Minnesota Session Laws - 1993, Regular Session

  
    Laws of Minnesota 1993 

                        CHAPTER 295-H.F.No. 1081 
           An act relating to commerce; regulating collection 
          agencies; modifying prohibited practices; requiring 
          notification to the commissioner upon certain employee 
          terminations; repealing inconsistent surety bond and 
          term and fee rules; regulating credit services 
          organizations; modifying registration and bond 
          requirements; modifying enforcement powers; amending 
          Minnesota Statutes 1992, sections 332.37; 332.54, 
          subdivision 1, and by adding subdivisions; 332.55; and 
          332.59; proposing coding for new law in Minnesota 
          Statutes, chapter 332; repealing Minnesota Rules, 
          parts 2870.1300; and 2870.1600. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  Minnesota Statutes 1992, section 332.37, is 
amended to read: 
    332.37 [PROHIBITED PRACTICES.] 
    No collection agency or collectors 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; or 
    (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, except a person who resides with the 
debtor or a third party with whom the debtor has authorized the 
licensee 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 telephone 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 a 
duplicate receipt in the debtor's payment records; or 
    (19) 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. 2.  [332.385] [NOTIFICATION TO COMMISSIONER.] 
    The collection agency licensee shall notify the 
commissioner of any employee termination within ten days of the 
termination if it is in whole or in part based on a violation of 
this chapter. 
    Sec. 3.  Minnesota Statutes 1992, section 332.54, 
subdivision 1, is amended to read: 
    Subdivision 1.  [FILING.] It is unlawful for any credit 
services organization to offer, advertise, or execute or cause 
to be executed by a consumer any contract in this state unless 
the credit services organization at the time of the offer, 
advertisement, sale, or execution of a contract has been 
properly registered with the commissioner.  The commissioner may 
charge the credit services organization a reasonable fee not 
exceeding $100 to cover the costs of filing. 
    Sec. 4.  Minnesota Statutes 1992, section 332.54, is 
amended by adding a subdivision to read: 
    Subd. 6.  [TERM.] Registration issued or renewed by the 
commissioner of commerce under sections 332.52 to 332.60 expires 
on June 30 of each year. 
    Sec. 5.  Minnesota Statutes 1992, section 332.54, is 
amended by adding a subdivision to read: 
     Subd. 7.  [FEES.] The fee for a credit services 
organization's registration is $100 for issuance or renewal for 
each location of business. 
    Sec. 6.  Minnesota Statutes 1992, section 332.55, is 
amended to read: 
    332.55 [BOND.] 
    A credit services organization must submit to the 
commissioner at the time of registration, a an annual surety 
bond of $10,000 and in which, expiring on June 30 of each year, 
by an insurance company, which is authorized by the state of 
Minnesota to transact the business of fidelity and surety 
insurance, is a surety.  The credit services organization must 
be the obligor.  The bond must benefit the state of Minnesota 
and any person who may have a cause of action against the 
obligor arising out of the obligor's activities as a credit 
services organization.  The commissioner may accept a deposit in 
cash, or securities that may be legally purchased by savings 
banks or for trust funds of an aggregate market value equal to 
the bond requirement, in lieu of the surety bond.  The cash or 
securities must be deposited with the state treasurer. 
    Sec. 7.  Minnesota Statutes 1992, section 332.59, is 
amended to read: 
    332.59 [VIOLATIONS.] 
    Any person who violates sections 332.52 to 332.58 is guilty 
of a misdemeanor.  The commissioner of commerce may bring a 
civil action or proceeding against a person who violates any 
provision of sections 332.52 to 332.58.  A violation of sections 
332.52 to 332.58 is a violation of section 325F.69, subdivision 
1, and the provisions of section 8.31 apply.  Sections 332.52 to 
332.58 do not limit or restrict the right of any person to 
pursue any appropriate remedy for a violation of sections 332.52 
to 332.58.  The provisions of section 45.027 apply to the 
enforcement of sections 332.52 to 332.58. 
    Sec. 8.  [RULES REPEALER.] 
    Minnesota Rules, parts 2870.1300; and 2870.1600, are 
repealed. 
    Presented to the governor May 17, 1993 
    Signed by the governor May 20, 1993, 3:20 p.m.