2006 Minnesota Statutes

CHAPTER 332. COLLECTION, CREDIT SERVICES, DEBT PRORATING

    Subdivision 1.[Repealed, 1969 c 766 s 17]
    Subd. 2.[Repealed, 1969 c 766 s 17]
    Subd. 3.[Repealed, 1969 c 766 s 17]
    Subd. 4.[Repealed, 1969 c 766 s 17; 1971 c 25 s 103]

332.02 [Repealed, 1969 c 766 s 17]

332.03 [Repealed, 1969 c 766 s 17]

332.04 [Repealed, 1969 c 1120 s 21]

332.05 [Repealed, 1969 c 1120 s 21]

332.06 [Repealed, 1969 c 1120 s 21]

332.07 [Repealed, 1969 c 1120 s 21]

332.08 [Repealed, 1969 c 1120 s 21]

332.09 [Repealed, 1969 c 1120 s 21]

332.10 [Repealed, 1969 c 1120 s 21]

    Subdivision 1.[Repealed, 1971 c 25 s 62]
    Subd. 2.[Repealed, 1969 c 1120 s 21]

PRORATING AGENCIES

332.12 DECLARATION OF POLICY.
The business of rendering financial planning service by compromising, settling, adjusting,
prorating or liquidating the indebtedness of a debtor is a matter of public interest and concern and
is subject to rules and control in the public interest.
History: 1969 c 1120 s 1; 1985 c 248 s 70

332.13 DEFINITIONS.
    Subdivision 1. Scope. Unless a different meaning is clearly indicated by the context, the
following words, terms, and phrases, where used in sections 332.12 to 332.29, shall have the
meanings ascribed to them in this section.
    Subd. 2. Debt prorating. "Debt prorating" means the performance of any one or more of
the following:
(a) managing the financial affairs of an individual by distributing income or money to the
creditors thereof;
(b) receiving funds for the purpose of distributing said funds among creditors in payment or
partial payment of obligations of a debtor; or
(c) settling, adjusting, prorating, pooling, or liquidating the indebtedness of a debtor. Any
person so engaged or holding out as so engaged shall be deemed to be engaged in debt prorating
regardless of whether or not a fee is charged for such services. This term shall not include services
performed by the following when engaged in the regular course of their respective businesses
and professions:
(1) attorneys at law, escrow agents, accountants, broker-dealers in securities;
(2) banks, state or national, trust companies, savings associations, title insurance companies,
insurance companies and all other lending institutions duly authorized to transact business in the
state of Minnesota, provided no fee is charged for such service;
(3) persons who, as employees on a regular salary or wage of an employer not engaged in the
business of debt prorating, perform credit services for their employer;
(4) public officers acting in their official capacities and persons acting pursuant to court order;
(5) nonprofit corporations, organized under Minnesota Statutes 1967, Chapter 317, giving
debt prorating service, provided no fee is charged for such service;
(6) any person while performing services incidental to the dissolution, winding up or
liquidation of a partnership, corporation or other business enterprise;
(7) the state of Minnesota, its political subdivisions, public agencies and their employees;
(8) credit unions, provided no fee is charged for such service;
(9) "qualified organizations" designated as representative payees for purposes of the Social
Security and Supplemental Security Income representative payee system and the federal Omnibus
Budget Reconciliation Act of 1990, Public Law 101-508; and
(10) accelerated mortgage payment providers. "Accelerated mortgage payment providers"
are persons who, after satisfying the requirements of sections 332.30 to 332.303, receive funds
to make mortgage payments to a lender or lenders, on behalf of mortgagors, in order to exceed
regularly scheduled minimum payment obligations under the terms of the indebtedness. The term
does not include: (i) persons or entities described in clauses (1) to (9); (ii) mortgage lenders or
servicers, industrial loan and thrift companies, or regulated lenders under chapter 56; or (iii)
persons authorized to make loans under section 47.20, subdivision 1.
For purposes of this clause and sections 332.30 to 332.303, "lender" means the original
lender or that lender's assignee, whichever is the current mortgage holder.
    Subd. 3. Attorney general. "Attorney general" means the attorney general of the state of
Minnesota.
    Subd. 4. Debtor. "Debtor" means the person for whom the debt prorating service is
performed.
    Subd. 5. Person. "Person" means any individual, firm, partnership, association or corporation.
    Subd. 6. Licensee. "Licensee" means any person licensed by the commissioner pursuant to
sections 332.12 to 332.29 and, where used in conjunction with an act or omission required or
prohibited by sections 332.12 to 332.29, shall mean any person performing debt prorating services.
    Subd. 7. This act. The term "this act" means sections 332.12 to 332.29 as enacted and
hereafter amended.
    Subd. 8. Commissioner. "Commissioner" means commissioner of commerce.
History: 1969 c 1120 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1992
c 587 art 1 s 28; 1994 c 638 s 1; 1995 c 202 art 1 s 25

332.14 REQUIREMENT OF LICENSE.
On or after January 1, 1970, it shall be unlawful for any person to operate a debt prorating
service or engage in said activity as defined in section 332.13 except as authorized by law without
first having obtained a license as hereinafter provided.
History: 1969 c 1120 s 3

332.15 LICENSE.
    Subdivision 1. Form. Application for a license to operate a debt prorating service in this
state shall be made in writing to the commissioner, under oath, in the form prescribed by the
commissioner, and shall contain the full name and address of the applicant, the business to be
conducted, and, if the applicant is a partnership or association, of every member thereof and, if a
corporation, of each officer, director and shareholder owning more than five percent of outstanding
common stock thereof and such other information and material as the commissioner may require.
    Subd. 2. License for each location. Each person operating a debt prorating service shall
obtain a license for each location and place of business, including each branch office. Such
person shall submit a separate application for each place of business. The full license fee shall be
payable only for one such place of business. For each additional place of business the license fee
shall be $100.
    Subd. 3. Fees. Each applicant, at the time of making such application, shall pay to the
commissioner the sum of $100 as a fee for investigation of the applicant, and the additional sum of
$250 as a license fee. If the application is denied, said license fee shall be returned to the applicant.
    Subd. 4. Bond. Every applicant shall submit to the commissioner at the time of the
application for a license, a surety bond in which the applicant shall be the obligor, in a sum to be
determined by the commissioner but not less than $5,000, and in which an insurance company,
which is duly authorized by the state of Minnesota to transact the business of fidelity and surety
insurance, shall be a surety; provided, however, the commissioner may accept a deposit in cash,
or securities such as may legally be purchased by savings banks or for trust funds of an aggregate
market value equal to the bond requirement, in lieu of the surety bond, such cash or securities to
be deposited with the commissioner of finance. The commissioner may also require a fidelity
bond in an appropriate amount covering employees of any applicant. Each branch office or
additional place of business of an applicant shall be bonded as provided herein. In determining
the bond amount necessary for the maintenance of any office be it surety, fidelity or both the
commissioner shall consider the financial responsibility, experience, character and general fitness
of the agency and its operators and owners; the volume of business handled or proposed to be
handled; the location of the office and the geographical area served or proposed to be served;
and such other information the commissioner may deem pertinent based upon past performance,
previous examinations, annual reports and manner of business conducted in other states.
    Subd. 5. Condition of bond. The applicant shall be the obligor. The bond shall run to the
state of Minnesota for the use of the state and of any person or persons who may have a cause of
action against the obligor arising out of the obligor's activities as a debt prorater. Such bond shall
be conditioned that said obligor will not commit any fraudulent act and will faithfully conform to
and abide by the provisions of sections 332.12 to 332.29 and of all rules lawfully made by the
commissioner hereunder and pay to the state and to any such person or persons any and all money
that may become due or owing to the state or to such person or persons from said obligor under
and by virtue of the provisions of sections 332.12 to 332.29.
    Subd. 6. Right of action on bond. If the licensee has failed to account to a debtor or
distribute to the debtor's creditors such amounts as are required by sections 332.12 to 332.29
and the contract between the debtor and licensee, the debtor or the debtor's legal representative
or receiver, the commissioner or the attorney general, shall have, in addition to all other legal
remedies, a right of action in the name of the debtor on the bond or the security given pursuant to
the provisions of this section, for loss suffered by the debtor, not exceeding the face of the bond or
security, and without the necessity of joining the licensee in such suit or action.
History: 1969 c 1120 s 4; 1971 c 441 s 1; 1985 c 248 s 70; 1986 c 444; 1992 c 564 art 4 s
15; 1999 c 151 s 43,44; 2003 c 112 art 2 s 50

332.16 QUALIFICATIONS FOR LICENSE.
Upon the filing of the application, approval of the bond and payment of the specified fees,
the commissioner shall conduct an investigation. The commissioner shall thereafter issue a
license to the applicant on finding:
(a) that the financial responsibility, experience, character and general fitness of the applicant,
and of the members thereof, if the applicant be a partnership or association, and of the officers,
directors and each of the stockholders who own more than five percent of outstanding stock
thereof, if the applicant be a corporation, are such as to indicate that the business will be operated
fairly and honestly within the purposes of sections 332.12 to 332.29, and that any other business
or profession engaged in by the applicant or such persons does not create a conflict of interest
with respect to the ability to represent an individual fairly;
(b) that neither the applicant, nor any of such persons has been convicted of any crime or
ordinance involving moral turpitude within the past ten years;
(c) that neither the applicant nor any of such persons has had a record of having defaulted in
the payment of money collected for others, including the discharge of debts through bankruptcy
proceedings;
(d) that neither the applicant nor any of such persons has had a license to engage in debt
prorating revoked or removed in this or any other state;
(e) that neither the applicant nor any of such persons operates or is an employee or owner of
a collection agency or process serving business; and
(f) that such person or the applicant and all of such persons have fully complied with the
requirements of sections 332.12 to 332.29 and all valid rules and orders of the commissioner. Said
license shall permit the applicant to engage in the debt prorating service business in accordance
with the provisions of sections 332.12 to 332.29 at the location specified in the application. The
license shall remain in full force and effect for one calendar year or until it is surrendered by the
licensee or revoked or suspended by the commissioner pursuant hereto.
History: 1969 c 1120 s 5; 1971 c 441 s 2; 1985 c 248 s 70; 1986 c 444

332.17 RENEWAL OF LICENSE.
Each licensee under the provisions of sections 332.12 to 332.29 shall, not more than 60 nor
less than 30 days before its license is to expire, make application to the commissioner for renewal
of its license. Such application for renewal shall be on a form prescribed by the commissioner and
shall be accompanied by payment of the sum of $250 as a license fee, and a bond as required in
the case of an original application. The commissioner may investigate the licensee and determine
its continued fitness as in the case of an original application. If the commissioner shall renew
the license, said renewal shall be effective for one year from the date on which the previous
license expired.
History: 1969 c 1120 s 6; 1999 c 151 s 45

332.18 LICENSE DISPLAY AND TRANSFERABILITY; CHANGE OF ADDRESS.
Each license issued hereunder shall be kept conspicuously posted in the place of business of
the licensee. The business address may be changed by any licensee upon ten days' prior written
notice thereof to the commissioner. No license shall be transferable or assignable without the
consent of the commissioner and the licensee shall be limited solely to the business of debt
prorating service.
History: 1969 c 1120 s 7

332.19 DENIAL OF LICENSE.
After January 1, 1970, all applications for an initial license hereunder shall be approved or
denied within 60 days of their filing with the commissioner. The applicant shall be so notified
of any denial of the application by certified mail directed to the applicant at the address shown
on the application. The applicant shall be given an opportunity to be heard thereon before the
commissioner within 30 days after such notice is served. Such notice and hearing shall comply
with the Minnesota Administrative Procedure Act, Minnesota Statutes, sections 14.57 to 14.69.
Persons subject to the terms of sections 332.12 to 332.29 who are providing debt prorating services
on July 1, 1969 shall submit their applications for licenses not later than September 1, 1969.
History: 1969 c 1120 s 8; 1978 c 674 s 60; 1982 c 424 s 130; 1986 c 444; 1987 c 384 art 2 s 1

332.20 SUSPENDING, REVOKING, OR REFUSING TO RENEW LICENSE.
    Subdivision 1. Procedure. The commissioner may revoke, suspend or refuse to renew any
license issued hereunder, for cause as defined in this section. Revocation or refusal to renew
shall be upon notice and hearing as prescribed in the Minnesota Administrative Procedure Act,
Minnesota Statutes, sections 14.57 to 14.69. Said notice shall set a time for hearing before the
commissioner not less than 20 nor more than 30 days after service of such notice, provided, the
licensee may waive such 20 day minimum. The commissioner may, in such notice, suspend the
license for a period not to exceed 60 days. Unless the notice states that the license is suspended,
pending the determination of the main issue, the licensee may continue to transact business until
the final decision of the commissioner. If the license is so suspended, the commissioner shall hold
a hearing and render a final determination within 10 days of a request by the licensee. If the
commissioner fails to do so, the suspension shall terminate and be of no force or effect.
    Subd. 2. Cause. The commissioner may revoke, suspend and refuse to renew any license
hereunder on finding that:
(a) any licensee has failed to pay any fee required herein, or to maintain in effect the bond
required under the provisions of sections 332.12 to 332.29 or failed to comply with any order,
decision or finding of the commissioner made pursuant to and within the authority of sections
332.12 to 332.29; or that
(b) the licensee has violated any provisions of sections 332.12 to 332.29 or any rule or
direction lawfully made by the commissioner under and within the authority of sections 332.12 to
332.29; or that
(c) any material fact or condition exists which, if it had existed at the time of the original
application for a license, would have warranted the commissioner in refusing its issuance; or that
(d) any applicant or party to an application has made any false statement or representation to
the commissioner in applying for a license hereunder.
    Subd. 3. Notification of interested persons. After the notice and hearing required in
subdivision 1 hereof, upon issuing an order revoking a license, the commissioner may notify all
individuals who have contracts with the affected licensee and all creditors who have agreed to a
plan of forbearance that such license has been revoked and that said order is subject to appeal.
    Subd. 4. Receive funds of licensee. When an order is issued revoking or refusing to renew a
license, the commissioner shall apply to the district court for appointment of a receiver to receive
the assets of the licensee pending a final determination of the validity of said order.
History: 1969 c 1120 s 9; 1982 c 424 s 130; 1985 c 248 s 70; 1986 c 444; 1987 c 384 art 2 s 1

332.21 CONTRACTS.
(a) Each contract entered into by the licensee and the debtor shall be in writing and signed
by both parties. The licensee shall furnish the debtor with a copy of the signed contract. Each
such contract shall set forth:
(1) the dollar charges agreed upon for the services of the licensee, clearly disclosing to such
debtor the total amount which may be retained by licensee for services if the contract is fully
performed, which maximum amount would be the origination fee together with 15 percent of the
amount scheduled to be liquidated by such contract. This disclosure must state that if the amount
of debt owed is increased by interest, late fees, over the limit fees, and other amounts imposed
by the creditor or by reason of the events under paragraph (c), the length of the contract would
be extended and remain in force and that the total dollar charges agreed upon may increase at
the rate agreed upon in the original contract;
(2) the terms upon which the debtor may cancel the contract as set out in section 332.23;
(3) all debts which are to be managed by the licensee, including the name of the creditor and
the amount of the debt; and
(4) such other matter as the commissioner may require by rule.
(b) A contract shall not be effective until a payment has been made to the licensee for
distribution to creditors or until three business days after the signing thereof, whichever is later.
Within such period an individual may disaffirm said contract and upon such disaffirmance said
contract shall be null and void.
(c) Total fees contained in the contract may be exceeded in relation to creditors under
open-end agreements if it is agreed to in the contract and the additional debts so contracted to
be prorated do not exceed ten percent of the original debts in the contract or written revisions to
the original contract.
History: 1969 c 1120 s 10; 1971 c 441 s 3; 1985 c 248 s 70; 1996 c 414 art 1 s 40; 1997
c 157 s 61

332.22 BOOKS, RECORDS, AND INFORMATION.
    Subdivision 1. Records retention. Every licensee shall keep, and use in the licensee's
business, such books, accounts, and records as will enable the commissioner to determine whether
such licensee is complying with the provisions of sections 332.12 to 332.29 and of the rules,
orders and directives promulgated by the commissioner pursuant to sections 332.12 to 332.29.
Every licensee shall preserve such books, accounts and records for at least five years after making
the final entry on any transaction recorded therein. Examinations of the books, records and
method of operations as shall be conducted under the supervision of the commissioner herein
shall be done at the cost of the licensee. The cost shall be assessed as determined pursuant to
section 46.131, as amended from time to time.
    Subd. 2. Statements to debtors. Each licensee shall maintain and shall make available
records and accounts which will enable each debtor to ascertain the amounts paid to the creditors
of said debtor. A statement showing amounts received from the debtor, disbursements to each
creditor, amounts which any creditor has agreed to accept as payment in full for any debt owed
the creditor by the debtor, charges deducted by the licensee and such other information as the
commissioner may prescribe shall be furnished by the licensee to the debtor at least once every
three months and, in addition, upon any cancellation or termination of the contract. In addition to
the statements required by this subdivision, each debtor shall have reasonable access, without
cost, to information in the licensee's files applicable to such debtor. Such statements, records and
accounts shall otherwise remain confidential except for duly authorized state and government
officials, the commissioner, the attorney general, the debtor and the debtor's representative and
designees. Each licensee shall prepare and retain in the file of each debtor a written analysis of the
debtor's income and expenses to substantiate that the plan of payment is feasible and practical.
History: 1969 c 1120 s 11; 1971 c 441 s 4; 1985 c 248 s 70; 1986 c 444

332.23 FEES, PAYMENTS, AND CANCELLATIONS.
    Subdivision 1. Origination fee, credit background report cost. The licensee may charge
an origination fee of not more than $25 and collect from the debtor the actual cost of a credit
background report obtained from a credit reporting agency not related to or affiliated with the
licensee or if affiliated, the total cost of the report may not exceed $8. The costs to the debtor of
said origination fee and credit background report may be made from the originating amount paid
by the debtor to the licensee. The cost of only one credit background report may be collected from
the debtor in any 12-month period.
    Subd. 2. Withdrawal of fee. The licensee may withdraw and retain as partial payment of
the licensee's total fee not more than 15 percent of any sum deposited with the licensee by the
debtor for distribution. The remaining 85 percent must be disbursed to listed creditors pursuant
to and in accordance with the contract between the debtor and the licensee within 35 days after
receipt unless the reasonable payment of one or more of the debtor's obligations requires that the
funds be held for a longer period so as to accumulate a sum certain or where the debtor's payment
is returned for nonsufficient funds, then no longer than 42 days. Total payment to licensee for
services rendered, excluding the origination fee and any credit background report, shall not
exceed 15 percent of funds deposited with licensee by debtor for distribution.
    Subd. 3. Cancellation. All contracts with debtors for debt prorating service shall contain on
their face, in easily readable characters, a provision entitling either party to cancel the contract
without cause upon 30 days' written notice. The contract shall automatically terminate upon the
payment of all listed debts and fees. In the event of cancellation by either party, the licensee shall
notify the debtor's creditors of such cancellation within ten days thereof.
    Subd. 4. Additional contracts; recurring payments. Separate and additional contracts shall
be entered into by the licensee and debtor for the management of any debt not listed in any other
executory contract or for any increase in the size of any debt included in any other contract,
provided, the licensee shall not charge any origination fee for any such additional contract.
No fees or charges shall be received or retained by the licensee for any handling of recurrent
payments. Recurrent payments shall include current rent, house, utility, telephone, maintenance
as defined in section 518.27, child support, insurance premium and such other payments as the
commissioner may by rule prescribe.
    Subd. 5. Advance payments. Notwithstanding anything herein to the contrary no fees
or charges shall be received or retained for any payments by the debtor made more than the
following number of days in advance of the date specified in the contract on which they are
due: (a) 42 days in the case of contracts requiring monthly payments; (b) 15 days in the case
of contracts requiring biweekly payments; or (c) seven days in the case of contracts requiring
weekly payments. For those contracts which do not require payments in specified amounts, a
payment shall be deemed an advance payment to the extent it exceeds twice the average regular
payment theretofore made by the debtor pursuant to that contract. This subdivision shall not apply
when it is the intention of the debtor to use such advance payments to satisfy future payment of
obligations due within 30 days under the contract.
    Subd. 6. Consent of creditors. The licensee shall actively seek to obtain the consent of all
creditors to the plan of distribution set forth in the contract. Failure to obtain such consent of all
such creditors within 60 days of the date upon which the contract is executed shall entitle the
debtor to cancel the contract within 120 days of the date of such execution without liability to pay
any cancellation fee. Consent by a creditor may be express and in writing, or may be evidenced
by acceptance of a payment made pursuant to the plan of distribution set forth in the contract. The
licensee shall notify the debtor within ten days after the expiration of the 60 day period prescribed
in this subdivision of any failure to obtain the required consent and of the debtor's right to cancel
without penalty. Such notice shall be in such form as the commissioner shall prescribe. Nothing
contained in this section shall be deemed to require the return of any origination fee and any fees
earned by the licensee prior to cancellation or default.
    Subd. 7. Excess charges. If a licensee contracts for, receives or makes any charge in excess
of the maximum permitted by sections 332.12 to 332.29, except as the result of an accidental and
bona fide error, the licensee's contract with the debtor shall be void and the licensee shall return to
the debtor the amount of all moneys received from the debtor or on the debtor's behalf from the
commencement of the contract which have not been distributed to creditors.
    Subd. 8. Payments held in trust. Any payment received by a licensee from or on behalf of a
debtor shall be held in trust by the licensee from the moment it is received. The licensee shall not
commingle such payment with the licensee's own property or funds, but shall maintain a separate
trust account and deposit in such account all such payments received. All disbursements, whether
to the debtor or to the creditors of the debtor, or to the licensee, shall be made from such account.
History: 1969 c 1120 s 12; 1971 c 441 s 5-8; 1978 c 772 s 62; 1985 c 248 s 70; 1986 c 444;
1995 c 202 art 2 s 30,31; 1997 c 157 s 62-64

332.24 PROHIBITIONS.
A licensee shall not:
(1) purchase from a creditor any obligation of a debtor;
(2) use, threaten to use, seek to have used or seek to have threatened the use of any legal
process, including but not limited to garnishment and repossession of personal property, against
any debtor while the contract between the licensee and the debtor remains executory;
(3) advertise or make any statement or representation with regard to the rates, terms, or
conditions of debt prorating service which is false, misleading or deceptive;
(4) require as a condition of performing debt prorating services nor shall the contract between
the licensee and a debtor require the purchase of any services, stock, insurance, commodity or
other property or any interest therein either by the debtor or the licensee;
(5) compromise any debts unless the prior written approval of the debtor has been obtained
to such compromise and unless such compromise shall inure solely to the benefit of the debtor;
(6) receive from any debtor as security or in payment of any fee a promissory note or other
promise to pay or any mortgage or other security, whether as to real or personal property;
(7) lend money or credit to any debtor if any interest or fee is charged;
(8) take any confession of judgment or power of attorney to confess judgment against the
debtor or appear as the debtor in any judicial proceedings;
(9) take, concurrent with the signing of the contract, or as a part of the contract or as part
of the application for the contract, a release of any obligation required to be performed on the
part of the licensee;
(10) offer, pay or give any substantial cash fee, gift, bonus, premium, reward or other
compensation to any person, other than an employee of the licensee for referring any prospective
customer to the licensee;
(11) receive any cash, fee, gift, bonus, premium, reward, or other compensation from any
person other than the debtor or a person in the debtor's behalf in connection with activities as
a licensee; provided, however, that this paragraph shall not apply to a licensee which is a bona
fide nonprofit corporation, duly organized under chapter 317A;
(12) enter into a contract with a debtor unless a thorough written budget analysis indicates
that the debtor can reasonably meet the requirements of the financial adjustment plan and will be
benefited by the plan;
(13) in any way charge or purport to charge or provide any debtor credit insurance in
conjunction with any contract or agreement involved in the financial adjustment plan.
Any violation of the prohibitions contained in this section shall be cause for the suspension,
revocation or refusal to renew a license pursuant to section 332.20 and shall also constitute
a violation of the provisions of sections 332.12 to 332.29 to which the penalties prescribed in
section 332.26 shall attach. In addition to such penalties any person attempting to perform a debt
prorating service in this state without maintaining an office in this state shall be subject to a fine
not to exceed $10,000, as determined by the commissioner.
History: 1969 c 1120 s 13; 1971 c 441 s 9; 1986 c 444; 1989 c 304 s 137

332.25 RULES.
The commissioner shall make and file in accordance with the provisions of chapter 14, such
reasonable rules as shall be necessary for the administration of sections 332.12 to 332.29.
History: 1969 c 1120 s 14; 1982 c 424 s 130; 1985 c 248 s 70

332.26 PENALTIES.
Any person willfully violating any of the provisions of sections 332.12 to 332.29 or of any
rules promulgated pursuant hereto shall be guilty of a gross misdemeanor.
History: 1969 c 1120 s 15; 1985 c 248 s 70

332.27 CONTRACTS VOID.
Any contract for debt prorating service as defined in sections 332.12 to 332.29 made by an
unlicensed person shall be null and void and of no legal effect and all fees paid to such person
pursuant to such contract shall be recoverable with reasonable attorney's fees.
History: 1969 c 1120 s 16

332.28 INJUNCTION.
To engage in a debt prorating service business without a valid, existing license so to do is
hereby declared to be inimical to the public welfare and constitutes a public nuisance. The attorney
general or the county attorney of any county may apply for an injunction in district court to enjoin
any person from engaging in said business and any such court may issue temporary or permanent
injunctions as the circumstances shall require. Such injunction proceedings shall be in addition to
and not in lieu of penalties and remedies otherwise provided in sections 332.12 to 332.29.
History: 1969 c 1120 s 17

332.29 INVESTIGATION.
    Subdivision 1. Examination; audit. The commissioner shall examine the books and records
of every licensee hereunder and of any person engaged in the business of debt prorating service
as defined in section 332.13 at least once every 24 calendar months. The commissioner once
during any calendar year, may require the submission of an audit prepared by a certified public
accountant of the books and records of each licensee hereunder. If the licensee has, within one
year previous to the commissioner's demand, had an audit prepared for some other purpose,
this audit may be submitted to satisfy the requirement of this section. The commissioner may
investigate any complaint concerning violations of sections 332.12 to 332.29 and may require the
attendance and sworn testimony of witnesses and the production of documents.
    Subd. 2. Duties of attorney general and county attorney. Upon transmittal from the
commissioner of a written complaint of any person feeling aggrieved, the attorney general may
forward such complaint to the county attorney of the county wherein the business is situated,
who shall investigate and report. The attorney general or such county attorney may require the
attendance and sworn testimony of witnesses and the production of documents.
History: 1969 c 1120 s 18; 1987 c 349 art 1 s 39; 2003 c 51 s 19

332.30 ACCELERATED MORTGAGE PAYMENT PROVIDER; BOND
REQUIREMENTS.
(a) Before beginning business in this state, an accelerated mortgage payment provider,
as defined in section 332.13, subdivision 2, clause (10), shall submit to the commissioner of
commerce an authorization fee of $250 and either:
(1) a surety bond in which the accelerated mortgage payment provider is the obligor, in an
amount determined by the commissioner; or
(2) if the commissioner agrees to accept it, a deposit:
(i) in cash in an amount equivalent to the bond amount; or
(ii) of authorized securities, as defined in section 50.14, with an aggregate market value equal
to the bond amount. The cash or securities must be deposited with the commissioner of finance.
(b) The amount of the bond required by the commissioner shall vary with the amount of
Minnesota client funds held or to be held by the obligor. For new businesses, the bond must be no
less than $100,000, except as provided in section 332.301. The commissioner may increase the
required bond amount upon 30 days' notice to the accelerated mortgage payment provider.
(c) If a bond is submitted, it must name as surety an insurance company authorized to
transact fidelity and surety business in this state. The bond must run to the state of Minnesota for
the use of the state and of any person who may have a claim against the obligor arising out of the
obligor's activities as an accelerated mortgage payment provider. The bond must be conditioned
that the obligor will not commit any fraudulent act and will faithfully conform to and abide by the
provisions of accelerated mortgage payment agreements with Minnesota residents.
If an accelerated mortgage payment provider has failed to account to a mortgagor or
distribute funds to the mortgagee as required by an accelerated mortgage payment agreement, the
mortgagor or the mortgagor's legal representative or receiver or the commissioner shall have,
in addition to any other legal remedies, a right of action in the name of the debtor on the bond
or the security given pursuant to this section.
History: 1994 c 638 s 2; 1999 c 151 s 46; 2003 c 112 art 2 s 50

332.301 BOND; BACKGROUND CHECK.
The commissioner may accept an initial surety bond or deposit in an amount less than
$100,000 based upon the business plan of the accelerated mortgage payment provider, provided
the commissioner obtains a third-party background check at the expense of the accelerated
mortgage payment provider and from a source to be determined by the commissioner. The
commissioner may require a third-party background check in connection with any accelerated
mortgage payment provider at the expense of the accelerated mortgage payment provider, but no
more often than annually.
History: 1994 c 638 s 3

332.302 CONTRACTS; NOTICE TO MORTGAGOR.
A contract entered into between an accelerated mortgage payment provider and a mortgagor
shall be in writing and include all applicable terms and conditions including, but not limited
to, all fees, costs, and charges. A conforming copy must be provided to the mortgagor before
any fees in connection with the accelerated mortgage payment services are received by the
accelerated mortgage payment provider. A contract shall provide that the arrangement between
the accelerated mortgage payment provider and lender or lenders requires:
(1) that if the original terms of the mortgage, mortgage note, or escrow agreement are in
default because of nonpayment by the accelerated mortgage payment provider, the lender or
lenders mail or otherwise deliver to the mortgagor a written notice within 30 days of the default;
and
(2) that a written summary of payments received by the accelerated mortgage payment
provider by date and amount, payments made to the lender or lenders on behalf of the mortgagor
by date and amount, and unremitted balance held by the accelerated mortgage payment provider
be provided to the mortgagor at least annually or more frequently on a date or dates mutually
agreed upon between the accelerated mortgage payment provider and mortgagor.
History: 1994 c 638 s 4

332.303 SEGREGATED ACCOUNTS.
A payment received by an accelerated mortgage payment provider from or on behalf of a
client shall be held by the accelerated mortgage payment provider in a separate trust account
clearly designated for client funds. The account shall be in a bank or other depository institution
authorized or chartered under the laws of any state or of the United States. The accelerated
mortgage payment provider shall not commingle funds held for payment to lenders with its
own property or funds.
History: 1994 c 638 s 5

COLLECTION AGENCIES

332.31 DEFINITIONS.
    Subdivision 1. Terms. The terms in this section for the purposes of sections 332.31 to
332.45 shall have the meanings given them.
    Subd. 2. Person. "Person" means and includes individuals, partnerships, associations
or corporations.
    Subd. 3. Collection agency. "Collection agency" means and includes any person engaged in
the business of collection for others any account, bill or other indebtedness except as hereinafter
provided. It includes persons who furnish collection systems carrying a name which simulates
the name of a collection agency and who supply forms or form letters to be used by the creditor,
even though such forms direct the debtor to make payments directly to the creditor rather than to
such fictitious agency.
    Subd. 4.[Repealed, 1979 c 144 s 7]
    Subd. 5.[Repealed, 1979 c 144 s 7]
    Subd. 6. Collector. "Collector" is a person acting under the authority of a collection agency
under subdivision 3, and on its behalf in the business of collection for others an account, bill, or
other indebtedness except as otherwise provided in this chapter.
    Subd. 7. Exempt out-of-state collection agency. "Exempt out-of-state collection agency"
means a collection agency that has no physical presence in this state, that is engaged in the
business of collecting claims on behalf of creditors that have no physical presence in this state,
and that only conducts business within this state by means of interstate communications including
telephone, mail, and facsimile transmission.
History: 1969 c 766 s 1; 1973 c 720 s 54 subd 2; 1987 c 37 s 1; 2000 c 389 s 1

332.311 TRANSFER OF ADMINISTRATIVE FUNCTIONS.
The powers, duties, and responsibilities of the consumer services section under sections
332.31 to 332.45 relating to collection agencies are hereby transferred to and imposed upon the
commissioner of commerce.
History: 1973 c 720 s 54 subd 1; 1979 c 144 s 4; 1980 c 516 s 2; 1983 c 289 s 114 subd 1;
1984 c 655 art 1 s 92

332.32 EXCLUSIONS.
The term "collection agency" shall not include persons whose collection activities are
confined to and are directly related to the operation of a business other than that of a collection
agency such as, but not limited to banks when collecting accounts owed to the banks and when
the bank will sustain any loss arising from uncollectible accounts, abstract companies doing
an escrow business, real estate brokers, public officers, persons acting under order of a court,
lawyers, trust companies, insurance companies, credit unions, savings associations, loan or
finance companies unless they are engaged in asserting, enforcing or prosecuting unsecured
claims which have been purchased from any person, firm, or association when there is recourse to
the seller for all or part of the claim if the claim is not collected.
History: 1969 c 766 s 2; 1995 c 202 art 1 s 25

332.33 LICENSING AND REGISTRATION.
    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 register with the commissioner under this section. A 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 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 is $400. The fee for each collector registration and renewal 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.
    Subd. 5. Collection agency license issuance. Every 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. 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 occurs.
    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.
History: 1969 c 399 s 1; 1969 c 766 s 3; 1971 c 23 s 22; 1971 c 576 s 1; 1973 c 720 s 54
subd 2; 1979 c 144 s 6; 1980 c 516 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1985 c
248 s 70; 1986 c 444; 1987 c 37 s 2; 1987 c 358 s 118,119; 1997 c 222 s 50,51; 2004 c 208 s 1

332.335 EXEMPTION FROM LICENSURE.
    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 332.45.
    Subd. 2. Certificate of exemption. To qualify as an exempt out-of-state collection agency,
a person, except for those excluded from the definition of collection agency under section
332.32, must, before initiating collection activity, obtain a certificate of exemption from the
commissioner. A certificate of exemption must be issued upon the applicant's filing an application
on a form approved by the commissioner if the applicant is found to be qualified under this
chapter. The form must include:
(1) a signed statement that the exempt out-of-state collection agency holds a valid license to
do business as a collection agency in another state whose requirements for licensing are similar
to the requirements imposed under this chapter along with a copy of the licensing document
from the other state;
(2) certification that the exempt out-of-state collection agency will not solicit or collect claims
for any creditor who has a business presence in this state. A creditor has a business presence in
this state if either the creditor or an affiliate or subsidiary of the creditor has an office in this state;
(3) certification that the exempt out-of-state collection agency will not establish a physical
presence in this state and that all collection activity in this state will be conducted exclusively by
means of interstate communications including telephone, mail, or facsimile transmission;
(4) evidence of a corporate surety bond substantially similar, as determined by the
commissioner, to the bond required under section 332.34;
(5) appointment of the commissioner as the exempt out-of-state collection agency's agent for
service of process in this state; and
(6) written acknowledgment that the exempt out-of-state collection agency agrees to be
subject to the jurisdiction of Minnesota courts and the Minnesota Administrative Procedure Act,
chapter 14, in connection with the commissioner's enforcement of Minnesota law pertaining to
collection activities in Minnesota, including compliance with this chapter and chapter 45.
    Subd. 3. Notice. An exempt out-of-state collection agency must advise the commissioner
of any material changes to the information submitted in the most recent application within ten
days of the change.
    Subd. 4. Loss of exemption. In addition to fines and other authorized sanctions, a certificate
of exemption is considered revoked if the exempt out-of-state collection agency is found to be in
violation of any provision of chapter 45 or 332, or the Fair Debt Collection Practices Act of 1977,
United States Code, title 15, sections 1691 to 1693r.
History: 2000 c 389 s 2; 2004 c 208 s 2

332.34 BOND.
The commissioner of commerce shall require each collection agency licensee to annually file
and maintain in force a corporate surety bond, in a form to be prescribed by, and acceptable to, the
commissioner, and in a sum of at least $20,000. A collection agency may deposit cash in and
with a depository acceptable to the commissioner in an amount and in the manner prescribed and
approved by the commissioner in lieu of a bond.
History: 1969 c 766 s 4; 1973 c 720 s 54 subd 2; 1979 c 144 s 6; 1980 c 516 s 2; 1981 c
229 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 37 s 3; 1996 c 439
art 1 s 16; 1997 c 222 s 52

332.35 PRIOR CONVICTION OR JUDGMENT AS DISQUALIFICATION.
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.
History: 1969 c 766 s 5; 2004 c 208 s 3

332.355 AGENCY RESPONSIBILITY FOR COLLECTORS.
The commissioner may take action against a collection agency for any violations of debt
collection laws by its debt collectors. The commissioner may also take action against the debt
collectors themselves for these same violations.
History: 2000 c 483 s 51

332.36 [Repealed, 1975 c 61 s 26]

332.37 PROHIBITED PRACTICES.
No collection agency or 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 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;
(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 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 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."
History: 1969 c 766 s 7; 1981 c 229 s 2; 1987 c 37 s 4; 1988 c 592 s 12; 1993 c 295 s 1;
1999 c 137 s 10; 2004 c 208 s 4; 2005 c 10 art 2 s 4

332.38 APPLICATION IN CASE OF PRETENDED PURCHASE, ASSIGNMENT OR
USE OF A FICTITIOUS NAME.
The provisions of sections 332.31 to 332.45 shall apply to any person who, by any device,
subterfuge or pretense, makes a pretended purchase or takes a pretended assignment of accounts
from another for the purpose of evading provisions of sections 332.31 to 332.45, or, uses a
fictitious name or any name other than the person's own name which would indicate to the debtor
that a third person is collecting or attempting to collect such account or claim.
History: 1969 c 766 s 8; 1986 c 444

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.
History: 1993 c 295 s 2

332.39 INJUNCTIONS.
The attorney general or the county attorney of any county may apply for an injunction in
district court to enjoin any violations of sections 332.31 to 332.45, or any practices prohibited
in section 332.37, and any such court may issue temporary or permanent injunctions as the
circumstances shall require. Such injunctive proceedings shall be in addition to and not in lieu of
penalties and remedies otherwise provided in sections 332.31 to 332.45.
History: 1969 c 766 s 9

332.395 COMMISSIONER'S POWER OVER INEFFECTIVE LICENSES AND
REGISTRATIONS.
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 .
History: 1996 c 439 art 1 s 17; 2004 c 208 s 5

332.40 INVESTIGATION, SUSPENSION, AND REVOCATION OF LICENSES OR
REGISTRATIONS.
    Subdivision 1. Examination of licensee's or registered 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 licensure or registration on an original application,
or, fails to maintain its registration or comply with all of the requirements of 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 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 thereunder.
    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 occurred.
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.
History: 1969 c 766 s 10; 1973 c 720 s 54 subd 2; 1979 c 144 s 6; 1980 c 516 s 2; 1981 c
229 s 3; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 37 s 5; 2004 c 208 s 6

332.41 APPEALS.
Appeal from a denial, suspension, revocation, or censure of a license or registration must
be made according to chapter 14.
History: 1969 c 766 s 11; 1973 c 720 s 54 subd 2; 1979 c 144 s 6; 1980 c 516 s 2; 1983 c
289 s 114 subd 1; 1984 c 655 art 1 s 92; 2001 c 208 s 24; 2004 c 208 s 7

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 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.
History: 1969 c 766 s 12; 1973 c 720 s 54 subd 2; 1979 c 144 s 6; 1980 c 516 s 2; 1983 c
289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 2004 c 208 s 8

332.43 DELINQUENT COLLECTION AGENCIES.
    Subdivision 1. Appointment of receiver. 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.
    Subd. 2.[Repealed, 1979 c 144 s 7]
    Subd. 3.[Repealed, 1979 c 144 s 7]
History: 1969 c 766 s 13; 1973 c 720 s 54 subd 2; 1979 c 144 s 5; 1986 c 444; 2004 c 208 s 9

332.44 RULEMAKING POWER.
The commissioner of commerce shall make and file in accordance with the provisions of
chapter 14, all reasonable rules as shall be necessary for the administration of sections 332.31
to 332.45.
History: 1969 c 766 s 14; 1973 c 720 s 54 subd 2; 1979 c 144 s 6; 1980 c 516 s 2; 1982 c
424 s 130; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1985 c 248 s 70

332.45 LIABILITY OF SURETIES.
Sureties for collection agencies who have executed bonds pursuant to Minnesota Statutes
1967, sections 332.01 to 332.03 shall not be liable for any new liabilities incurred by the
collection agency after the commissioner of commerce has approved that agency's bond as
required by section 332.34.
History: 1969 c 766 s 15; 1973 c 720 s 54 subd 2; 1979 c 144 s 6; 1980 c 516 s 2; 1983 c
289 s 114 subd 1; 1984 c 655 art 1 s 92

332.50 [Renumbered 604.113]

332.505 [Renumbered 604.15]

332.51 [Renumbered 604.14]

CREDIT SERVICES ORGANIZATIONS

332.52 DEFINITIONS.
    Subdivision 1. Applicability. The definitions in this section apply to sections 332.52 to
332.60.
    Subd. 2. Buyer. "Buyer" means any individual who is solicited to purchase or who purchases
the services of a credit services organization.
    Subd. 3. Credit services organization. (a) "Credit services organization" means any person
that, with respect to the extension of credit by others, sells, provides, performs, or represents that
the person will sell, provide, or perform, in return for the payment of money or other valuable
consideration, any of the following services:
(1) improve a buyer's credit record, history, or rating;
(2) obtain an extension of credit for a buyer; or
(3) provide advice or assistance to a buyer with regard to either clause (1) or (2).
(b) "Credit services organization" does not include:
(1) any person authorized to make loans or extensions of credit under the laws of this state or
the United States, if the person is subject to regulation and supervision by this state or the United
States or a lender approved by the United States Secretary of Housing and Urban Development
for participation in any mortgage insurance program under the National Housing Act;
(2) any bank, savings bank, or savings and loan institution whose deposits or accounts are
eligible for insurance by the Federal Deposit Insurance Corporation or a subsidiary of the bank,
savings bank, or savings and loan institution;
(3) any credit union, federal credit union, or out-of-state credit union doing business in
this state;
(4) any nonprofit organization exempt from taxation under section 501(c)(3) of the Internal
Revenue Code of 1986, as amended through December 31, 1990;
(5) any person licensed as a prorating agency under the laws of this state if the person is
acting within the course and scope of that license;
(6) any person licensed as a real estate broker by this state if the person is acting within
the course and scope of that license;
(7) any person licensed as a collection agency under the laws of this state if the person is
acting within the course and scope of that license;
(8) any person licensed to practice law in this state if the person renders services within the
course and scope of practice as an attorney;
(9) any broker-dealer registered with the Securities and Exchange Commission or the
Commodity Futures Trading Commission if the broker-dealer is acting within the course and
scope of that regulation; or
(10) any consumer reporting agency as defined in the federal Fair Credit Reporting Act,
United States Code, title 15, sections 1681 to 1681t, as amended through December 31, 1990.
    Subd. 4. Extension of credit. "Extension of credit" means the right, offered or granted
primarily for personal, family, or household purposes, to defer payment of debt or to incur debt
and defer its payment.
History: 1991 c 314 s 1

332.53 WAIVER OF RIGHTS.
Any waiver by a buyer of sections 332.52 to 332.60 is void. Any attempt by a credit services
organization to have a buyer waive rights provided under sections 332.52 to 332.60 is a violation
of sections 332.52 to 332.60. In any proceeding involving sections 332.52 to 332.60, the burden
of proving an exemption or an exception from a definition is upon the person claiming it.
History: 1991 c 314 s 2

332.54 REGISTRATION.
    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.
    Subd. 2. Disclosure. The registration must contain the following information:
(1) the name and address of the credit services organization;
(2) the name and address of the registered agent authorized to accept service of process
on behalf of the credit services organization;
(3) the name and address of any person who directly or indirectly owns or controls a ten
percent or greater interest in the credit services organization;
(4) the name and address of the surety company that issued the bond required under section
332.55; and
(5) full disclosure of any litigation or unresolved complaint filed within the preceding five
years with the state, any other state, or the United States relating to the operation of the credit
services organization, or a notarized statement that there has been no litigation or unresolved
complaint filed within the preceding five years with the state, any other state, or the United States
relating to the operation of the credit services organization.
    Subd. 3. Additional information. The credit services organization must attach to the
registration statement a copy of the contract which the credit services organization intends to
execute with its consumers and evidence of the required bond.
    Subd. 4. Update of information. The credit services organization must update the
registration statement required under this section not later than 90 days after the date from which
a change in the information required in the statement occurs.
    Subd. 5. Buyer inspection. Each credit services organization registering under this section
must maintain a copy of the registration statement in its files. The credit services organization
must allow a buyer to inspect the registration statement on request.
    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.
    Subd. 7. Fees. The fee for a credit services organization's registration is $100 for issuance or
renewal for each location of business.
History: 1991 c 314 s 3; 1993 c 295 s 3-5

332.55 BOND.
A credit services organization must submit to the commissioner at the time of registration, an
annual surety bond of $10,000, 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.
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 commissioner of finance.
History: 1991 c 314 s 4; 1992 c 564 art 4 s 16; 1993 c 295 s 6; 2003 c 112 art 2 s 50

332.56 PROHIBITED ACTS.
    Subdivision 1. Requirements; prohibitions. A credit services organization, its salespersons,
agents, and representatives, and independent contractors who sell or attempt to sell the services of
a credit services organization may not do any of the following:
(1) charge or receive any money or other valuable consideration prior to full and complete
performance of the services the credit services organization has agreed to perform for the buyer;
(2) charge or receive any money or other valuable consideration solely for referral of the
buyer to a retail seller who will or may extend credit to the buyer if the credit that is or will be
extended to the buyer is upon substantially the same terms as those available to the general public;
(3) make, counsel, or advise any buyer to make, any statement with respect to a buyer's
credit worthiness, credit standing, or credit capacity that is untrue or misleading or that should
be known by the exercise of reasonable care to be untrue or misleading to a credit reporting
agency or to any person who has extended credit to a buyer or to whom a buyer is applying for
an extension of credit; or
(4) make or use any untrue or misleading representations in the offer or sale of the services
of a credit services organization or engage, directly or indirectly, in any act, practice, or course of
business that operates or would operate as fraud or deception upon any person in connection with
the offer or sale of the services of a credit services organization.
    Subd. 2. Salespersons; agents. If a credit services organization is in compliance with
subdivision 1, clause (1), the salesperson, agent, or representative who sells the services of that
organization is not required to obtain a surety bond.
History: 1991 c 314 s 5

332.57 DISCLOSURE STATEMENT.
    Subdivision 1. Requirement. Before the execution of a contract or agreement between the
buyer and a credit services organization or before the receipt by the credit services organization of
any money or other valuable consideration, whichever occurs first, the credit services organization
shall provide the buyer with a statement in writing containing all of the information required by
subdivision 2. The credit services organization shall maintain on file for a period of two years an
exact copy of the statement, personally signed by the buyer, acknowledging receipt of a copy
of the statement.
    Subd. 2. Contents. The disclosure statement required under subdivision 1 must be printed in
boldface and in at least 10-point type and must include the following statement:

"CONSUMER CREDIT FILE RIGHTS UNDER MINNESOTA AND FEDERAL LAW

You have a right to obtain a copy of your credit report from a credit bureau. You may be
charged a reasonable fee. There is no fee, however, if you have been turned down for credit,
employment, insurance, or a rental dwelling because of information in your credit report within
the preceding 30 days. The credit bureau must provide someone to help you interpret the
information in your credit file.
You have a right to dispute inaccurate information by contacting the credit bureau directly.
However, neither you nor any "credit repair" company or credit services organization has the right
to have accurate, current, and verifiable information removed from your credit bureau report.
Under the federal Fair Credit Reporting Act, the credit bureau must remove accurate, negative
information from your report only if it is over seven years old. Bankruptcy can be reported for
ten years.
You have a right to sue a credit repair company that violates Minnesota's Credit Services
Organization Act. This law prohibits deceptive practices by credit repair companies and gives you
a right to cancel your contract for any reason within five working days from the date you signed it.
Credit bureaus are required to follow reasonable procedures to ensure that creditors report
information accurately. However, mistakes may occur.
You may, on your own, notify a credit bureau in writing that you dispute the accuracy of
information in your credit file. The credit bureau must then reinvestigate and modify or remove
inaccurate information. The credit bureau may not charge any fee for this service. Any pertinent
information and copies of any documents you have concerning an error should be given to the
credit bureau.
If reinvestigation does not resolve the dispute to your satisfaction, you may send a brief
statement to the credit bureau to keep in your file, explaining why you think the record is
inaccurate. The credit bureau must include your statement about disputed information with any
reports it issues about you."
History: 1991 c 314 s 6

332.58 CONTRACT.
    Subdivision 1. Requirements. Each contract between the buyer and a credit services
organization for the purchase of the services of the credit services organization must be in writing,
dated, and signed by the buyer and must include the following:
(1) a conspicuous statement in boldface type, in immediate proximity to the space reserved
for the signature of the buyer, as follows: "If you, the buyer, have been denied credit within
the last 30 days, you may obtain a free copy of the consumer credit report from the consumer
reporting agency. You also have the right to dispute inaccurate information in a report. You may
cancel this contract at any time prior to midnight of the fifth day after the date of the transaction.
See the attached notice of cancellation form for an explanation of this right";
(2) the terms and conditions of payment, including the total of all payments to be made by
the buyer, whether to the credit services organization or to some other person;
(3) a full and detailed description of the services to be performed by the credit services
organization for the buyer, including all guarantees and all promises of full or partial refunds,
and the estimated date by which the services are to be performed or the estimated length of time
for performing the services;
(4) the credit services organization's principal business address and the name and address of
its agent in this state authorized to receive service of process; and
(5) with respect to the previous calendar year or the time period the credit services
organization has been in business, whichever is shorter, the percentage of the credit services
organization's customers for whom the credit services organization has fully and completely
performed the services the credit services organization agreed to perform for the buyer.
    Subd. 2. Notice of cancellation. The contract must be accompanied by a completed form
in duplicate, captioned "Notice of Cancellation" that must be attached to the contract, is easily
detachable, and contains in boldface type the following statement written in the same language as
used in the contract:

"Notice of Cancellation

You may cancel this contract without any penalty or obligation within five days from the
date the contract is signed.
If you cancel this contract, any payment made by you under this contract will be returned
within ten days following receipt by the seller of your cancellation notice.
To cancel this contract, mail or deliver a signed dated copy of this cancellation notice, or
any other written notice to ......(name of seller)...... at ......(address of seller)......, ......(place of
business)...... not later than midnight ......(date)......
I hereby cancel this transaction,
......(date)......
...(purchaser's signature)..."
    Subd. 3. Buyer's copy. The credit services organization shall give to the buyer a copy of
the completed contract and all other documents the credit services organization requires the
buyer to sign at the time that they are signed.
History: 1991 c 314 s 7

332.59 VIOLATIONS.
Any person who violates sections 332.52 to 332.58 is guilty of a misdemeanor. 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.
History: 1991 c 314 s 8; 1993 c 295 s 7

332.60 DAMAGES.
A buyer suffering damages as a result of a violation of sections 332.52 to 332.58 by a credit
services organization may bring an action for recovery of damages. Judgment must be entered for
actual damages, but in no case shall the amount be less than the amount paid by the buyer to the
credit services organization, plus reasonable attorney fees and costs. An award may also be entered
for punitive damages. The remedies provided under sections 332.52 to 332.60 are in addition to
any other procedures or remedies for any violation or conduct otherwise provided by law.
History: 1991 c 314 s 9