issued under the provisions of this chapter each licensee shall be
 19    entitled to have such permit renewed for the  succeeding  calendar  year  upon
 20    payment  of  the annual permit fee as fixed by the director, but not to exceed
 21    fifty dollars ($50.00), compliance with the bond requirements of this chapter,
 22    the  filing  of  a  financial  statement  in  the  form  required  by  section
 23    26-2224(7), Idaho Code, showing a net worth of at least two thousand five hun-
 24    dred dollars ($2,500) for each place of business for which a permit is sought,
 25    filing of all other documents required by section  26-2224,  Idaho  Code,  and
 26    approval  by  the  director  of all literature to be employed by the permittee
 27    during the course of the business year, except no annual  permit  renewal  fee
 28    need be paid by a nonprofit corporation or association conducting credit coun-
 29    seling  or  debt  prorating  activities  pay  to  the director a nonrefundable
 30    license renewal fee of one hundred dollars ($100)  and  shall  file  with  the
 31    director  a license renewal form providing complete information as required by
 32    the director.
 33        (2)  Failure to fully comply with the license renewal requirements of this
 34    section by the fifteenth day of March of each year shall result  in  automatic
 35    expiration of the license as of that date.

 36        SECTION  13.  That Section 26-2232, Idaho Code, be, and the same is hereby
 37    amended to read as follows:

 38        26-2232.  COLLECTION AGENCY SURETY BONDS. (1)  Upon approval of the appli-
 39    cation and prior to the issuance of the permit a license under this  act,  the
 40    applicant must shall file in the department of finance two (2) a surety bonds.
 41    Both  bonds  shall be in a form provided prescribed by the attorney general of
 42    this state, and director. The bond shall be executed by the applicant as prin-
 43    cipal and by some a surety company authorized to do business in this state, as
 44    surety, and shall be for the term of any permit  the  license  issued  to  the
 45    applicant. Each permittee shall be required to have the two (2) bonds for each
 46    permit as hereinafter provided. In lieu of the bonds required by this section,
 47    a  certificate  of  deposit issued by an a financial institution authorized to
 48    conduct business in Idaho bank and made payable to the director  may  be  pro-
 49    vided  to the director in the same principal amount as required for the bonds.
 50    The interest on the certificate of deposit shall be payable to  the  permittee
 51    licensee.  The  certificate of deposit shall be maintained at all times during

                                       12

  1    which the permittee licensee is authorized to do business under Idaho law, and
  2    this act. The certificate of deposit must  provide  that  it  will  remain  in
  3    effect  for  at  least three (3) years following discontinuance of operations,
  4    unless released earlier by the director when all statutory  requirements  have
  5    been met.
  6        (a2)  A The surety bond shall be executed to the state of Idaho in the sum
  7    of  fifteen  thousand  dollars ($15,000) or upon renewal in such larger sum as
  8    hereinafter provided. In any case where a permittee licensee or its  represen-
  9    tatives  has  have failed to account for and pay over the proceeds of any col-
 10    lection made or money received for payment or prorating to creditors,  or  has
 11    have  failed to return to a debtor any sum received that was not to be applied
 12    to his debts, the creditor or debtor shall have in addition to all other legal
 13    remedies a right of action in his own name on such bond without the  necessity
 14    of joining the permittee licensee in such action. The bond shall be continuous
 15    in  form  and  shall  remain  in  full force and effect for the permit license
 16    period. The surety may cancel the bond provided that the surety shall in  such
 17    event provide the permittee licensee and the director with notice no less than
 18    thirty  (30)  days prior to cancelation cancellation of said bond. Such notice
 19    shall be by registered or certified  mail with request for  a  return  receipt
 20    and  addressed  to the permittee licensee at its main office and to the direc-
 21    tor. In no event shall the liability of the surety  for  any  and  all  claims
 22    against the bond exceed the face amount of such bond.
 23        (3)  Upon  renewal  of any permit a license, the permittee  licensee shall
 24    supply the director with a statement of the preceding year's net  collections.
 25    The amount of the bond upon renewal shall be in the amount of fifteen thousand
 26    dollars  ($15,000),  or  two (2) times the average monthly net collections for
 27    the preceding year computed to the next highest one thousand dollars ($1,000),
 28    whichever sum is greater, up to a maximum  of  one  hundred  thousand  dollars
 29    ($100,000).
 30        (b)  A  bond  shall  be  executed  to the state of Idaho in the sum of two
 31    thousand dollars ($2,000), which shall be limited to  the  indemnification  of
 32    the  department  of  finance  for any and all expenses incurred as a result of
 33    investigations, administrative proceedings, and prosecutions  which  shall  be
 34    instituted  by  the  director against a permittee or licensee pursuant to this
 35    act. The bond shall be continuous in form and remain in full force and  effect
 36    and  run  concurrently  with  the  permit  period and any renewal thereof. The
 37    surety may cancel the bond provided that the surety shall in such  event  pro-
 38    vide  the  permittee  and  the  director with notice thirty (30) days prior to
 39    cancelation of said bond. Such notice shall be registered  or  certified  mail
 40    with  request  for a return receipt and addressed to the permittee at its main
 41    office and to the director. In no event shall the liability of the surety  for
 42    any and all claims against the bond exceed the face amount of such bond.

 43        SECTION 14.  That Section 26-2232A, Idaho Code, be, and the same is hereby
 44    repealed.

 45        SECTION  15.  That  Chapter  22, Title 26, Idaho Code, be, and the same is
 46    hereby amended by the addition thereto of a NEW SECTION, to be known and  des-
 47    ignated as Section 26-2232A, Idaho Code, and to read as follows:

 48        26-2232A.  DEBT COUNSELORS, CREDIT COUNSELORS, CREDIT REPAIR ORGANIZATIONS
 49    --  BONDS. (1) Upon approval of the application and prior to the issuance of a
 50    license under this act, an applicant for a license as a debt counselor, credit
 51    counselor or credit repair  organization  shall  file  in  the  department  of
 52    finance  a surety bond in a form prescribed by the director. The bond shall be

                                       13

  1    executed by the applicant as principal and by a surety company  authorized  to
  2    do  business in this state, and shall be for the term of the license issued to
  3    the applicant. In lieu of the bond required by this section, a certificate  of
  4    deposit  issued  by  a financial institution authorized to conduct business in
  5    Idaho may be provided to the director in the same principal amount as required
  6    for the bond. The interest on the certificate of deposit shall be  payable  to
  7    the licensee. The certificate of deposit shall be maintained at all times dur-
  8    ing  which  the licensee is authorized to do business under this act. The cer-
  9    tificate of deposit must provide that it will remain in effect  for  at  least
 10    three  (3)  years following discontinuance of operations, unless released ear-
 11    lier by the director when all statutory requirements have been met.
 12        (2)  The surety bond shall be executed to the state of Idaho in the sum of
 13    fifteen thousand dollars ($15,000) or upon renewal in such larger sum as here-
 14    inafter provided. In any case where a licensee  or  its  representatives  have
 15    failed  to  account  for  and  pay  over moneys accepted, received or held for
 16    another in the licensee's conduct of business authorized by this act, a person
 17    injured thereby shall have, in addition to all other legal remedies,  a  right
 18    of  action  in  his own name on such bond without the necessity of joining the
 19    licensee in such action. The bond shall be continuous in form and shall remain
 20    in full force and effect for the license period. The  surety  may  cancel  the
 21    bond provided that the surety shall in such event provide the licensee and the
 22    director  with  notice  no less than thirty (30) days prior to cancellation of
 23    the bond. Such notice shall be by registered or certified  mail  with  request
 24    for  a  return receipt and addressed to the licensee at its main office and to
 25    the director.  In no event shall the liability of the surety for any  and  all
 26    claims against the bond exceed the face amount of such bond.
 27        (3)  Upon  renewal  of  a  license, the licensee shall supply the director
 28    with a statement of the moneys accepted, received or held for another  in  the
 29    licensee's  conduct of business authorized by this act. The amount of the bond
 30    upon renewal shall be in the amount of fifteen thousand dollars ($15,000),  or
 31    two  (2)  times  the  average monthly amount over the preceding year of moneys
 32    accepted, received or held for another in the licensee's conduct  of  business
 33    authorized  by  this  act  computed  to  the next highest one thousand dollars
 34    ($1,000), whichever sum is greater, up to a maximum of  one  hundred  thousand
 35    dollars ($100,000).

 36        SECTION  16.  That Section 26-2233, Idaho Code, be, and the same is hereby
 37    amended to read as follows:

 38        26-2233.  PERMITTEE LICENSEE ACCOUNTS REQUIRED. A permittee shall  in  its
 39    own name:
 40        (1)  Every  licensee under this act that receives or holds funds belonging
 41    to another in connection with the business activities authorized by  this  act
 42    shall,  in  its own name, eEstablish and maintain a separate trust account for
 43    deposit and remittance of creditors' such funds in  a  financial  institution,
 44    the  deposits  of  which are insured by the federal deposit insurance corpora-
 45    tion. A licensee may not, directly or indirectly, misappropriate, misapply  or
 46    borrow money held in trust.
 47        (2)  Every  licensee  under this act shall eEstablish and maintain a sepa-
 48    rate business account for the licensee's business funds and moneys in a finan-
 49    cial institution, the deposits of which are insured  by  the  federal  deposit
 50    insurance corporation.

 51        SECTION  17.  That Section 26-2234, Idaho Code, be, and the same is hereby
 52    amended to read as follows:

                                       14

  1        26-2234.  EXAMINATIONS, INVESTIGATIONS, RECORDS AND PAYMENT OF FUNDS.  (1)
  2    The  director or his duly authorized representatives may make an annual exami-
  3    nation, or more frequently in the  director's  discretion,  of  the  place  of
  4    licensee's  business  of  each  permittee and foreign permittee locations from
  5    which activities authorized under this act are conducted, and for that purpose
  6    the director shall have free access during normal business hours to the  offi-
  7    ces  and  places  of  business,  and  to the books, creditors' accounts, trust
  8    accounts, business accounts, records, papers, files, safes and vaults  of  all
  9    such permittees used by a licensee for its operations under this act.
 10        (2)  The director may, upon his own motion, and shall, upon the sworn com-
 11    plaint  in writing of any person, investigate the action of any person or per-
 12    sons claimed to have violated the provisions of this chapter, and conduct pub-
 13    lic or private investigations and examinations within or outside of this state
 14    which the director considers necessary or appropriate to determine  whether  a
 15    person  has  violated, is violating, or is about to violate this act or a rule
 16    adopted or order issued under this act, or to aid in the enforcement  of  this
 17    act. Ffor that purpose the director shall have free access during normal busi-
 18    ness hours to the offices and places of business, and to the books, creditors'
 19    accounts, trust accounts, business accounts, records, papers, files, safes and
 20    vaults  of  all  such persons used by a licensee for its operations under this
 21    act.
 22        (3)  Every permittee and foreign permittee shall execute to  the  director
 23    an  agreement  of  consent  to examination of any and all bank accounts of the
 24    permittee providing the director with authority to make  such  examination  at
 25    any  time the director, in his discretion, deems it to be in the public inter-
 26    est.
 27        (4)  The cost of examination for the first annual  examination  each  year
 28    and any investigation shall be paid to the director by each permittee licensee
 29    so  examined  or  investigated and the director may maintain an action for the
 30    recovery of such costs against the permittee licensee or  against  the  surety
 31    providing the bond to indemnify the state for such expenditures as required by
 32    this  chapter act. The cost shall be fixed annually by the director, but shall
 33    not exceed twenty-five fifty dollars ($250.00) per examination hour.
 34        (54)  Each permittee collection agency licensee shall acknowledge in writ-
 35    ing each account received for collection and shall maintain a record  of  such
 36    account, and shall make a permanent record of all sums collected by him and of
 37    all  disbursements  made.  by  him. Every permittee collection agency licensee
 38    shall keep and preserve all records relating to accounts received for  collec-
 39    tion,  collections moneys collected, receipts, and disposal or disbursement of
 40    all creditors' funds for a period of five three (53)  years  after  the  final
 41    disposition  of any account. It shall be unlawful for any person to intention-
 42    ally make any false entry, omit to make a necessary entry,  mutilate,  secrete
 43    away,  destroy or otherwise dispose of any record mentioned referenced in this
 44    subsection, provided a record may be disposed of after  the  five  three  (53)
 45    year period heretofore provided.
 46        (65)  Every permittee collection agency licensee shall, within thirty (30)
 47    days  after  the  close  following  the end of each calendar month, pay to his
 48    creditors the net proceeds of remit to his creditor clients all funds due them
 49    resulting from collections made by the permittee licensee during said calendar
 50    month. Each permittee shall report to the creditor all collections made by him
 51    and/or any payments made to the creditor within thirty  (30)  days  after  the
 52    close  Such  licensees  shall provide each of their creditor clients a written
 53    statement of all moneys collected on behalf of such creditor clients  and  any
 54    payments  made  to such creditor clients within thirty (30) days following the
 55    end of each calendar month.

                                       15

  1        (76)  Every permittee shall maintain his books and records  in  accordance
  2    with generally accepted accounting practices subject to such rules and regula-
  3    tions  as  adopted  by  the  director  Every licensee shall maintain books and
  4    records, including financial records in  accordance  with  generally  accepted
  5    accounting  principles, in a manner that will enable the director to determine
  6    whether the licensee is complying with the provisions of this act.
  7        (87)  The director, may impound the creditors' accounts, or trust accounts
  8    of any permittee if  it  shall  be  deemed  in  the  general  public  interest
  9    accounts,  including  all  operating  and trust accounts held in any financial
 10    institution, of any licensee or person required to be licensed under this  act
 11    who  receives,  holds or disburses consumer funds, if the director deems it in
 12    the public interest and good cause exists therefor, in accordance with section
 13    67-5247, Idaho Code.

 14        SECTION 18.  That Section 26-2235, Idaho Code, be, and the same is  hereby
 15    repealed.

 16        SECTION  19.  That Section 26-2236, Idaho Code, be, and the same is hereby
 17    amended to read as follows:

 18        26-2236.  SUBPOENAS. The director shall have the power to issue  subpoenas
 19    and  bring  before him any person, book, or writing in this state as necessary
 20    to determine whether a person has violated any provision of this act, rule  or
 21    order  thereunder,  to swear witnesses and to take the testimony of any person
 22    by deposition, with the same fees and mileage and in the same manner  as  pre-
 23    scribed by law in judicial procedure in district courts of this state in civil
 24    cases.  Any  party  to a proposed revocation or suspension of a permit license
 25    shall have the right of subpoena to compel the  attendance  of  witnesses  and
 26    produce all reasonably necessary books and writings on his behalf. In case any
 27    witness  shall  fail  or refuse to comply with a subpoena to appear before the
 28    director, the clerk of the district court of the county in which the  adminis-
 29    trative  proceedings are held shall, upon demand of the director, issue a sub-
 30    poena reciting the demand therefor and summoning the  witness  to  appear  and
 31    testify at a time and place fixed; and violation of such subpoena or disobedi-
 32    ence  thereto  shall be deemed and punished as a violation of any other a sub-
 33    poena issued from by the district court. Any revocation or suspension  of  any
 34    permit  or  license  provided for by this chapter shall be governed by chapter
 35    52, title 67, Idaho Code.

 36        SECTION 20.  That Section 26-2237, Idaho Code, be, and the same is  hereby
 37    amended to read as follows:

 38        26-2237.  FEES  --  DISPOSITION  OF  FUNDS.  All fees provided for in this
 39    chapter act shall be paid to the director and by him  remitted  to  the  state
 40    treasurer pursuant to section 59-1014, Idaho Code, and all such funds shall be
 41    deposited  to  the  credit  of the finance administrative account in the state
 42    dedicated fund.

 43        SECTION 21.  That Section 26-2238, Idaho Code, be, and the same is  hereby
 44    amended to read as follows:

 45        26-2238.  VIOLATIONS  --  PENALTIES. (1)  Any person who shall do business
 46    within the state of Idaho as defined in this act, without  a  permit,  or  any
 47    permit  holder  engages  in activities authorized under this act, who fails to
 48    establish and maintain a separate trust account for such creditors' funds  for

                                       16

  1    each  permit which he holds, or fails to make and keep the records as required
  2    by under this act, or fails to disburse funds in accordance with the  require-
  3    ments  of  this act, or misappropriates, transfers, or converts to his own use
  4    or benefit, funds belonging to or held for another person, shall, upon convic-
  5    tion, be guilty of a felony and punishable by a fine not exceeding  to  exceed
  6    five  thousand  dollars ($5,000) per violation or by imprisonment in the state
  7    penitentiary for not more than five (5) years, or both, and.
  8        (2)  Any person, except a person exempt under section 26-2239, Idaho Code,
  9    who engages in activities authorized under this act without first obtaining  a
 10    license  as required by this act shall, upon conviction, be guilty of a felony
 11    punishable by a fine not to  exceed  five  thousand  dollars  ($5,000)  or  by
 12    imprisonment for not more than five (5) years, or both.
 13        (3)  Aany person who shall fail to comply with any of the other provisions
 14    of this act shall, upon conviction, be guilty of a misdemeanor.

 15        SECTION  22.  That Section 26-2239, Idaho Code, be, and the same is hereby
 16    amended to read as follows:

 17        26-2239.  EXEMPTIONS. The provisions of this chapter act shall  not  apply
 18    to the following:
 19        (1)  Any  attorney-at-law duly authorized Persons licensed to practice law
 20    in this state, to the extent that they are retained by their clients to engage
 21    in activities authorized by this act, and such activities  are  incidental  to
 22    the  practice of law. Such exemption shall not apply to an attorney engaged in
 23    a separate business conducting the activities authorized by this act;
 24        (2)  Any regulated lender as defined in section 28-41-301(37), Idaho Code,
 25    nor any and its subsidiary, affiliate or agent of such a regulated  lender  to
 26    the  extent that the regulated lender, subsidiary, affiliate or agent collects
 27    for the regulated lender or engages in acts governed by  this  act  which  are
 28    incidental to the business of a regulated lender;
 29        (3)  Any  bank,  trust  company, credit union, insurance company or indus-
 30    trial loan company authorized to do business in this state;
 31        (4)  Any federal, state or local governmental agency or instrumentality;
 32        (5)  Any real estate broker or real estate  salesman  licensed  under  the
 33    laws of and residing within this state when while engaged in the regular prac-
 34    tice of a real estate business acts authorized by his real estate license;
 35        (6)  Any abstract and title companies doing an person authorized to engage
 36    in escrow business in this state while engaged in authorized escrow business;
 37        (7)  Any  mortgage  company  to  the  extent that such mortgage company is
 38    engaged in the regular business of a mortgage company as  defined  in  section
 39    26-2802,  Idaho Code, except a mortgage company engaged in a separate business
 40    conducting the activities authorized by this act;
 41        (8)  Any court appointed trustee, receiver or conservator;
 42        (9)  Any telephone corporation, as defined in subsection (10)  of  section
 43    62-603,  Idaho Code, whose initial request for payment on behalf of such tele-
 44    phone corporation or on behalf of another person is made by the telephone cor-
 45    poration as a part of regular telecommunications billings to its customers and
 46    at a time before the account, bill, claim or other indebtedness  becomes  past
 47    due or delinquent;
 48        (10) Any  person while acting as a debt collector for another person, both
 49    of whom are related by common ownership or affiliated by corporate control, if
 50    the person acting as a debt collector does so only for persons to whom  he  is
 51    so  related  or affiliated and if the principal business of such person is not
 52    the collection of debts.

                                       17

  1        SECTION 23.  That Section 26-2240, Idaho Code, be, and the same is  hereby
  2    amended to read as follows:

  3        26-2240.  AGENT  IDENTIFICATION  --  QUARTERLY  NOTICE -- FEE. Each permit
  4    holder shall applicant for a license under this act, with its initial  license
  5    application, and each licensee at annual renewal, shall file with the director
  6    a  list of all agents including the name of the each agent and any other iden-
  7    tifying information the director may require. A fee of twenty dollars ($20.00)
  8    for each listed agent shall accompany the list.  Each  licensee  shall  notify
  9    tThe  director  shall be notified in writing of any additions to the its agent
 10    list no less often than every  calendar  quarter.  A  fee  of  twenty  dollars
 11    ($20.00)  shall be filed with paid to the director for each additionally iden-
 12    tified agent in the quarterly notification of additions to a  permit  holder's
 13    licensee's agent list. An agent is not required to be listed, nor the fee paid
 14    therefor,  unless the agent acted for the permit holder licensee for more than
 15    five thirty (530) business days.

 16        SECTION 24.  That Section 26-2243, Idaho Code, be, and the same is  hereby
 17    amended to read as follows:

 18        26-2243.  PROPERTY RIGHT IN ACCOUNTS -- PRACTICE OF LAW PROHIBITED. A per-
 19    mit  holder licensee under this act shall have a property right in any account
 20    assigned to it for collection; provided,  however,  no  right  herein  granted
 21    shall authorize such permit holder licensee to engage in the practice of law.

 22        SECTION  25.  That Section 26-2244, Idaho Code, be, and the same is hereby
 23    amended to read as follows:

 24        26-2244.  CEASE AND DESIST ORDERS, PENALTY. (1) Whenever it appears to the
 25    director that it is in the public interest, he may order any person  to  cease
 26    and  desist from acts, practices, or omissions which constitute a violation of
 27    this chapter act or a rule adopted or an order issued under this act.
 28        (2)  Whenever, after notice and the opportunity for a hearing, the  direc-
 29    tor  finds that any person has violated engaged in any act, practice, or omis-
 30    sion constituting a violation of any provision of this chapter act or  a  rule
 31    adopted  or  an order issued under this act, the director may order the person
 32    to cease and desist from such acts, practices or omissions which constitute  a
 33    violation of this chapter and:
 34        (a)  Impose  a  civil  penalty  of not more than two thousand five hundred
 35        thousand dollars ($2,5005,000) for each violation upon any person found to
 36        have violated any provision of this chapter act or a rule  adopted  or  an
 37        order issued under this act;
 38        (b)  Issue  an order restoring to any person in interest any consideration
 39        that may have been acquired or transferred in violation  of  this  chapter
 40        act or a rule adopted or an order issued under this act; or and
 41        (c)  Issue  an  order that the person violating this chapter act or a rule
 42        adopted or an order issued under this act pay costs, which in the  discre-
 43        tion  of the director may include an amount representing reasonable attor-
 44        ney's fees and reimbursement for investigative efforts.

 45        SECTION 26.  That Section 26-2245, Idaho Code, be, and the same is  hereby
 46    amended to read as follows:

 47        26-2245.  DIRECTOR'S  POWER  TO ENJOIN VIOLATIONS. (1) Whenever it appears
 48    to the director that any person, or employee or agent thereof, has engaged  in

                                       18

  1    or is about to engage in any act or practice or omission constituting a viola-
  2    tion of any provision of this chapter act, or any rule or order issued hereun-
  3    der, he may in his discretion bring an action in any court of competent juris-
  4    diction to enjoin any such acts, or practices or omissions and to enforce com-
  5    pliance  with this chapter act or any rules adopted or order issued hereunder.
  6    Upon a showing that a person, or employee or agent of any person, thereof, has
  7    engaged in or is about to engage in an act, or practice or omission constitut-
  8    ing a violation of this chapter act or any rule adopted or order issued  here-
  9    under,  a  permanent  or  temporary  injunction, or restraining order shall be
 10    granted and a receiver or conservator may  be  appointed,  which  may  be  the
 11    director,  for  the  defendant's assets. The director shall not be required to
 12    furnish a bond.
 13        (2)  In addition to the foregoing, the director,  in  his  discretion  and
 14    upon  a  showing in any court of competent jurisdiction that a person has vio-
 15    lated the any provisions of this chapter act or rule adopted or  order  issued
 16    hereunder, may be granted the following additional remedies:
 17        (a)  An  order  restoring to any person in interest any consideration that
 18        may have been acquired or transferred in violation of this chapter act;
 19        (b)  An order that the person violating this chapter act,  rule  or  order
 20        issued  hereunder,  pay a civil penalty to the department in an amount not
 21        to exceed two thousand five hundred  thousand  dollars  ($2,5005,000)  for
 22        each violation;
 23        (c)  An order allowing the director to recover costs, which in the discre-
 24        tion of the court may include an amount representing reasonable attorney's
 25        fees and reimbursement for investigative efforts; and
 26        (d)  An order granting other appropriate remedies upon a proper showing.

 27        SECTION  27.  That Section 26-2246, Idaho Code, be, and the same is hereby
 28    repealed.

 29        SECTION 28.  That Chapter 22, Title 26, Idaho Code, be, and  the  same  is
 30    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 31    ignated as Section 26-2246, Idaho Code, and to read as follows:

 32        26-2246.  CLOSURE OR DISCONTINUANCE OF  OPERATIONS  --  REQUIREMENTS.  (1)
 33    Whenever  the  operations  of  a collection agency licensee under this act are
 34    closed or discontinued due to revocation, termination, or relinquishment of  a
 35    collection  agency  license,  or  for  any other reason, the collection agency
 36    shall, within thirty (30) days following  the  closure  or  discontinuance  of
 37    operations,  furnish the director with sufficient proof in a form to be deter-
 38    mined by the director that:
 39        (a)  The collection agency has remitted to all of its creditor clients all
 40        moneys collected on their behalf and due such creditor clients;
 41        (b)  All collection accounts, judgments obtained, and other accounts  have
 42        been  returned  to  the  creditor  clients or other proper parties, and if
 43        appropriate, assigned by the collection agency to its creditor clients  or
 44        other proper parties; and
 45        (c)  All valuable papers, documents, judgments and other property provided
 46        to  the collection agency by its creditor clients or other parties in con-
 47        nection with the  collection  agency's  collection  activities  have  been
 48        returned to the creditor clients or other proper parties.
 49        (2)  A  collection  agency  which  holds a license issued pursuant to this
 50    act, upon closure or discontinuance of  its  operations,  shall  maintain  the
 51    bonds  required of such licensee to conduct a collection agency business until
 52    a final accounting of its affairs, as set forth in subsection (1) of this sec-

                                       19

  1    tion, has been filed with and approved by the director.
  2        (3)  Whenever the operations of a collection agency are closed or  discon-
  3    tinued  as  set forth in subsection (1) of this section, in the event the col-
  4    lection agency does not complete all requirements of  such  subsection  within
  5    thirty  (30)  days following the closure or discontinuance of operations, upon
  6    demand by the director, the collection agency shall  permit  the  director  to
  7    take  possession  of  its  business records, bank accounts, including creditor
  8    client trust accounts, other property belonging to  its  creditor  clients  or
  9    third  parties, and its assets. The director may then liquidate the collection
 10    agency's business, return any moneys owed to the collection agency's  creditor
 11    clients,  return  the  collection  agency's  accounts to its creditor clients,
 12    return or assign any judgments to the agency's creditor clients, and take  any
 13    other actions which are reasonably necessary to cause the collection agency to
 14    liquidate its assets and to comply with subsection (1) of this section.
 15        (4)  If a collection agency refuses to permit the director to take posses-
 16    sion  of  its business records, bank accounts, creditor client trust accounts,
 17    other property belonging to its creditor clients  or  third  parties  and  its
 18    assets, as set forth in subsection (3) of this section, the director may apply
 19    to  a court of competent jurisdiction in the county of the collection agency's
 20    principal place of business for the appointment of a receiver  or  conservator
 21    as  set forth in section 26-2245(1), Idaho Code.  Such receiver or conservator
 22    may be the director.
 23        (5)  The expenses of the receiver or conservator and attorney's fees,  and
 24    all  expenses  necessarily  incurred  in liquidation of the collection agency,
 25    shall be paid out of the funds in the control of the director or  conservator,
 26    to  the  extent  those  funds  exceed any sums due and owing to the collection
 27    agency's creditor clients or other proper parties.  To the extent funds in the
 28    control of the receiver are not sufficient to pay all sums due  and  owing  to
 29    the  collection  agency's  creditor clients or other proper parties and to pay
 30    the costs of a receiver or conservator and of liquidation  of  the  collection
 31    agency,  the collection agency and its owners, shareholders, or interest hold-
 32    ers shall be responsible for the balance of any reasonably necessary costs and
 33    fees of liquidation.

 34        SECTION 29.  That Section 26-2248, Idaho Code, be, and the same is  hereby
 35    amended to read as follows:

 36        26-2248.  ADMINISTRATION  OF  ACT. The administration of the provisions of
 37    this act shall be under the general supervision and control of  the  director,
 38    subject  to  chapter  52,  title 67, Idaho Code. The director may from time to
 39    time make adopt, amend, and rescind such  rules,  regulations  and  forms  and
 40    issue orders necessary to carry out the provisions of this act. No rule, regu-
 41    lation  or form order may be made unless the director finds that the action is
 42    necessary or appropriate for the public interest  or  for  the  protection  of
 43    creditors and debtors the public consistent with the purposes of this act.

 44        SECTION  30.  That  Sections  26-2250 and 26-2251, Idaho Code, be, and the
 45    same are hereby repealed.

 46        SECTION 31.  That Chapter 22, Title 26, Idaho Code, be, and  the  same  is
 47    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 48    ignated as Section 26-2251, Idaho Code, and to read as follows:

 49        26-2251.  SEVERABILITY. The provisions of this act are hereby declared  to
 50    be  severable and if any provision of this act or the application of such pro-

                                       20

  1    vision to any person or circumstance is declared invalid for any reason,  such
  2    declaration  shall  not  affect the validity of the remaining portions of this
  3    act.

  4        SECTION 32.  That Section 1-2301A, Idaho Code, be, and the same is  hereby
  5    amended to read as follows:

  6        1-2301A.  DRAWING  CHECK WITHOUT FUNDS OR INSUFFICIENT FUNDS -- CIVIL LIA-
  7    BILITY. In any action filed in the small claims department  against  a  person
  8    who  makes  any  check, draft or order for the payment of money which has been
  9    dishonored for lack of funds or credit to pay the same, or because  the  maker
 10    has  no  account with the drawee, the plaintiff, or a collection agency with a
 11    permit license issued to it pursuant to section 26-22295, Idaho Code, which is
 12    attempting to collect the dishonored check under a written agreement with  the
 13    payee or holder of the check, may recover from the defendant the amount of the
 14    check,  draft  or order and, in addition thereto, the greater of the amount of
 15    one hundred dollars ($100) or three (3) times the amount for which the  check,
 16    draft or order is drawn. Except as provided in section 1-2304, Idaho Code, the
 17    plaintiff  or  collection  agency may recover no other costs, fees, charges or
 18    damages. However, damages recovered under the provisions of this section shall
 19    not exceed by more than five hundred dollars ($500) the value  of  the  check,
 20    draft or order and may be awarded only if the plaintiff made written demand of
 21    the  defendant for payment of the amount of the check, draft or order not less
 22    than ten (10) days before commencing the action, and if the  defendant  failed
 23    to  tender to the plaintiff, prior to commencement of the action, an amount of
 24    money not less than the amount demanded. The written demand required  by  this
 25    section  shall  be  sent  to  the  maker  by  certified mail at his last known
 26    address, or by regular mail, supported by an affidavit of service by  mailing,
 27    to  the  address  printed  or  written  on  the  check  as provided in section
 28    28-22-106, Idaho Code, in which case the demand  shall  be  deemed  conclusive
 29    three  (3)  days  following  the  date  the affidavit is executed. The written
 30    demand shall fully advise the maker of the check, draft, or order of the  con-
 31    sequences  of failure to make prompt payment under this section. The plaintiff
 32    or collection agency must show proof of service  by  producing  a  copy  of  a
 33    signed return receipt or affidavit of personal service.

Statement of Purpose / Fiscal Impact

                     STATEMENT OF PURPOSE

                          RS 17430C1

The purpose of this bill is to amend the Idaho Collection Agency 
Act to establish uniformity of licensing requirements for 
collection agencies operating in Idaho, whether based in or 
outside of this state.  This would be accomplished largely by 
eliminating an in-state office requirement and replacing a 
testing requirement administered in Idaho with an experience 
requirement for office managers.  This bill would also (i) 
repeal an outdated net worth requirement, (ii) amend a quarterly 
fee and reporting requirement so that it will apply only to 
solicitors/agents employed by licensees for thirty (30) days in 
place of the current five (5) day requirement.  The bill 
clarifies that an existing $20 annual fee applies to the 
solicitors/agents of licensees operating in Idaho, whether based 
in or outside of this state.  The bill would also eliminate one 
of two bonds currently required under the Collection Agency Act.  
The bill also includes a definition of credit repair 
organizations and imposes requirements and restrictions.  The 
bill also repeals the requirement that credit and debt 
counselors be non-profit 501 (c)(3) charitable organizations 
under the Internal Revenue Code.




                           FISCAL NOTE

It is anticipated that some increase in revenue may result from 
payment by all licensees, whether based in or outside of this 
state, of the $20 annual solicitor/agent fee.  However, this 
increase could largely be offset by extending the time period 
from five (5) days to thirty (30) days for solicitor/agent fees 
to be paid.  An increase in revenue is also anticipated to 
result from an increase in licensing fees of approximately 
$35,000 annually based on the number of current licensees.



CONTACT
Name:	Michael Larsen
Agency:	Finance, Dept. of
Phone:	(208) 332-8060


STATEMENT OF PURPOSE/FISCAL NOTE	                  H 451