Idaho Collection Agency Act
ID ST � 26-2223
Chapter 22. Collection Agencies
Title 26. Banks and Banking
Chapter 22. Collection Agencies
As used in this chapter:
(1) “Agent” means any person who is compensated on a commission basis or by salary, or both, by any permittee and who either contacts debtors or creditors in connection with the collection agency business of the permittee.
(2) “Business funds” means all moneys belonging to or due the permittee in connection with the operation of a collection agency business.
(3) “Collection agency,” “collection bureau” or “collection office” shall be a person who engages in any of the activities enumerated in section 26-2223, Idaho Code.
(4) “Director” means the director of the department of finance.
(5) “Creditor” means any person who transfers to a permittee accounts due and owing for collection purposes.
(6) “Creditors’ account” means all funds due and owing a creditor within the definition of this chapter.
(7) “Net collections” means all funds that are due to creditors from the permittee pursuant to the contract between the permittee and creditor, or permittee and debtor without taking into account any offset or funds due from the creditor to the permittee, because of the creditor having collected any part of the account due, plus all funds that the permittee agreed to return to debtors or that were not to be applied to debts.
(8) “Permittee” means a person who has a permit to do business as a collection agency, or debt counselor, or credit counselor in Idaho .
(9) “Person” means any permittee, agent, solicitor, individual, corporation, association, copartnership, trust, company or unincorporated organization.
(10) “Debt counselor” means any person engaged in any of the activities enumerated in subsection (6) of section 26-2223, Idaho Code.
(11) “Credit counselor” means any person engaged in any of the activities enumerated in subsection (6) or (7) of section 26-2223, Idaho Code. No credit counselor shall be granted a permit pursuant to this chapter unless qualified as an exempt organization under section 501(c)(3) of the Internal Revenue Code [FN1].
[FN1] 26 U.S.C.A. � 501.
� 26-2223. Collection agency, debt counselor, or credit counselor permits
No person shall without complying with the terms of this chapter and obtaining a permit from the director:
(1) Operate as a collection agency, collection bureau, collection office, debt counselor, or credit counselor in this state.
(2) Engage, either directly or indirectly in this state in the business of collecting or receiving payment for others of any account, bill, claim or other indebtedness.
(3) Solicit or advertise for the right to collect or receive payment for another of any account, bill, claim or other indebtedness.
(4) Sell or otherwise distribute any system or systems of collection letters and similar printed matter where the name of any person other than the particular creditor to whom the debt is owed appears.
(5) Engage in any activity which indicates, directly or indirectly, that a third party may be involved in effecting any collections.
(6) Engage or offer to engage in the business of receiving money from debtors for application to or payment of or prorating of any creditor or creditors of such debtor.
(7) Engage or offer to engage in the business of providing counseling or other services to debtors in the management of their debts, and contracting with the debtor to effect the adjustment, compromise, or discharge of any account, note or other indebtedness of the debtor.
(8) Engage or offer to engage in the business of credit repair which includes obtaining, for others, improvements in credit records, extensions of credit for clients, or causing the removal of documents from the credit records of a client maintained by a credit reporting agency.
(9) Engage or offer to engage in this state, directly or indirectly, in the business of collecting any form of indebtedness for that person’s own account if the indebtedness was acquired from another person and if the indebtedness was either delinquent or in default at the time it was acquired.
� 26-2223A. Office to be maintained in state–Designation of responsible person
Every permittee under this chapter must maintain an office in the state of Idaho, staffed with at least one (1) natural person who passed the examination required in section 26-2229, Idaho Code, or is exempt from the provisions of this chapter pursuant to section 26-2239(1), Idaho Code, at each branch or facility. Each permittee must have a listed Idaho telephone number and must be open to the public during normal business hours on each business day, provided, however, that the director may in his discretion approve a request for opening at hours other than normal business hours or a portion of a business day. A business day within the meaning of this section does not include Saturdays, Sundays, or legal holidays. Each permittee under this chapter must designate a natural person, who need not be a resident of the state of Idaho , to be responsible for the business carried on at the office and who has passed the examination for a permit required by section 26-2229, Idaho Code. If the person designated by the permittee to be responsible for business carried on at the office is not normally available in the Idaho office, then the permittee’s collection activities with debtors must begin with a written notice to each debtor setting forth a mailing address and a toll-free telephone number whereby a debtor may contact the designated responsible person during normal business hours.
� 26-2224. Form of application
Every applicant for such permit shall file in the department of finance an application in form to be prescribed by the director setting forth:
(1) The name of the applicant if an individual; if the applicant is a corporation a list of its officers and directors and their addresses; if the applicant is a partnership a list of the partners and their addresses; or if the applicant is a limited liability company a list of its members or managers and their addresses. Every corporation shall designate and appoint one (1) or more of its officers or employees, every partnership shall designate and appoint one (1) or more of its partners, and every limited liability company shall designate and appoint one (1) or more of its members or managers who shall submit to the examination hereinafter required. No permit shall be issued to any corporation, partnership or limited liability company unless and until the persons so designated shall submit to and pass the examination required by this chapter.
(2) The location of the principal office or place of business of the applicant.
(3) Other names, if any, by which the applicant conducts, engages in or solicits business.
(4) The names of all persons and organizations with which the applicant is affiliated in such business, and the location of the principal office or place of business of each such affiliation.
(5) A complete description of the business to be conducted, or plan of operation contemplated, by the applicant in this state.
(6) A list of all papers and filings used by the applicant which must accompany the application and be identified as exhibits by number.
(7) A financial statement showing the applicant to have a financial net worth of not less than two thousand five hundred dollars ($2,500), which statement shall be subject to disclosure according to chapter 3, title 9, Idaho Code. The financial statement shall specify assets and liabilities, providing detailed reference to each item listed to inform the director of the nature and extent of such assets and liabilities. This financial statement shall be signed by the applicant or its proper agent. The net worth shall not include any notes, accounts, bills, and judgments held for collection by the applicant nor shall it include good will or other assets the value of which is speculative and not susceptible to prompt liquidation.
(8) Such other information concerning the applicant’s business as the director may reasonably require. Such application shall be executed and verified by the applicant or applicants personally, or by an individual associated with the applicant as designated by the director.
� 26-2225. Information and materials required with application–Examination fee–Consent to service
Such application shall be accompanied by:
(1) Complete copies of all literature and circulars issued or circulated by or on behalf of the applicant in soliciting or advertising for business including circular and form letters.
(2) Complete forms of all contracts designed for execution by persons placing any account, bill, claim or other indebtedness in the hands of the applicant for collection.
(3) Complete forms of all contracts and assignments designed for execution by debtors making any assignments to or placing any property with the applicant for the purpose of paying the creditors of such debtors.
(4) Complete forms of all contracts and releases designed for execution by creditors to whom payments are made or are to be made by the applicant.
(5) If the applicant is a corporation or association, a copy of its articles of incorporation or association, duly authenticated.
(6) A list of the names and addresses of all agents who will contact debtors or creditors or solicit business for the applicant in this state.
(7) The names and addresses of all directors and officers, if the applicant is a corporation or association; and the names of the members, if the applicant is an unincorporated company, a firm or copartnership.
(8) An agreement executed by the applicant stipulating that no literature or form of contract not submitted with the application will be issued, circulated or used by the applicant prior to the filing thereof with the director.
(9) An initial examination fee as fixed by the director, but not to exceed one hundred dollars ($100), except that no examination fee need be paid by a nonprofit corporation or association conducting credit counseling or debt prorating activities.
(10) Complete copies of all literature, circulars, contracts, and/or other related material to be circulated or distributed by the permit holder to a debtor.
(11) An irrevocable consent to service executed by the applicant appointing the director and his successors in office to be attorney of the applicant to receive service of any lawful process in any civil suit, action, or proceeding against the applicant which arises under this act or any rule or order hereunder. After the consent has been filed, any service hereunder shall have the same force and validity as if personally served on a person filing the consent. A person who has filed such a consent in connection with a previous registration need not file another. Service may be made by leaving a copy of the process in the office of the director.
� 26-2226. False or fraudulent debt reduction and elimination practices
(1) No person shall obtain or attempt to obtain a fee, compensation or consideration from a person through a false or fraudulent representation or statement that a debt, loan, or extension of credit could or would be eliminated, reduced or substituted, if the representation or statement is false or misleading or has the tendency or capacity to be misleading, or if the person making the representation or statement does not have sufficient information upon which a reasonable belief in the truth of the representation or statement could be based.
(2)(a) Whenever it appears to the director that a person has violated subsection (1) of this section, the director shall have the powers and remedies set forth in sections 67-2754 and 67-2755, Idaho Code, as well as the powers and remedies found in this chapter, as to any such violation.
(b) Any person who violates subsection (1) of this section shall be subject to the criminal proceedings and penalties set forth in sections 67-2757, 67- 2758 and 67-2759, Idaho Code, as well as the criminal proceedings and penalties provided in this chapter.
� 26-2227. Repealed
� 26-2228. Powers of the director
The director shall have the power to provide the manner and method for conducting examinations. Applications for examination shall be filed with the director at least ten (10) days prior to the examination date.
The examination shall be uniformly given, may be written or oral or a combination of both and shall be practical in nature. The examination may include questions on bookkeeping, credit adjusting, business law, collection procedure, business ethics, agency, debtor and creditor relationship, trust funds, creditors’ funds, business funds, fiduciary relationships, and the provisions of this act and the rules duly issued by the director pursuant to this act, and such other subject matter as the director by rule may specify. The examination shall be given twice each year or at such more frequent intervals as the director may direct.
� 26-2229. Examination–Permit
(1) The director shall examine each application for a permit and accompanying papers and investigate the qualifications of the applicant and if he finds therefrom that the same are in proper form, that the literature proposed to be circulated does not tend to conceal or misrepresent any fact to the detriment of any person dealing with the applicant, that the contract or contracts proposed to be entered into for the collection or payment or prorating of accounts, bills, claims or other indebtedness by the applicant, or prorating or receiving money for payment to creditors are equitable, fair and reasonable, and that the applicant meets all other requirements and qualifications of this act, he shall examine the applicant if an individual, or the designated officer or officers or employees of any corporation and the designated member or members of any partnership, in the manner described in section 26-2225, Idaho Code, and if such applicant or designee passes a satisfactory examination, he shall cause a permit to be issued authorizing the applicant to conduct such a business in this state subject to the provisions of this act, until the fifteenth day of March next thereafter.
(2) If the director finds that the applicant does not qualify under the provisions of this act, the application shall be denied. If he finds the applicant is qualified he must issue a permit upon the filing of the bonds required by this act and the payment of an annual permit fee as fixed by the director, but not to exceed fifty dollars ($50), except that no permit fee need be paid by a nonprofit corporation or association conducting credit counseling or debt prorating activities.
(3) Contracts between collection agencies and clients shall be in writing. No collection contract shall be deemed equitable, fair or reasonable within the meaning of this section which in substance either:
(a) Permits the applicant to retain any sums due the creditor on any account, bill, claim or other indebtedness collected for him by the applicant on account of, or as a setoff against, any fee, commission, charge, expense or compensation claimed, other than the regular collection fees or commissions, to be due from such creditor on any other account whatever.
(b) Penalizes the creditor for failure to produce evidence in support of any account, bill, claim or item of indebtedness placed with the applicant for collection in addition to that delivered upon the execution of such contract.
(c) Penalizes such creditor for any unintentional error, mistake or omission in furnishing to the applicant the correct name or address of any debtor.
(d) Stipulates, directly or indirectly, for the payment of any fee, commission or compensation in excess of fifty per cent (50%) of the amount actually collected on any account, bill, claim or other indebtedness entrusted to the applicant for collection, provided, however, that in the case of interest collected by a permittee, the creditor and the permittee by agreement between them may provide for division of such interest between them without such percentage limitation; and provided further that in the case of collection of checks dishonored by nonacceptance or nonpayment the creditor and the permittee by written agreement between them may provide, in place of a percentage fee, for the payment of a set dollar amount collection fee not to exceed the amount provided in section 28-22-105, Idaho Code, which shall not be subject to the fifty per cent (50%) limitation. Collection agreements to proceed under section 1-2301A, Idaho Code, shall be subject to the fifty per cent (50%) limitation.
(4) A permit holder, engaging in the business of receiving money from debtors for application to or payment or prorating the account or accounts of any creditor or creditors of such debtor, for compensation or otherwise, or in the business of acting as the assignee for the benefit of creditors as a primary or secondary object, shall not take or receive for services performed by such permit holder for any one (1) person more than fifteen per cent (15%) of the amount received by it at any one (1) time from or on behalf of that person for payment or prorating to creditors and no other charges shall be made or received for any such service.
� 26-2229A. Requirement of fair, open and honest dealing
(1) Every permittee, foreign permittee and agent shall deal openly, fairly, and honestly without deception in the conduct of the collection agency business. When not inconsistent with the statutes of this state, the provisions of the federal fair debt collection practices act, 15 U.S.C. section 1692, et seq., as amended, may be enforced by the director against agents, permittees and foreign permittees under the provisions of this chapter.
(2) In any and every instance where the permittee has a managerial or financial interest in the creditor, or where the creditor has a managerial or financial interest in the permittee, disclosure of such interest must be made on each and every contact with a debtor in seeking to make a collection of any account, claim, or other indebtedness where such interest or relationship exists between creditor and permittee.
(3) No permittee, foreign permittee, or agent shall collect or attempt to collect any interest or other charges, fees, or expenses incidental to the principal obligation unless such interest or incidental fees, charges, or expenses are:
(a) Expressly authorized by statute;
(b) Allowed by court rule against the debtor;
(c) Have been judicially determined; or
(d) Are provided for in a written form agreement, to be signed by both the debtor and the permittee, and which has the prior approval of the director with respect to the terms of the agreement and amounts of the fees, interest, charges and expenses.
(4) No person shall sell, distribute or make use of collection letters, demand forms or other printed matter which are made similar to or resemble governmental forms or documents, or legal forms used in civil or criminal proceedings.
(5) No person shall use any trade name, address, insignia, picture, emblem or any other means which creates any impression that such person is connected with or is an agency of government.
� 26-2230. Branch offices
(1) The director may authorize a permittee, upon request, to conduct collection activities authorized in this chapter at additional locations. The additional locations shall be considered branches of the permittee. The director shall be informed of the opening and closing of all branch locations operated by permittees.
(2) The director may authorize a permittee, upon written request, to conduct limited collection activities at locations other than the principal location of the permittee or branches. The facilities may be at the domiciles of the agents employed by the permit holder. Collection activities at facilities shall be limited to telecommunications with creditors, clients, debtors, and the permittee’s offices and branches. The director shall be informed of the opening and closing of all facility locations operated by permittees.
� 26-2231. Renewal of permit
Upon application postmarked on or before the fifteenth day of March of each year, the holder of any permit issued under the provisions of this chapter shall be entitled to have such permit renewed for the succeeding calendar year upon payment of the annual permit fee as fixed by the director, but not to exceed fifty dollars ($50.00), compliance with the bond requirements of this chapter, the filing of a financial statement in the form required by section 26-2224(7), Idaho Code, showing a net worth of at least two thousand five hundred dollars ($2,500) for each place of business for which a permit is sought, filing of all other documents required by section 26-2224, Idaho Code, and approval by the director of all literature to be employed by the permittee during the course of the business year, except no annual permit renewal fee need be paid by a nonprofit corporation or association conducting credit counseling or debt prorating activities.
� 26-2232. Bonds
Upon approval of the application and prior to the issuance of the permit the applicant must file in the department of finance two (2) bonds. Both bonds shall be in a form provided by the attorney general of this state, and shall be executed by the applicant as principal and by some surety company authorized to do business in this state as surety, and shall be for the term of any permit issued to the applicant. Each permittee shall be required to have the two (2) bonds for each permit as hereinafter provided. In lieu of the bonds required by this section, a certificate of deposit issued by an Idaho bank and made payable to the director may be provided to the director in the same principal amount as required for bonds. The interest on the certificate of deposit shall be payable to the permittee. The certificate of deposit shall be maintained at all times during which the permittee is authorized to do business under Idaho law, and must provide that it will remain in effect for at least three (3) years following discontinuance of operations, unless released earlier by the director when all statutory requirements have been met.
(a) A bond shall be executed to the state of Idaho in the sum of fifteen thousand dollars ($15,000) or upon renewal in such larger sum as hereinafter provided. In any case where a permittee or its representatives has failed to account for and pay over the proceeds of any collection made or money received for payment or prorating to creditors, or has failed to return to a debtor any sum received that was not to be applied to his debts, the creditor or debtor shall have in addition to all other legal remedies a right of action in his own name on such bond without the necessity of joining the permittee in such action. The bond shall be continuous in form and shall remain in full force and effect for the permit period. The surety may cancel the bond provided that the surety shall in such event provide the permittee and the director with notice thirty (30) days prior to cancelation of said bond. Such notice shall be by registered or certified mail with request for a return receipt and addressed to the permittee at its main office and to the director. In no event shall the liability of the surety for any and all claims against the bond exceed the face amount of such bond.
Upon renewal of any permit, the permittee shall supply the director with a tatement of the preceding year’s net collections. The amount of the bond upon renewal shall be in the amount of fifteen thousand dollars ($15,000), or two (2) times the average monthly net collections for the preceding year computed to the next highest one thousand dollars ($1,000), whichever sum is greater, up to a maximum of one hundred thousand dollars ($100,000).
(b) A bond shall be executed to the state of Idaho in the sum of two thousand dollars ($2,000), which shall be limited to the indemnification of the department of finance for any and all expenses incurred as a result of investigations, administrative proceedings, and prosecutions which shall be instituted by the director against a permittee or licensee pursuant to this act. The bond shall be continuous in form and remain in full force and effect and run concurrently with the permit period and any renewal thereof. The surety may cancel the bond provided that the surety shall in such event provide the permittee and the director with notice thirty (30) days prior to cancelation of said bond. Such notice shall be registered or certified mail with request for a return receipt and addressed to the permittee at its main office and to the director. In no event shall the liability of the surety for any and all claims against the bond exceed the face amount of such bond.
� 26-2232A. Alternate Bonding
(1) A debt counselor or credit counselor which holds a valid permit under this chapter and is engaged in the activities described in section 26-2223(6) or 26-2223(7), Idaho Code, may, upon approval of the director of the department of finance, supply the director, upon renewal of its permit, in lieu of the bond required in section 26-2232(a), Idaho Code, a bond in the minimum amount of ten thousand dollars ($10,000) or two (2) times the average monthly net of unremitted funds received from debtors for the preceding year, computed to the next highest one thousand dollars ($1,000), whichever is greater.
(2) Such bonds shall be subject to the same conditions and requirements as the bond set forth in section 26-2232(a), Idaho Code, and shall be in addition to the bond required by section 26-2232(b), Idaho Code.
(3) Application for approval by the director of the department of finance shall be on a form provided by the director and shall include such information as the director shall require.
(4) A credit counselor applicant shall furnish with the application a certified copy of applicant’s determination as an exempt corporation under section 501(c)(3) of the Internal Revenue Code, made by the district director of internal revenue, or in the subsequent renewal of its permit and bond, evidence of continuance of its exempt determination by the district director of internal revenue.
(5) Upon approval by the director of the department of finance of the alternate bond and so long thereafter as the credit counselor or debt counselor service shall continue operations under the alternate bond herein provided for, it shall furnish to the director of the department of finance, not later than the fifteenth day of March of each year, a statement containing the following information:
(a) The amount of net unremitted funds received from debtors it held on the first day of each calendar month which was collected or received in any prior month or months showing the exact month received and the amount for such month.
(b) The amount of money received during each calendar month from debtors.
(c) The amount of money remitted to creditors or returned to debtors during each calendar month.
(d) The moneys, fees, or commissions retained from the moneys received during each calendar month.
(e) The amount of net unremitted funds due creditors or debtors at the end of each calendar month.
(6) For the purposes of this section money or moneys remitted shall mean money which has actually been conveyed or transferred to the creditor or debtor or his designated agent by physical transfer of cash or by certified or cashier’s check or other means so that actual ownership of such funds shall have passed to the creditor or debtor or his agent and no right or interest shall remain in the credit counseling service. A check or bank draft issued but not actually paid, without recourse shall not constitute a remittance.
(7) At any time that the director of the department of finance shall deem that the alternate bond provided for in this section shall be inadequate he may withdraw and cancel approval for the “in lieu” bond and require the bond provided in section 26-2232(a), Idaho Code, or cancel or suspend the permit of the consumer credit counseling service as provided in section 26-2236, Idaho Code.
� 26-2233. Permittee accounts required
A permittee shall in its own name:
(1) Establish and maintain a separate trust account for deposit and remittance of creditors’ funds in a financial institution, the deposits of which are insured by the federal deposit insurance corporation.
(2) Establish and maintain a separate business account for the business funds and moneys in a financial institution, the deposits of which are insured by the federal deposit insurance corporation.
� 26-2234. Investigations, records and payment of funds
(1) The director or his duly authorized representatives may make an annual examination, or more frequently in the director’s discretion, of the place of business of each permittee and foreign permittee and for that purpose the director shall have free access to the offices and places of business, books, creditors’ accounts, trust accounts, business accounts, records, papers, files, safes and vaults of all such permittees.
(2) The director may, upon his own motion, and shall, upon the sworn complaint in writing of any person, investigate the action of any person or persons claimed to have violated the provisions of this chapter, and for that purpose the director shall have free access to the offices and places of business, books, creditors’ accounts, trust accounts, business accounts, records, papers, files, safes and vaults of all such persons.
(3) Every permittee and foreign permittee shall execute to the director an agreement of consent to examination of any and all bank accounts of the permittee providing the director with authority to make such examination at any time the director, in his discretion, deems it to be in the public interest.
(4) The cost of examination for the first annual examination each year and any investigation shall be paid to the director by each permittee so examined or investigated and the director may maintain an action for the recovery of such costs against the permittee or against the surety providing the bond to indemnify the state for such expenditures as required by this chapter. The cost shall be fixed annually by the director, but shall not exceed twenty-five dollars ($25.00) per examination hour.
(5) Each permittee shall acknowledge in writing each account received for collection and shall maintain a record of such account, make a permanent record of all sums collected by him and of all disbursements made by him. Every permittee shall keep and preserve all records relating to accounts received for collection, collections, receipts, and disposal or disbursement of all creditors’ funds for a period of five (5) years after the final disposition of any account. It shall be unlawful for any person to intentionally make any false entry, omit to make a necessary entry, mutilate, secrete away, destroy or otherwise dispose of any record mentioned in this subsection, provided a record may be disposed of after the five (5) year period heretofore provided.
(6) Every permittee shall, within thirty (30) days after the close of each calendar month, pay to his creditors the net proceeds of all collections made by the permittee during said calendar month. Each permittee shall report to the creditor all collections made by him and/or any payments made to the creditor within thirty (30) days after the close of each calendar month.
(7) Every permittee shall maintain his books and records in accordance with generally accepted accounting practices subject to such rules and regulations as adopted by the director.
(8) The director, may impound the creditors’ accounts, or trust accounts of any permittee if it shall be deemed in the general public interest.
� 26-2235. Denial, suspension, revocation of permit
(1) An application for a permit may be denied and, after notice and hearing, a permit may be suspended or revoked, by the director if he finds that the holder of or the applicant for, or any member or manager of an applicant or holder, or any officer or manager of an applicant or holder of such permit:
(a) has violated any provision of this chapter or any rule or order of the director authorized under this chapter; or
(b) is not legally qualified to do business in this state; or
(c) has violated any contract or agreement of a type mentioned in this chapter; or
(d) has failed, refused, neglected, on demand, to pay or remit