H. B. 3217
(By Delegate Boggs)
[Introduced March 30, 2001; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact sections two and four, article sixteen,
chapter forty-seven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, all relating to requiring
collection agencies to be licensed by the secretary of state;
requiring collection agencies to identify themselves clearly
when calling debtors and to provide their license number with
the secretary of state's office when calling; and, requiring
collection agencies to maintain telephone access for persons
who desire to contact them.
Be it enacted by the Legislature of West Virginia:
That sections two and four, article sixteen, chapter
forty-seven of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted, all to read as
follows:
ARTICLE 16. COLLECTION AGENCIES.
§47-16-2. Definitions.
The following words and terms as used in this article shall be
construed as follows:
(a) "Claim" means any obligation for the payment of money due
or asserted to be due to another person, firm, corporation or
association.
(b) "Collection Agency" means and includes all persons, firms,
corporations and associations: (1) Directly or indirectly engaged
in the business of soliciting from or collecting for others any
account, bill or indebtedness due or asserted to be owed or due
another and all persons, firms, corporations and associations
directly or indirectly engaged in asserting, enforcing or
prosecuting those claims; (2) which, in attempting to collect or in
collecting his or its own accounts or claims uses a fictitious name
or names other than his or its own name; (3) which attempts to or
does give away or sell to others any system or series of letters or
forms for use in the collection of accounts or claims which assert
or indicate directly or indirectly that the claims or accounts are
being asserted or collected by any person, firm, corporation or
association other than the creditor or owner of the claim or
account; or (4) directly or indirectly engaged in the business of
soliciting, or who holds himself or herself out as engaged in the
business of soliciting, debts of any kind owed or due, or asserted
to be owed or due, to any solicited person, firm, corporation or association for fee, commission or other compensation.
The term "collection agency" shall may not mean or include:
(1) Regular employees of a single creditor or of a collection
agency licensed hereunder; (2) banks; (3) trust companies; (4)
savings and loan associations; (5) building and loan associations;
(6) industrial loan companies; (7) small loan companies; (8)
abstract companies doing an escrow business; (9) duly licensed real
estate brokers or agents when the claims or accounts being handled
by such the broker or agent are related to or in connection with
such the brokers' or agents' regular real estate business; (10)
express and telegraph companies subject to public regulation and
supervision; (11) attorneys-at-law handling claims and collections
in their own names and not operating a collection agency under the
management of a layman; or (12) any person, firm, corporation or
association acting under the order of any court of competent
jurisdiction.
(c) "Commissioner" means the state tax commissioner or his or
her agent.
(d) "Customer" means any person, firm, corporation or
association who has filed, assigned or sold any claim or chose in
action with or to a collection agency for collection.
(e) "Licensee" means any person holding a business franchise
registration certificate under section two, article twelve, chapter
eleven of this code and under the provisions of this article as well as the license issued by the secretary of state provided for
in section four of this article.
(f) "Trust account" means a special account established by a
collection agency with a banking institution in this state, wherein
funds collected on behalf of a customer shall be is deposited.
§47-16-4. Requirements for conduct of agency.
(a) License -- No person, firm, corporation or association
shall conduct within this state a collection agency without having
first applied for and obtained a business franchise registration
certificate pursuant to section two, article twelve, chapter eleven
of this code, nor shall any person, firm, corporation or
association establish or operate a collection agency or the
business of a collection agency, unless such the person, firm,
corporation or association maintains an office within the state of
West Virginia. The business franchise registration certificate,
shall be deemed in and of itself, does not satisfy the license
requirements of this article. the collection agency's license. In
addition to the business franchise registration certificate, the
collection agency is required to be licensed by and through the
office of the secretary of state. The secretary of state shall
propose legislative rules in accordance with article three, chapter
twenty-nine-a of this code designed to regulate collection agencies
in order to protect the general public from unscrupulous or
otherwise unacceptable collection practices. The legislative rules, shall provide a procedure and method of licensing collection
agencies and shall require collection agencies to clearly identify
themselves when communicating with persons from whom they seek to
make collections. The legislative rules shall, additionally,
require collection agencies to maintain telephone accessibility
with persons who desire to contact them. In the event the secretary
of state finds that a collection agency has engaged in unscrupulous
conduct while involved in collection efforts, he or she may revoke
the license issued from the secretary of state's office. A license
from both the secretary of state and the state tax commissioner is
required for each collection agency, including each principal
office and all branch offices thereof.
(b) Bond -- Each applicant shall file with the commissioner
and the secretary of state a continuing surety bond executed by a
corporation which is licensed to transact the business of fidelity
and surety insurance in the state of West Virginia to run
concurrently with the registration tax period, which bond must be
filed with, and approved by, said commissioner and the secretary of
state before the license licenses herein provided may be issued.
A separate bond shall be filed for each collection agency including
each principal office and all branch offices thereof. Each bond
shall be in the amount of five thousand dollars payable to the
state of West Virginia, and conditioned that any such person will
pay all damages to the state or a private person resulting from any unlawful act or action by such the person or his or its agent in
connection with the conduct of the business of the collection
agency. This continuing bond shall be filed with the tax
commissioner and the secretary of state.
An action may be brought in any court of competent
jurisdiction upon the bond by any person to whom the licensee fails
to account and pay as set forth in such the bond. The aggregate
liability of the surety for all breaches of the condition of the
bond shall may not exceed the sum of such the bond. Upon any
breach of legislative rules adopted under this section, the
secretary of state may summon the attorney general, who shall then
take appropriate action designed to protect the general public from
unscrupulous or otherwise unacceptable practices.
Upon entering judgment for the prevailing party in any action
on the bond required by this article, the court shall include in
the judgment, reasonable compensation for the services of such any
party's attorney in the action including reasonable attorneys' fees
for the services of the attorney general's staff attorneys.
The license Both licenses required by this section of held by
any licensee shall be are void upon termination of the bond of the
surety company, unless, prior to such the termination, a new bond
has been filed with the commissioner and the secretary of state's
office.
Should the license of any surety company to transact business in this state be terminated, all bonds given pursuant to this
article upon which such the company is surety shall thereupon be
suspended, and the commissioner shall immediately notify each
affected licensee of such the suspension and require that a new
bond be filed with his or her office as well as the office of the
secretary of state. This notice shall be by registered or
certified mail, return receipt requested, and shall be addressed to
the licensee at his or its principal place of business as shown by
the commissioner's records. The failure of any licensee to file a
bond with new or additional surety within thirty days after being
advised in writing by the commissioner of the necessity to do so
shall be is cause for the commissioner to revoke the license.
(c) Record Keeping -- Each collection agency licensed to
operate in this state shall keep a record of all sums collected by
such the agency and of all disbursements made by such the agency,
and shall maintain or make available all such records and all
records as to customers' funds at such the agency's principal place
of business within this state. Each collection agency shall
maintain records of collections for and payments to customers for
a period of six years from the date of last entry therein.
No collection agency, nor any employee thereof, shall
intentionally make a false entry in any such collection agency
record nor intentionally mutilate, destroy or otherwise dispose of
any such record within the time limits provided in this section. Such The records shall at all times be open for inspection by the
commissioner, or his duly appointed representative.
No licensee shall commingle the money of collection agency
customers with other moneys, but shall maintain a separate trust
account in a bank for customers' funds.
Each collection agency shall, within a period of thirty days
after the close of each and every calendar month, pay to such the
agency's customers the net proceeds due on all collections made
during the preceding calendar month. When the net proceeds due the
customer are less than five dollars at the end of any calendar
month, the collection agency may defer for a period not to exceed
ninety days the payment of said proceeds, if monthly statements are
mailed or delivered to the customer.
NOTE: The purpose of this bill is to require collection
agencies to obtain a license from the secretary of state's office.
The bill would further require the secretary of state to propose
legislative rules designed to regulate collection agencies in order
to prevent unscrupulous practices. The rules would also require
collection agencies to clearly identify themselves to persons when
engaged in the collection process and to maintain accessibility via
telephone for persons who desire to contact them.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
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