H. B. 2398


(By Delegate Thompson, Cann and H.White)
[Introduced January 26, 1999; referred to the
Committee on Govenrment Organization then Finance.]



A BILL to amend and reenact sections one, two and four, article sixteen, chapter forty-seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and to further amend said article by adding thereto a new section, designated section six, all relating to debt collection agencies; defining collection agency; transferring the responsibility for licensing debt collection agencies from the division of tax to the division of banking; and updating the procedures for granting, denying, revoking or suspending licenses.

Be it enacted by the Legislature of West Virginia:
That sections one, 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; and that said article be further amended by adding thereto a new section, designated section six, all to read as follows:
ARTICLE 16. COLLECTION AGENCIES.

§47-16-1. Citation of article.

This article may be cited as the "Collection Agency Act of 1973 1999."
§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) (1) "Collection agency" means and includes all persons, firms, corporations and associations:
(1) (A) 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) (B) Which, in attempting to collect or in collecting his, hers or its own accounts or claims uses a fictitious name or names other than his, hers or its own name;
(3) (C) 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) (D) Directly or indirectly engaged in the business of soliciting, or who holds himself, herself or itself 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.
(2) The term "collection agency" shall does not mean or include:
(1) (A) 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) under this article;
(B) Federally insured depository institutions;
(C) Regulated consumer lenders;
(D) Residential mortgage lenders, brokers and servicers licensed under article seventeen, chapter thirty-one of this code;
(E) Abstract companies doing an escrow business;
(9) (F) 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) (G) Express and telegraph companies subject to public regulation and supervision;
(11) (H) 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) (I) Any person, firm, corporation or association acting under the order of any court of competent jurisdiction.
(c) "Commissioner" means the state tax banking 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 license under the provisions 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 are deposited.
§47-16-4. Requirements for conduct of agency.

(a) License. - No person, firm, corporation or association shall may 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 license from the commissioner of banking, nor shall may 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 the collection agency's license. Provided, That any person previously licensed under this article prior to the first day of June one thousand nine hundred ninety-nine may continue to act as a collection agency and shall obtain a license from the commissioner of banking by the first day of November, one thousand nine hundred ninety-nine. A license is required for each collection agency including each principal office and all branch offices thereof and shall be renewed annually.
An application for a license under this article shall be in writing, under oath and on a form prescribed by the commissioner. The application shall include, but is not limited to, all of the following:
(1) An affirmation, under oath, that the applicant:
(A) Complies with federal and state tax laws; and
(B) Complies with all applicable provisions of chapter forty-six-a of this code;
(2) Documentation that the bond required by this section has been obtained; and
(3) An application fee of one hundred fifty dollars.
(b) Bond. - Each applicant shall file with the commissioner 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 license, which bond must shall be filed with, and approved by, said the commissioner before the license herein provided required by this section 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, her 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.
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 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 the party's attorney in the action.
The license of any licensee shall be is 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.
Should If the license of any a surety company to transact business in this state be is terminated, all bonds given pursuant to this article upon which such the company is surety shall thereupon be are suspended, and the commissioner shall immediately notify each affected licensee of such the suspension and require that a new bond be filed. This notice shall be by registered or certified mail, return receipt requested, and shall be addressed to the licensee at his or its licensee's 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 may 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 the commissioner's duly appointed representative.
No licensee shall may 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 the proceeds, if monthly statements are mailed or delivered to the customer.
(d) Denial of license or renewal of license. -- The commissioner may deny a license or renewal of a license for failure to comply or otherwise meet the requirements and qualifications of this article or a rule adopted under this article, including failure to submit a complete application. The denial of a license or denial of renewal by the commissioner and the appeal from that action is governed by the procedures for a contested case hearing under the provisions of article five, chapter twenty-nine-a of this code and shall conform to that provided for financial institutions pursuant to sections one and two, article eight, chapter thirty-one-a of this code and the rules thereunder. Whenever the commissioner refuses to issue a license, or refuses to renew a license, he or she shall make and enter an order to that effect and shall cause a copy of the order to be served in person or by certified mail, return receipt requested, or in any other manner in which process in a civil action in this state may be served, on the applicant or licensee, as the case may be.
§47-16-6. Hearing on suspension or revocation of license.
(a) A license may not be revoked or suspended except after notice and opportunity for hearing on that action. The commissioner may issue to a person licensed under this article an order to show cause why the license should not be revoked, or should not be suspended for a period not in excess of six months. The order shall state the place for a hearing and set a time for the hearing that is no less than ten days from the date of the order. The hearing shall be conducted in accordance with the provisions of article five, chapter twenty-nine-a of this code and the commissioner may appoint a hearing examiner to preside at the hearing and make a recommended decision. After the hearing, the commissioner shall revoke or suspend the license if he or she finds that:
(1) The licensee has knowingly or repeatedly violated this article;
(2) The licensee has failed to remit its required renewal fees;
(3) Facts or conditions exist which would clearly have justified the commissioner in refusing to grant a license had these facts or conditions been known to exist at the time the application for the license was made; or
(4) The licensee has failed or refused to keep the bond required by section four of this article in full force and effect.
(b) No revocation or suspension of a license under this article is lawful unless prior to institution of proceedings by the commissioner notice is given to the licensee of the facts or conduct which warrant the intended action, and the licensee is given an opportunity to show compliance with all lawful requirements for retention of the license.
(c) If the commissioner finds that probable cause for revocation of a license exists and that enforcement of this article to prevent imminent harm to public welfare requires immediate suspension of the license pending investigation, the commissioner may, after a hearing upon five days' written notice, enter an order suspending the license for not more than thirty days.
(d) Whenever the commissioner revokes or suspends a license, an order to that effect shall be entered and the commissioner shall forthwith notify the licensee of the revocation or suspension. Within five days after the entry of the order the commissioner shall mail by registered or certified mail, or shall provide for personal delivery to the licensee of, a copy of the order and the findings supporting the order.
(e) Any person holding a license under this article may relinquish the license by notifying the commissioner in writing of its relinquishment, but any relinquishment does not affect a person's liability for acts previously committed.
(f) No revocation, suspension, or relinquishment of a license impairs or affects the obligation of any preexisting lawful contract between the licensee and any person.
(g) The commissioner may reinstate a license, terminate a suspension or grant a new license to a person whose license has been revoked or suspended if no fact or condition then exists which clearly would have justified the commissioner in refusing to grant a license.




NOTE: The purpose of this bill is to transfer the responsibility for licensing debt collection agencies from the Tax Division to the Division of Banking and update the procedures for granting, denying, revoking or suspending licenses.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

§47-16-6 is new; therefore, strike-throughs and underscoring have been omitted.