2023 - 2024 LEGISLATURE
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2023 SENATE BILL 668
November 9, 2023 - Introduced by Senators KNODL and WANGGAARD, cosponsored
by Representatives O'CONNOR, MURPHY and MACCO. Referred to Committee on
Shared Revenue, Elections and Consumer Protection.
1 AN ACT to repeal 138.09 (7) (b), (bm) and (bn), 138.09 (7) (e) 2., 138.09 (7) (gm)
2 1. and 2., 138.12 (14), 218.04 (3) (c), 218.04 (8), 224.72 (7) (bm), 224.725 (5) (a)
3 1. and 2. and 224.725 (5) (b); to renumber 138.09 (1a) and 218.0161; to
4 renumber and amend 138.09 (1d), 138.09 (1m) (a), 218.0114 (4), 218.0114
5 (17), 218.04 (1) (b), 218.04 (13), 224.72 (7) (am), 224.725 (5) (a) (intro.), 224.728
6 (title), 224.728 (1), 224.728 (2), 224.728 (3), 224.728 (4) and 224.728 (5); to
7 amend 49.857 (1) (d) 12., 73.0301 (1) (d) 6., 100.315 (1), 108.227 (1) (e) 6., 138.09
8 (1m) (b) 1. (intro.), 138.09 (2), 138.09 (3) (c), 138.09 (3) (d), 138.09 (3) (e) 1. a. and
9 f., 138.09 (3) (f), 138.09 (6), 138.09 (7) (c) 2. and 4., 138.09 (7) (e) 3., 138.09 (7)
10 (g) (intro.), 138.09 (7) (k), 138.12 (3) (b), 138.12 (4) (am) 1., 138.12 (5) (b), 138.14
11 (4) (a) 1. (intro.), 138.14 (6) (a), 138.14 (6) (b) 1. b., 138.14 (7) (d), 138.14 (8) (c),
12 138.14 (9) (a) 4., 138.14 (14) (c) 1., 138.14 (14) (m), 138.14 (15) (title), 186.113
13 (22) (title), 214.04 (20), 215.13 (41) (title), 218.0111 (2), 218.0114 (5) (b),
14 218.0114 (13) (a), 218.0114 (20) (c), 218.0116 (1) (am), 218.0161 (title), 218.0162,
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1 218.02 (2) (a) 1. (intro.), 218.02 (5) (a) and (b), 218.02 (6) (a) (intro.), 218.02 (6)
2 (a) 1., 218.02 (9) (title), 218.02 (9) (a) (intro.), 218.02 (9) (c), 218.04 (1) (a), 218.04
3 (2) (a) and (b), 218.04 (3) (a) 1. (intro.), 218.04 (3) (b), 218.04 (4) (a), 218.04 (4)
4 (am) 1., 218.04 (5) (a) (intro.), 1., 2., 3. and 4., 218.04 (5) (c), 218.04 (6) (title),
5 218.04 (6) (b), 218.04 (6) (c) (intro.) and 2., 218.04 (7) (title), 218.04 (7) (a), 218.04
6 (9g) (c), 218.04 (9m) (e), 218.04 (10) (b), 218.04 (13) (title), 218.05 (3) (a) 2.,
7 218.05 (3) (c), 218.05 (10) (a) and (c), 218.05 (11) (intro.), 218.05 (12) (title),
8 218.05 (12) (a) 1., 220.02 (2) (c), 220.02 (3), 220.06 (1m), 224.71 (7), 224.71 (13g)
9 (b), 224.71 (18), 224.72 (2) (am), 224.72 (7) (title), 224.725 (1), 224.725 (1r) (a)
10 5., 224.725 (1r) (c) 1., 224.725 (1r) (c) 2. d., 224.725 (2) (a), 224.725 (2) (c) (intro.)
11 and 2. (intro.), 224.725 (5) (title), 224.74 (1) (a), 224.74 (2) (b), 224.755 (3) (a),
12 (c) and (d), 224.755 (4) (b) 1., 224.77 (1) (a), 224.77 (9), 321.60 (1) (a) 12., 422.202
13 (3) (c) and 946.79 (1) (a); to repeal and recreate 138.09 (3) (b), 138.12 (3) (c),
14 138.12 (5) (a) 2., 138.14 (5) (c), chapter 217, 218.02 (5) (c), 218.04 (6) (a), 218.04
15 (10) (a) and 218.05 (14) (a); and to create 138.09 (1c) (a) 3., 4., 5. and 6., 138.09
16 (1c) (b), 138.09 (1g) (a), (b), (d), (e), (f), (g), (h) and (i), 138.09 (1m) (b) 2. c., 138.09
17 (1m) (d) and (e), 138.09 (3) (cm), 138.09 (3) (e) 3., 138.09 (3) (g), 138.09 (4) (a)
18 4., 138.09 (4) (e), 138.12 (1) (cm) and (dm), 138.12 (3) (d) 2. c., 138.12 (3) (f), (g)
19 and (h), 138.12 (5r), 138.14 (1) (br), (jm) and (m), 138.14 (4) (a) 1g., 1m. and 1r.,
20 138.14 (4) (a) 2. c., 138.14 (15) (c), 218.0101 (24m) and (37m), 218.0114 (4g) and
21 (4m), 218.0114 (17) (b), 218.0114 (21g) (b) 3., 218.0114 (25), 218.0161 (2), 218.02
22 (1) (e) and (f), 218.02 (2) (a) 2. c., 218.02 (2) (d), (e) and (f), 218.02 (6) (a) 5., 218.02
23 (9) (d), 218.04 (1) (b) 2. and 3., 218.04 (1) (em) and (h), 218.04 (3) (a) 1g., 1m. and
24 1r., 218.04 (3) (a) 2. c., 218.04 (4) (ap) and (c), 218.04 (5) (a) 6., 218.04 (9), 218.04
25 (13) (b), 218.05 (1) (e) and (f), 218.05 (3) (am) 2. c., 218.05 (3) (d), (e) and (f),
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1 218.05 (12) (a) 4., 218.05 (12) (f), 224.35 (1g), 224.35 (1m) (bm), 224.35 (1r), (6),
2 (7) and (8), 224.72 (2) (c) 2. c. and 224.725 (2) (b) 1. c. of the statutes; relating
3 to: the licensing and regulation by the Department of Financial Institutions of
4 consumer lenders, payday lenders, money transmitters, sales finance
5 companies, collection agencies, mortgage bankers and mortgage brokers,
6 adjustment service companies, community currency exchanges, and insurance
7 premium finance companies; the Nationwide Multistate Licensing System and
8 Registry; modifying and repealing rules promulgated by the Department of
9 Financial Institutions; and granting rule-making authority.
Analysis by the Legislative Reference Bureau
This bill makes changes related to the Department of Financial Institutions'
regulation of collection agencies, consumer lenders, and sellers of checks and
standardizes certain DFI administrative procedures related to these and other
licensed financial services providers.
Nationwide Multistate Licensing System and Registry
The bill authorizes DFI to utilize the Nationwide Multistate Licensing System
and Registry to administer its licensing functions, and standardizes certain
administrative procedures, with respect to the following: consumer lenders; payday
lenders; collection agencies; sales finance companies; money transmitters (currently
known as sellers of checks); mortgage bankers and mortgage brokers; adjustment
service companies; community currency exchanges; and insurance premium finance
companies (collectively, licensed financial services providers). The NMLSR is a
multistate system developed and operated for the licensing and registration of
persons in financial services industries.
Under current law, DFI participates in the NMLSR (formerly known as the
Nationwide Mortgage Licensing System and Registry) only with respect to the
licensing of mortgage loan originators and certain other functions related to
mortgage loan originators, mortgage bankers, and mortgage brokers. Current law
allows DFI to establish relationships or contracts with the NMLSR or other entities
designated by the NMLSR to collect and maintain records and process transaction
or other fees related to mortgage loan originators, mortgage bankers, and mortgage
brokers. With respect to licensing mortgage loan originators, DFI may require that
an applicant submit any form, fee, or other information directly to the NMLSR and
may authorize the NMLSR to perform functions related to the licensing of mortgage
loan originators. DFI may also provide to the NMLSR information relating to
mortgage loan originator licensing or responsibilities. DFI may also rely on the
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NMLSR to establish application or reporting deadlines for mortgage loan originators
and other requirements related to mortgage loan originators. DFI may also use the
NMLSR as an agent for requesting and distributing information, including to other
governmental agencies. In general, information that is confidential or privileged
when it is provided to the NMLSR remains confidential or privileged.
The bill expands DFI's participation in the NMLSR and requires DFI to utilize
the NMLSR with respect to the licensing and regulation of licensed financial services
providers, including requiring applicants and licensees to provide information
directly to the NMLSR and to comply with application and reporting deadlines
established by the NMLSR. These applicants and licensees must register with, and
maintain a unique identifier issued by, the NMLSR. The bill provides DFI with
authority relating to the NMLSR that is additional to the NMLSR authority
described above. DFI may require an applicant or licensee to submit identity
information, a credit report, an investigative background report, fingerprints for
identity verification or a criminal history check, or other personal or professional
history information. DFI may report to the NMLSR enforcement actions against or
violations by licensed financial services providers, which generally must be kept
confidential.
The bill standardizes the license renewal process and renewal period for
licensed financial services providers and specifies that the renewal application and
related materials or information must be submitted through the NMLSR or as
directed by DFI. The bill specifies reasons for which DFI may deny renewal of a
license and allows an expired license to be reinstated within two months after the
license expires.
The bill requires licensed financial services providers to keep current and
accurate all material information on file with DFI and the NMLSR. If the
information changes in any material respect, the licensed financial services provider
must notify DFI and the NMLSR of the change within 10 days after the change. The
bill also requires most licensed financial services providers to submit annual reports
and financial statements through the NMLSR or as directed by DFI.
Collection agencies
The bill makes various changes relating to DFI's licensing and regulation of
collection agencies and their employees.
Under current law, a person may not operate as a collection agency unless the
person is licensed as a collection agency by DFI. A “collection agency" is defined as
a person engaging in the business of collecting or receiving for payment for others
of any account, bill, or other indebtedness, but the definition also contains specific
exceptions, including those for attorneys, banks, express companies, health care
billing companies, insurers, and real estate brokers and salespersons. A collection
agency is subject to regulation by DFI and to certain laws regulating its operations.
Also under current law, a “collector" or “solicitor" is defined as a person
employed by a collection agency to collect or receive payment, or to solicit the
receiving or collecting of payment, for others of any account, bill, or other
indebtedness outside of the collection agency office or the person's home. A collector
or solicitor must hold a separate license as a collector or solicitor, which must state
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the name of the collector's or solicitor's employer. The collector or solicitor must carry
this license as a means of identification whenever the collector or solicitor is engaged
in business.
The bill makes numerous statutory changes related to the licensing and
regulation of collection agencies and their employees, including the following:
1. The bill eliminates the requirement that a collector or solicitor hold a license
separate from the license of the collection agency that employs the collector or
solicitor. The bill also changes the definition of collector or solicitor to any person
who, on behalf of a licensed collection agency, does any of the following: 1) collects,
or attempts to collect, for others any account, bill, or other indebtedness; 2) receives
payment for others of any account, bill, or other indebtedness; or 3) solicits any
account, bill, or other indebtedness for collection by the collection agency. In
addition, the bill specifies that a collection agency is responsible for, and must
supervise the acts of, its collectors and solicitors and any other person who acts on
its behalf.
2. The bill changes the definition of a collection agency by adding exceptions
for mortgage bankers licensed by DFI and credit unions and by deleting the
exception for express companies. Accordingly, under the bill, licensed mortgage
bankers and credit unions are not regulated as collection agencies.
3. The bill specifies that a separate collection agency license is required for each
place of business maintained by the collection agency from which the collection
agency or its collectors or solicitors engage in the business of collecting or receiving
payments for others of any account, bill, or other indebtedness of a person located in
this state. The bill also specifies that, if an employee of a licensed collection agency
works from the employee's residence, a collection agency license is not required for
the employee's residence, but the employee's resident address may not be presented
to the public as a location or office of the collection agency and collection agency
records may not be maintained at the employee's residence.
4. As described above, the bill requires DFI to use the NMLSR in the licensing
and regulation of collection agencies. The bill also modifies license renewal and
reporting procedures for collection agencies to conform to the standardized
procedures applicable to all licensed financial services providers that use the
NMLSR. This change includes changing the collection agency licensing year to a
calendar year.
5. The bill specifies that the annual license fee applies for each place of business
that is required to be separately licensed. The bill also specifies that if an applicant
for an initial collection agency license fails to complete the application within 60 days
after DFI provides written notice that it is incomplete, the application is considered
abandoned, although the applicant may submit a new application.
6. The bill expands the reasons that DFI may suspend or revoke a collection
agency license to include the following: the collection agency has violated DFI's rules
related to collection agencies; and the collection agency has made a material
misstatement, or knowingly omitted a material fact, in an application for a license
or in information furnished to DFI or the NMLSR.
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7. The bill specifies that a collection agency must deposit and maintain in its
trust account money due to a claimant or forwarder within 48 hours after collection,
while current law requires the money to be deposited promptly.
8. The bill specifies that a collection agency may forward printed collection
notices to a debtor that are unsigned.
9. The bill creates statutory provisions relating to collectors or solicitors that
are similar to provisions that currently appear in DFI's rules. A collector or solicitor
may use an alias in oral or written communications with a debtor, but the alias must
include a first and last name and the collector or solicitor may not have more than
one alias. A collector or solicitor may only change an alias for good cause and if DFI
is first notified of the change.
10. The bill modifies current law provisions relating to a collection agency's
change of business location. The bill requires a collection agency to give written
notice to DFI at least 30 days prior to changing its business location, but deletes the
requirement that the collection agency obtain approval from DFI.
11. The bill gives DFI discretion to determine whether to report to the district
attorney for prosecution violations of law relating to a collection agency.
The bill also modifies and repeals various DFI rules related to collection
agencies, including the following:
1. The bill prohibits, with an exception, a licensed collection agency from
contracting for or assessing a fee, commission, or other charge to a creditor for
returning any account to the creditor that is not in the actual process of collection.
2. The bill requires a licensed collection agency's trust checking account to be
identified as a “trust account.” For the purpose of determining that funds are
maintained in a trust account sufficient to pay creditors or forwarders, amounts
collected by a third party, but not yet deposited into the trust account, are not
considered trust funds. Third-party payment processors may not be given authority
to withdraw funds from a collection agency's trust account.
3. The bill requires a licensed collection agency, in the records that it must keep
at its office, to maintain a list of all collectors and solicitors employed by the collection
agency that includes specified information about each collector or solicitor.
4. The bill includes the following requirements related to a licensed collection
agency's use of a trade name (commonly referred to as a “doing business as” or “d/b/a”
designation): 1) a licensed collection agency may not conduct business under a name
other than a name listed on its license; 2) before using a trade name, the collection
agency must obtain approval of the use of the trade name from DFI; and 3) the trade
name may not include a corporate identifier.
5. The bill specifies that, in attempting to collect an alleged account, bill, or
other indebtedness, a licensed collection agency may not violate any federal or state
statute, rule, or regulation that relates to practice as a collection agency.
6. The bill defines “terminated,” for purposes related to the termination of a
collection agency license, to include a license that is surrendered, revoked, or
expired.
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7. The bill specifies that a collection agency must enter into a written
a