Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 2004, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 208-H.F.No. 2187
An act relating to commerce; requiring debt collection
agency employees to be registered instead of licensed;
amending Minnesota Statutes 2002, sections 332.33;
332.335, subdivision 1; 332.35; 332.37; 332.395;
332.40; 332.41; 332.42; 332.43, subdivision 1.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 2002, section 332.33, is
amended to read:
332.33 [LICENSES LICENSING AND REGISTRATION.]
Subdivision 1. [REQUIREMENT.] Except as otherwise provided
in this chapter, no person shall conduct within this state a
collection agency or engage within this state in the business of
collecting claims for others as defined in sections 332.31 to
332.45, without having first applied for and obtained a
collection agency license. A person acting under the authority
of a collection agency, as a collector, must first obtain a
Minnesota collector license register with the commissioner under
this section. A licensed registered collector may use one
additional assumed name only if the assumed name is registered
with and approved by the commissioner.
Subd. 2. [PENALTY.] A person who carries on business as a
collection agency or acts as a collector without first having
obtained a license or acts as a collector without first having
registered with the commissioner pursuant to sections 332.31 to
332.45, or who carries on this business after the revocation,
suspension, or expiration of a license or registration is guilty
of a misdemeanor.
Subd. 3. [TERM.] Licenses issued or renewed and
registrations received by the commissioner of commerce under
sections 332.31 to 332.45 shall expire on June 30.
Each collection agency license shall plainly state the name and
business address of the licensee, and shall be posted in a
conspicuous place in the office where the business is
transacted. The fee for each collection agency license is $500,
and renewal as collection agency is $400. The fee for each
license collector registration and renewal as collector shall be
is $10. A collection agency licensee who desires to carry on
business in more than one place shall procure a license for each
place where the business is to be conducted.
Subd. 4. [INVESTIGATIONS.] The commissioner may require
financial statements and references of all applicants for a
license or registration as the commissioner considers
necessary. The commissioner may make or cause to be made an
independent investigation concerning the applicant's reputation,
integrity, competence, and net worth, at the expense of the
applicant for the initial investigation, not to exceed $500, and
for that purpose may require a deposit against the cost of the
investigation as the commissioner considers adequate. The
investigation may cover all managerial personnel employed by or
associated with the applicant.
Subd. 5. [COLLECTION AGENCY LICENSE ISSUANCE.] Every
application for a collection agency license or renewal shall be
acted upon promptly by the commissioner but in no event more
than 45 days after receipt of the application. Every
application for a collector's license or renewal shall be acted
upon promptly by the commissioner but in no event more than 15
days after receipt of the completed application. Each applicant
may be issued a temporary license after submitting a complete
application which meets all requirements for licensure. This
license shall be effective until a permanent license is issued
by the commissioner. If the application complies in form and
substance with sections 332.31 to 332.45 and the rules adopted
under those sections and the commissioner finds that the
applicant is qualified under sections 332.31 to 332.45, the
commissioner shall issue a license immediately. If the
application is not sufficient in form or substance, the
commissioner shall reject it and notify the applicant of the
manner in which it is deficient. The rejection is without
prejudice to the filing of a new application. On finding that
the applicant is not qualified under sections 332.31 to 332.45,
the commissioner shall reject the application and shall give the
applicant written notice of the rejection and the reasons for
the rejection.
Subd. 5a. [INDIVIDUAL COLLECTOR REGISTRATION.] A licensed
collection agency, on behalf of an individual collector, must
register with the state all individuals in the collection
agency's employ who are performing the duties of a collector as
defined in sections 332.31 to 332.45. The collection agency
must apply for an individual collection registration on a form
provided by the commissioner, or electronically when available.
The collection agency shall verify on the form that the
applicant has confirmed that the applicant meets the
requirements to perform the duties of a collector as defined in
sections 332.31 to 332.45. Upon submission of the form to the
department, the individual may begin to perform the duties of a
collector and may continue to do so unless the licensed
collection agency is informed by the commissioner that the
individual is ineligible.
Subd. 6. [DEPOSIT OF FEES.] All money received by the
commissioner under this section shall be deposited in the
general fund of the state treasury.
Subd. 7. [NOTICE.] A licensed collection agency or
registered individual collector must give the commissioner
written notice of a change in personal name, company name,
address, or ownership not later than 15 days after the change
occurs.
Subd. 8. [SCREENING PROCESS REQUIREMENT.] Each licensed
collection agency must establish procedures to follow when
screening an individual collector applicant prior to submitting
an applicant to the commissioner for registration. The
commissioner may review the procedures to ensure the integrity
of the screening process. Failure to establish these procedures
is subject to action under section 332.40.
Sec. 2. Minnesota Statutes 2002, section 332.335,
subdivision 1, is amended to read:
Subdivision 1. [REQUIREMENTS.] An exempt out-of-state
collection agency, as defined by section 332.31, subdivision 7,
that has obtained a certificate of exemption under subdivision 2
is exempt from the collector registration requirements and
collection agency licensing requirements of this chapter, but is
subject to all other provisions of sections 45.027 and 332.31 to
332.45.
Sec. 3. Minnesota Statutes 2002, section 332.35, is
amended to read:
332.35 [PRIOR CONVICTION OR JUDGMENT AS DISQUALIFICATION.]
No registration shall be accepted for, and no license shall
be issued to, any person, firm, corporation or association who
or which, or any of the officers of which have, within the past
five years, been convicted in any court of fraud or any felony
or have been convicted of or had judgment entered against them
in any court for failure to account to a client or customer for
money or property collected by them for the client or customer.
No registration shall be accepted for, and no license shall be
issued to, any attorney whose license to practice law has been
suspended or revoked, for a period of five years after the date
of such suspension or revocation.
Sec. 4. Minnesota Statutes 2002, section 332.37, is
amended to read:
332.37 [PROHIBITED PRACTICES.]
No collection agency or collectors collector shall:
(1) in collection letters or publications, or in any
communication, oral or written threaten wage garnishment or
legal suit by a particular lawyer, unless it has actually
retained the lawyer;
(2) use or employ constables, sheriffs or any other officer
authorized to serve legal papers in connection with the
collection of a claim, except when performing their legally
authorized duties;
(3) use or threaten to use methods of collection which
violate Minnesota law;
(4) furnish legal advice or otherwise engage in the
practice of law or represent that it is competent to do so;
(5) communicate with debtors in a misleading or deceptive
manner by using the stationery of a lawyer, forms or instruments
which only lawyers are authorized to prepare, or instruments
which simulate the form and appearance of judicial process;
(6) exercise authority on behalf of a creditor to employ
the services of lawyers unless the creditor has specifically
authorized the agency in writing to do so and the agency's
course of conduct is at all times consistent with a true
relationship of attorney and client between the lawyer and the
creditor;
(7) publish or cause to be published any list of debtors
except for credit reporting purposes, use shame cards or shame
automobiles, advertise or threaten to advertise for sale any
claim as a means of forcing payment thereof, or use similar
devices or methods of intimidation;
(8) refuse to return any claim or claims and all valuable
papers deposited with a claim or claims upon written request of
the creditor, claimant or forwarder after tender of the amounts
due and owing to the agency within 30 days after the request;
refuse or intentionally fail to account to its clients for all
money collected within 30 days from the last day of the month in
which the same is collected; or, refuse or fail to furnish at
intervals of not less than 90 days upon written request of the
claimant or forwarder, a written report upon claims received
from the claimant or forwarder;
(9) operate under a name or in a manner which implies that
the agency is a branch of or associated with any department of
federal, state, county or local government or an agency thereof;
(10) commingle money collected for a customer with the
agency's operating funds or use any part of a customer's money
in the conduct of the agency's business;
(11) transact business or hold itself out as a debt
prorater, debt adjuster, or any person who settles, adjusts,
prorates, pools, liquidates or pays the indebtedness of a
debtor, unless there is no charge to the debtor, or the pooling
or liquidation is done pursuant to court order or under the
supervision of a creditor's committee;
(12) violate any of the provisions of the Fair Debt
Collection Practices Act of 1977 while attempting to collect on
any account, bill or other indebtedness;
(13) communicate with a debtor by use of a recorded message
utilizing an automatic dialing announcing device unless the
recorded message is immediately preceded by a live operator who
discloses prior to the message the name of the collection agency
and the fact the message intends to solicit payment and the
operator obtains the consent of the debtor to hearing the
message;
(14) in collection letters or publications, or in any
communication, oral or written, imply or suggest that health
care services will be withheld in an emergency situation;
(15) when a debtor has a listed telephone number, enlist
the aid of a neighbor or third party to request that the debtor
contact the licensee or collector, except a person who resides
with the debtor or a third party with whom the debtor has
authorized the licensee or collector to place the request. This
clause does not apply to a call back message left at the
debtor's place of employment which is limited to the
licensee's or collector's telephone number and the collector's
name;
(16) when attempting to collect a debt, fail to provide the
debtor with the full name of the collection agency as it appears
on its license;
(17) collect any money from a debtor that is not reported
to a creditor or fail to return any amount of overpayment from a
debtor to the debtor or to the state of Minnesota pursuant to
the requirements of chapter 345;
(18) accept currency or coin as payment for a debt without
issuing an original receipt to the debtor and maintain
maintaining a duplicate receipt in the debtor's payment records;
(19) attempt to collect any amount of money from a debtor
or charge a fee to a creditor that is not authorized by
agreement with the client;
(20) falsify any collection agency documents with the
intent to deceive a debtor, creditor, or governmental agency; or
(21) when initially contacting a Minnesota debtor by mail,
fail to include a disclosure on the contact notice, in a type
size or font which is equal to or larger than the largest other
type of type size or font used in the text of the notice. The
disclosure must state: "This collection agency is licensed by
the Minnesota Department of Commerce."
Sec. 5. Minnesota Statutes 2002, section 332.395, is
amended to read:
332.395 [COMMISSIONER'S POWER OVER INEFFECTIVE LICENSES AND
REGISTRATIONS.]
If a license or registration lapses, is surrendered,
withdrawn, terminated, or otherwise becomes ineffective, the
commissioner of commerce may do either or both of the
following: (1) institute a proceeding under section 45.027
within two years after the license or registration was last
effective and enter a revocation or suspension order as of the
last date on which the license or registration was in effect;
(2) impose a civil penalty as provided for in section 45.027,
subdivision 6.
Sec. 6. Minnesota Statutes 2002, section 332.40, is
amended to read:
332.40 [INVESTIGATION, SUSPENSION, AND REVOCATION OF
LICENSES OR REGISTRATIONS.]
Subdivision 1. [EXAMINATION OF LICENSEE'S OR REGISTERED
INDIVIDUAL COLLECTOR'S RECORDS.] The commissioner of commerce
may make examinations of the collection records of a licensee or
registered individual collector at a reasonable time and in a
scope as is necessary to enforce the provisions of sections
332.31 to 332.45, and for that purpose the commissioner shall
have free access to the books and records of a licensee or
registered individual collector relating thereto. If a licensee
or registered individual collector violates any provision of
sections 332.31 to 332.45, or any administrative rules issued
pursuant to sections 332.31 to 332.45, fails to maintain its
financial condition sufficient to qualify for a license
licensure or registration on an original application, or, fails
to maintain its registration or comply with all of the
requirements of Minnesota Statutes 1967, chapter 303, the
commissioner may, after notice and hearing in accordance with
the provisions of the laws of this state governing proceedings
before administrative agencies, revoke a license or
registration, or suspend a license or registration for a period
as the commissioner may deem deems proper.
Subd. 2. [OTHER EXAMINATIONS.] The commissioner may
investigate within or without this state as the commissioner
deems necessary to determine whether any person has violated any
provision of the Fair Debt Collection Practices Act of 1977, or
of sections 332.31 to 332.45, or any rule or order thereunder;
to determine whether a license or registration should be issued,
renewed, or revoked; to aid in the enforcement of sections
332.31 to 332.45; or in prescribing rules and forms thereunder.
The commissioner may publish information concerning any
violation of sections 332.31 to 332.45 or any rule or order
thereunder.
Subd. 3. [COMMISSIONER'S POWERS.] For the purpose of any
investigation or proceeding under sections 332.31 to 332.45, the
commissioner or any person designated by the commissioner may
administer oaths and affirmations, subpoena collection agencies
or collectors and compel their attendance, take evidence and
require the production of any books, papers, correspondence,
memoranda, agreements or other documents or records which the
commissioner deems relevant or material to the inquiry. The
subpoena shall contain a written statement setting forth the
circumstances which have reasonably caused the commissioner to
believe that a violation of sections 332.31 to 332.45 may have
occurred.
In the event that the collection agency or collector
refuses to obey the subpoena, or should the commissioner, upon
completion of the examination of the collection agency or
collector, reasonably conclude that a violation has occurred,
the commissioner may examine additional witnesses, including
third parties, as may be necessary to complete the investigation.
Any subpoena issued pursuant to this section shall be
served by certified mail or by personal service. Service shall
be made at least 15 days prior to the date of appearance.
Subd. 4. [COURT ORDER TO COMPEL DISCLOSURES.] In case of
contumacy by or refusal to obey a subpoena by any person the
district court upon application by the commissioner may issue to
the person an order directing the person to appear before the
commissioner or commissioner's designee to produce documentary
evidence if so ordered or to give evidence touching the matter
under investigation or in question. Failure to obey the order
of the court may be punished by the court as a contempt of court.
Sec. 7. Minnesota Statutes 2002, section 332.41, is
amended to read:
332.41 [APPEALS.]
Appeal from a denial, suspension, revocation, or censure of
a license or registration must be made according to chapter 14.
Sec. 8. Minnesota Statutes 2002, section 332.42, is
amended to read:
332.42 [REPORTS AND RECORDS.]
Subdivision 1. [VERIFIED FINANCIAL STATEMENT.] The
commissioner of commerce may at any time require a collection
agency licensee to submit a verified financial statement for
examination by the commissioner to determine whether
the collection agency licensee is financially responsible to
carry on a collection agency business within the intents and
purposes of sections 332.31 to 332.45.
Subd. 2. [RECORD KEEPING.] The commissioner shall require
the collection agency licensee to keep such books and records in
the licensee's place of business in this state as will enable
the commissioner to determine whether there has been compliance
with the provisions of sections 332.31 to 332.45, unless the
agency is a foreign corporation duly authorized, admitted, and
licensed to do business in this state and complies with all the
requirements of Minnesota Statutes 1967, chapter 303 and with
all other requirements of sections 332.31 to 332.45. Every
collection agency licensee shall preserve the records of final
entry used in such business for a period of five years after
final remittance is made on any amount placed with the licensee
for collection or after any account has been returned to the
claimant on which one or more payments have been made.
Sec. 9. Minnesota Statutes 2002, section 332.43,
subdivision 1, is amended to read:
Subdivision 1. If the commissioner shall determine that a
collection agency licensee is insolvent or has collected
accounts but has failed to remit money due to any claimant
within 45 days from the end of the month in which collection was
made, or when the license of a collection agency has expired or
terminated for any reason whatsoever, the commissioner, on
determining such action necessary to protect the public
interest, may apply to the district court for the county in
which the main office of such agency is located for appointment
of a receiver to receive the assets of the collection agency
licensee for the purpose of liquidating or rehabilitating its
business and or for such other relief as the nature of the case
and the interest of the claimants may require. The reasonable
and necessary expenses of the receivership shall constitute the
first claim on the bond.
Sec. 10. [EFFECTIVE DATE.]
Sections 1 to 9 are effective January 1, 2005.
Presented to the governor May 14, 2004
Signed by the governor May 18, 2004, 3:55 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes