H. B. 4640
(By Delegates Boggs and Kuhn)
[Introduced February 22, 2002; 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; and to further amend said
article by adding thereto a new section, designated section
six, all relating to requiring collection agencies to be
registered by the secretary of state; requiring the secretary
of state to promulgate rules governing collection agencies;
requiring collection agencies to identify themselves and to
provide their registration numbers with the secretary of
state's office when calling debtors; 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; 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.
§47-16-2. 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 her or its own accounts or claims uses a
fictitious name or names other than his or her 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 does not mean or include:
(1) Regular employees of a single creditor or of a collection
agency registered 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.
(f) (e) "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. Certificate of registration; revocation of certificate
of registration; surety bond required; record
keeping.
(a) License Certificate of registration. -- 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 the collection agency's
license. In addition to the business franchise registration
certificate, the collection agency shall obtain a certificate of
registration from the office of the secretary of state. Each
collection agency, including each principal office and all branch
offices, shall obtain both the certificate of registration from the
secretary of state and a business franchise registration
certificate from the state tax commissioner. is required for each
collection agency, including each principal office and all branch
offices thereof
The secretary of state may, upon a finding that a collection
agency has engaged in conduct involving fraud, deceit,
misrepresentation or dishonesty, revoke the certificate of
registration.
(b) Bond. -- Each applicant shall file with the commissioner
and with 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 the commissioner and the
secretary of state before the license certificate of registration
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 her or its agent in connection with the
conduct of the business of the collection agency. This continuing
bond shall must be filed with the tax commissioner and with 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
collection agency 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 may include
in the judgment, reasonable compensation for the services of such
party's attorney in the action attorney's fees.
The license Both forms of registration required by this
section of held by any licensee collection agency 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 with 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 collection agency of such the suspension and
require that a new bond be filed with his or her office as well as
with 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 collection agency at his or her or its
principal place of business as shown by the commissioner's records. The failure of any licensee collection agency 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 business franchise
registration certificate.
(c) Record Keeping. -- Each collection agency licensed
registered 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 or her duly appointed representative.
No licensee collection agency shall commingle the money of collection agency its 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.
(d) Conduct. -- Collection agencies shall clearly identify
themselves when communicating with persons from whom they seek to
make collections, and shall maintain telephone accessibility for
persons who desire to contact them
.
(e) Fees. -- All fees and moneys collected by the secretary of
state pursuant to the provisions of this article shall be deposited
by the secretary of state according to the provisions of section
two, article one, chapter fifty-nine of this code
.
§47-16-6. Rule making.
The secretary of state shall propose rules for legislative
approval designed to regulate collection agencies in accordance with article three, chapter twenty-nine-a of this code. The
legislative rules must provide for registration, assessment of fees
and requirements relating to surety bonds.
NOTE: The purpose of this bill is to require each collection
agencies to obtain a certificate of registration from the secretary
of state's office. The bill would 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.
§47-16-6
is new; therefore, strike-throughs and underscoring
have been omitted.