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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. 
           Section 1.  Minnesota Statutes 2002, section 332.33, is 
        amended to read: 
           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.  
        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 
           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 
           Sec. 3.  Minnesota Statutes 2002, section 332.35, is 
        amended to read: 
           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 
           (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 
           (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 
           (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: 
           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: 
        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 
           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 
           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