Idaho Collection Agency Act
Chapter 22. Collection Agencies
Title 26. Banks and Banking
Chapter 22. Collection Agencies
§ 26-2221. Short title
This act shall be known as the "Idaho Collection Agency
Act."
§ 26-2222. Definitions
As used in this chapter:
(1) "Agent" means any person who is compensated on a
commission basis or by salary, or both, by any permittee and who either
contacts debtors or creditors in connection with the collection agency business
of the permittee.
(2) "Business funds" means all moneys belonging to or
due the permittee in connection with the operation of a collection agency
business.
(3) "Collection agency," "collection bureau"
or "collection office" shall be a person who engages in any of the
activities enumerated in section 26-2223, Idaho
Code.
(4) "Director" means the director of the department of
finance.
(5) "Creditor" means any person who transfers to a
permittee accounts due and owing for collection purposes.
(6) "Creditors' account" means all funds due and owing a
creditor within the definition of this chapter.
(7) "Net collections" means all funds that are due to
creditors from the permittee pursuant to the contract between the permittee and
creditor, or permittee and debtor without taking into account any offset or
funds due from the creditor to the permittee, because of the creditor having
collected any part of the account due, plus all funds that the permittee agreed
to return to debtors or that were not to be applied to debts.
(8)
"Permittee" means a person who has a permit to do business as a
collection agency, or debt counselor, or credit counselor in
(9) "Person" means any permittee, agent, solicitor,
individual, corporation, association, copartnership, trust, company or
unincorporated organization.
(10) "Debt counselor" means any person engaged in any of
the activities enumerated in subsection (6) of section
26-2223, Idaho Code.
(11) "Credit counselor" means any person engaged in any
of the activities enumerated in subsection (6) or (7) of
section 26-2223, Idaho Code. No credit counselor shall be granted a
permit pursuant to this chapter unless qualified as an exempt organization
under section 501(c)(3) of the
Internal Revenue Code [FN1].
[FN1] 26 U.S.C.A. § 501.
§ 26-2223. Collection
agency, debt counselor, or credit counselor permits
No person shall without complying with the terms of this chapter
and obtaining a permit from the director:
(1) Operate as a collection agency, collection bureau, collection
office, debt counselor, or credit counselor in this state.
(2) Engage, either directly or indirectly in this state in the
business of collecting or receiving payment for others of any account, bill,
claim or other indebtedness.
(3) Solicit or advertise for the right to collect or receive
payment for another of any account, bill, claim or other indebtedness.
(4) Sell or otherwise distribute any system or systems of collection
letters and similar printed matter where the name of any person other than the
particular creditor to whom the debt is owed appears.
(5) Engage in any activity which indicates, directly or
indirectly, that a third party may be involved in effecting any collections.
(6) Engage or offer to engage in the business of receiving money
from debtors for application to or payment of or prorating of any creditor or
creditors of such debtor.
(7) Engage or offer to engage in the business of providing
counseling or other services to debtors in the management of their debts, and
contracting with the debtor to effect the adjustment, compromise, or discharge
of any account, note or other indebtedness of the debtor.
(8) Engage or offer to
engage in the business of credit repair which includes obtaining, for others,
improvements in credit records, extensions of credit for clients, or causing
the removal of documents from the credit records of a client maintained by a
credit reporting agency.
(9) Engage or offer to engage in this state, directly or
indirectly, in the business of collecting any form of indebtedness for that
person's own account if the indebtedness was acquired from another person and
if the indebtedness was either delinquent or in default at the time it was
acquired.
§ 26-2223A. Office to
be maintained in state--Designation of responsible person
Every permittee under this chapter must maintain an office in the
state of Idaho, staffed with at least one (1) natural person who passed the
examination required in section 26-2229, Idaho
Code, or is exempt from the provisions of this chapter pursuant to section 26-2239(1), Idaho
Code, at each branch or facility. Each permittee must have a listed
§ 26-2224. Form of
application
Every applicant for such permit shall file in the department of
finance an application in form to be prescribed by the director setting forth:
(1) The name of the applicant if an individual; if the applicant
is a corporation a list of its officers and directors and their addresses; if
the applicant is a partnership a list of the partners and their addresses; or
if the applicant is a limited liability company a list of its members or
managers and their addresses. Every corporation shall designate and appoint one
(1) or more of its officers or employees, every partnership shall designate and
appoint one (1) or more of its partners, and every limited liability company
shall designate and appoint one (1) or more of its members or managers who
shall submit to the examination hereinafter required. No permit shall be issued
to any corporation, partnership or limited liability company unless and until
the persons so designated shall submit to and pass the examination required by
this chapter.
(2) The location of the principal office or place of business of
the applicant.
(3) Other names, if any, by which the applicant conducts, engages
in or solicits business.
(4) The names of all persons and organizations with which the
applicant is affiliated in such business, and the location of the principal
office or place of business of each such affiliation.
(5) A complete description of the business to be conducted, or plan
of operation contemplated, by the applicant in this state.
(6) A list of all papers and filings used by the applicant which
must accompany the application and be identified as exhibits by number.
(7) A financial statement showing the applicant to have a
financial net worth of not less than two thousand five hundred dollars
($2,500), which statement shall be subject to disclosure according to chapter
3, title 9, Idaho Code. The financial statement shall specify assets and
liabilities, providing detailed reference to each item listed to inform the
director of the nature and extent of such assets and liabilities. This
financial statement shall be signed by the applicant or its proper agent. The
net worth shall not include any notes, accounts, bills, and judgments held for
collection by the applicant nor shall it include good will or other assets the
value of which is speculative and not susceptible to prompt liquidation.
(8) Such other information concerning the applicant's business as
the director may reasonably require. Such application shall be executed and
verified by the applicant or applicants personally, or by an individual
associated with the applicant as designated by the director.
§ 26-2225. Information
and materials required with application--Examination fee--Consent to service
Such application shall be accompanied by:
(1) Complete copies of all literature and circulars issued or
circulated by or on behalf of the applicant in soliciting or advertising for
business including circular and form letters.
(2) Complete forms of all contracts designed for execution by
persons placing any account, bill, claim or other indebtedness in the hands of
the applicant for collection.
(3) Complete forms of all contracts and assignments designed for
execution by debtors making any assignments to or placing any property with the
applicant for the purpose of paying the creditors of such
debtors.
(4) Complete forms of all contracts and releases designed for
execution by creditors to whom payments are made or are to be made by the
applicant.
(5) If the applicant is a corporation or association, a copy of
its articles of incorporation or association, duly authenticated.
(6) A list of the names and addresses of all agents who will
contact debtors or creditors or solicit business for the applicant in this
state.
(7) The names and addresses of all directors and officers, if the
applicant is a corporation or association; and the names of the members, if the
applicant is an unincorporated company, a firm or copartnership.
(8) An agreement executed
by the applicant stipulating that no literature or form of contract not
submitted with the application will be issued, circulated or used by the
applicant prior to the filing thereof with the director.
(9) An initial examination fee as fixed by the director, but not
to exceed one hundred dollars ($100), except that no examination fee need be
paid by a nonprofit corporation or association conducting credit counseling or
debt prorating activities.
(10) Complete copies of all literature, circulars, contracts,
and/or other related material to be circulated or distributed by the permit
holder to a debtor.
(11) An irrevocable consent to service executed by the applicant
appointing the director and his successors in office to be attorney of the
applicant to receive service of any lawful process in any civil suit, action,
or proceeding against the applicant which arises under this act or any rule or
order hereunder. After the consent has been filed, any
service hereunder shall have the same force and validity as if personally
served on a person filing the consent. A person who has filed such a consent in
connection with a previous registration need not file another. Service may be
made by leaving a copy of the process in the office of the director.
§ 26-2226. False or
fraudulent debt reduction and elimination practices
(1) No person shall obtain or attempt to obtain a fee,
compensation or consideration from a person through a false or fraudulent
representation or statement that a debt, loan, or extension of credit could or
would be eliminated, reduced or substituted, if the representation or statement
is false or misleading or has the tendency or capacity to be misleading, or if
the person making the representation or statement does not have sufficient
information upon which a reasonable belief in the truth of the representation
or statement could be based.
(2)(a) Whenever it appears to the director that a person has
violated subsection (1) of this section, the director shall have the powers and
remedies set forth in sections 67-2754 and 67-2755, Idaho Code,
as well as the powers and remedies found in this chapter, as to any such violation.
(b) Any person who violates subsection (1) of this section shall be subject to the criminal proceedings and penalties set forth in sections 67-2757, 67- 2758 and 67-2759, Idaho Code, as well as the criminal proceedings and penalties provided in this chapter.
§ 26-2227. Repealed
§ 26-2228. Powers of
the director
The director shall have the power to provide the manner and method
for conducting examinations. Applications for examination shall be filed with
the director at least ten (10) days prior to the examination date.
The examination shall be uniformly given, may be written or oral
or a combination of both and shall be practical in nature. The examination may
include questions on bookkeeping, credit adjusting, business law, collection
procedure, business ethics, agency, debtor and creditor relationship, trust
funds, creditors' funds, business funds, fiduciary relationships, and the
provisions of this act and the rules duly issued by the director pursuant to
this act, and such other subject matter as the director by rule may specify.
The examination shall be given twice each year or at such more frequent
intervals as the director may direct.
§ 26-2229.
Examination--Permit
(1) The director shall examine each application for a permit and
accompanying papers and investigate the qualifications of the applicant and if
he finds therefrom that the same are in proper form, that the literature
proposed to be circulated does not tend to conceal or misrepresent any fact to
the detriment of any person dealing with the applicant, that the contract or
contracts proposed to be entered into for the collection or payment or
prorating of accounts, bills, claims or other indebtedness by the applicant, or
prorating or receiving money for payment to creditors are equitable, fair and
reasonable, and that the applicant meets all other requirements and
qualifications of this act, he shall examine the applicant if an individual, or
the designated officer or officers or employees of any corporation and the designated
member or members of any partnership, in the manner described in section 26-2225, Idaho
Code, and if such applicant or designee passes a satisfactory
examination, he shall cause a permit to be issued authorizing the applicant to
conduct such a business in this state subject to the provisions of this act,
until the fifteenth day of March next thereafter.
(2) If the director finds that the applicant does not qualify
under the provisions of this act, the application shall be denied. If he finds
the applicant is qualified he must issue a permit upon the filing of the bonds
required by this act and the payment of an annual permit fee as fixed by the
director, but not to exceed fifty dollars ($50), except that no permit fee need
be paid by a nonprofit corporation or association conducting credit counseling
or debt prorating activities.
(3) Contracts between collection agencies and clients shall be in
writing. No collection contract shall be deemed equitable, fair or reasonable
within the meaning of this section which in substance either:
(a) Permits the applicant to retain any sums due the creditor on any account, bill, claim or other indebtedness collected for him by the applicant on account of, or as a setoff against, any fee, commission, charge, expense or compensation claimed, other than the regular collection fees or commissions, to be due from such creditor on any other account whatever.
(b) Penalizes the creditor for
failure to produce evidence in support of any account, bill, claim or item of
indebtedness placed with the applicant for collection in addition to that
delivered upon the execution of such contract.
(c) Penalizes such creditor for any unintentional error, mistake
or omission in furnishing to the applicant the correct name or address of any
debtor.
(d) Stipulates, directly or indirectly, for the payment of any
fee, commission or compensation in excess of fifty per cent (50%) of the amount
actually collected on any account, bill, claim or other indebtedness entrusted
to the applicant for collection, provided, however, that in the case of interest
collected by a permittee, the creditor and the permittee by agreement between
them may provide for division of such interest between them without such
percentage limitation; and provided further that in the case of collection of
checks dishonored by nonacceptance or nonpayment the creditor and the permittee
by written agreement between them may provide, in place of a percentage fee,
for the payment of a set dollar amount collection fee not to exceed the amount
provided in section 28-22-105, Idaho Code, which shall not be subject to
the fifty per cent (50%) limitation. Collection agreements to proceed under section 1-2301A, Idaho Code, shall be subject to the fifty
per cent (50%) limitation.
(4) A permit holder,
engaging in the business of receiving money from debtors for application to or
payment or prorating the account or accounts of any creditor or creditors of
such debtor, for compensation or otherwise, or in the business of acting as the
assignee for the benefit of creditors as a primary or secondary object, shall
not take or receive for services performed by such permit holder for any one
(1) person more than fifteen per cent (15%) of the amount received by it at any
one (1) time from or on behalf of that person for payment or prorating to
creditors and no other charges shall be made or received for any such service.
§ 26-2229A. Requirement
of fair, open and honest dealing
(1) Every permittee, foreign permittee and agent shall deal
openly, fairly, and honestly without deception in the conduct of the collection
agency business. When not inconsistent with the statutes of this state, the
provisions of the federal fair debt collection practices act, 15 U.S.C. section 1692,
et seq., as amended, may be enforced by the director against agents, permittees
and foreign permittees under the provisions of this chapter.
(2) In any and every instance where the permittee has a managerial
or financial interest in the creditor, or where the creditor has a managerial
or financial interest in the permittee, disclosure of such interest must be
made on each and every contact with a debtor in seeking to make a collection of
any account, claim, or other indebtedness where such interest or relationship
exists between creditor and permittee.
(3) No permittee,
foreign permittee, or agent shall collect or attempt to collect any interest or
other charges, fees, or expenses incidental to the principal obligation unless
such interest or incidental fees, charges, or expenses are:
(a) Expressly authorized by statute;
(b) Allowed by court rule
against the debtor;
(c) Have been judicially
determined; or
(d) Are provided for in a
written form agreement, to be signed by both the debtor and the permittee, and
which has the prior approval of the director with respect to the terms of the
agreement and amounts of the fees, interest, charges and expenses.
(4) No person shall sell, distribute or make use of collection
letters, demand forms or other printed matter which are made similar to or
resemble governmental forms or documents, or legal forms used in civil or
criminal proceedings.
(5) No person shall use any trade name, address, insignia,
picture, emblem or any other means which creates any
impression that such person is connected with or is an agency of government.
§ 26-2230. Branch
offices
(1) The director may authorize a permittee, upon request, to
conduct collection activities authorized in this chapter at additional
locations. The additional locations shall be considered branches of the
permittee. The director shall be informed of the opening and closing of all
branch locations operated by permittees.
(2) The director may authorize a permittee, upon written request,
to conduct limited collection activities at locations other than the principal
location of the permittee or branches. The facilities may be at the domiciles
of the agents employed by the permit holder. Collection activities at
facilities shall be limited to telecommunications with creditors, clients,
debtors, and the permittee's offices and branches. The director shall be
informed of the opening and closing of all facility locations operated by
permittees.
§ 26-2231. Renewal of
permit
Upon application postmarked on or before the fifteenth day of
March of each year, the holder of any permit issued under the provisions of
this chapter shall be entitled to have such permit renewed for the succeeding
calendar year upon payment of the annual permit fee as fixed by the director,
but not to exceed fifty dollars ($50.00), compliance with the bond requirements
of this chapter, the filing of a financial statement in the form required by section 26-2224(7), Idaho
Code, showing a net worth of at least two thousand five hundred
dollars ($2,500) for each place of business for which a permit is sought, filing
of all other documents required by section 26-2224, Idaho
Code, and approval by the director of all literature to be employed
by the permittee during the course of the business year, except no annual
permit renewal fee need be paid by a nonprofit corporation or association
conducting credit counseling or debt prorating activities.
§ 26-2232. Bonds
Upon approval of the application and prior to the issuance of the
permit the applicant must file in the department of finance two (2) bonds. Both
bonds shall be in a form provided by the attorney general of this state, and
shall be executed by the applicant as principal and by some surety company
authorized to do business in this state as surety, and shall be for the term of
any permit issued to the applicant. Each permittee shall be required to have
the two (2) bonds for each permit as hereinafter provided. In lieu of the bonds
required by this section, a certificate of deposit issued by an Idaho bank and
made payable to the director may be provided to the director in the same
principal amount as required for bonds. The interest on the certificate of
deposit shall be payable to the permittee. The certificate of deposit shall be
maintained at all times during which the permittee is authorized to do business
under Idaho law, and must provide that it will remain in effect for at least
three (3) years following discontinuance of operations, unless released earlier
by the director when all statutory requirements have been met.
(a) A bond shall be
executed to the state of
Upon renewal of any permit, the permittee shall supply the
director with a tatement of the preceding year's net
collections. The amount of the bond upon renewal shall be in the amount of
fifteen thousand dollars ($15,000), or two (2) times the average monthly net
collections for the preceding year computed to the next highest one thousand
dollars ($1,000), whichever sum is greater, up to a maximum of one hundred
thousand dollars ($100,000).
(b) A bond shall be executed
to the state of Idaho in the sum of two thousand dollars ($2,000), which shall
be limited to the indemnification of the department of finance for any and all
expenses incurred as a result of investigations, administrative proceedings,
and prosecutions which shall be instituted by the director against a permittee
or licensee pursuant to this act. The bond shall be continuous in form and
remain in full force and effect and run concurrently with the permit period and
any renewal thereof. The surety may cancel the bond provided that the surety
shall in such event provide the permittee and the director with notice thirty
(30) days prior to cancelation of said bond. Such notice shall be registered or
certified mail with request for a return receipt and addressed to the permittee
at its main office and to the director. In no event shall the liability of the
surety for any and all claims against the bond exceed the face amount of such
bond.
§ 26-2232A. Alternate
Bonding
(1) A debt counselor or credit counselor which holds a valid
permit under this chapter and is engaged in the activities described in section 26-2223(6) or 26-2223(7), Idaho Code,
may, upon approval of the director of the department of finance, supply the
director, upon renewal of its permit, in lieu of the bond required in section 26-2232(a), Idaho
Code, a bond in the minimum amount of ten thousand dollars ($10,000)
or two (2) times the average monthly net of unremitted funds received from
debtors for the preceding year, computed to the next highest one thousand
dollars ($1,000), whichever is greater.
(2) Such bonds shall be subject to the same conditions and
requirements as the bond set forth in section 26-2232(a), Idaho
Code, and shall be in addition to the bond required by section 26-2232(b), Idaho
Code.
(3) Application for approval by the director of the department of
finance shall be on a form provided by the director and
shall include such information as the director shall require.
(4) A credit counselor applicant shall furnish with the
application a certified copy of applicant's determination as an exempt
corporation under section 501(c)(3) of the
Internal Revenue Code, made by the district director of internal
revenue, or in the subsequent renewal of its permit and bond, evidence of
continuance of its exempt determination by the district director of internal
revenue.
(5) Upon approval by the director of the department of finance of
the alternate bond and so long thereafter as the credit counselor or debt
counselor service shall continue operations under the alternate bond herein
provided for, it shall furnish to the director of the department of finance,
not later than the fifteenth day of March of each year, a statement containing
the following information:
(a) The amount of net unremitted funds received from debtors it held on the first day of each calendar month which was collected or received in any prior month or months showing the exact month received and the amount for such month.
(b) The amount of money
received during each calendar month from debtors.
(c) The amount of money
remitted to creditors or returned to debtors during each calendar month.
(d) The moneys, fees, or
commissions retained from the moneys received during each calendar month.
(e) The amount of net
unremitted funds due creditors or debtors at the end of each calendar month.
(6) For the purposes of this section money or moneys remitted
shall mean money which has actually been conveyed or transferred to the
creditor or debtor or his designated agent by physical transfer of cash or by
certified or cashier's check or other means so that actual ownership of such
funds shall have passed to the creditor or debtor or his agent and no right or
interest shall remain in the credit counseling service. A check or bank draft
issued but not actually paid, without recourse shall not constitute a
remittance.
(7) At any time that the director of the department of finance
shall deem that the alternate bond provided for in this
section shall be inadequate he may withdraw and cancel approval for the
"in lieu" bond and require the bond provided in section 26-2232(a), Idaho
Code, or cancel or suspend the permit of the consumer credit
counseling service as provided in section 26-2236, Idaho
Code.
§ 26-2233. Permittee
accounts required
A permittee shall in its own name:
(1) Establish and maintain a separate trust account for deposit
and remittance of creditors' funds in a financial institution, the deposits of
which are insured by the federal deposit insurance corporation.
(2) Establish and maintain a separate business account for the
business funds and moneys in a financial institution, the deposits of which are
insured by the federal deposit insurance corporation.
§ 26-2234.
Investigations, records and payment of funds
(1) The director or his duly authorized representatives may make
an annual examination, or more frequently in the director's discretion, of the
place of business of each permittee and foreign permittee and for that purpose
the director shall have free access to the offices and places of business,
books, creditors' accounts, trust accounts, business accounts, records, papers,
files, safes and vaults of all such permittees.
(2) The director may, upon his own motion, and shall, upon the
sworn complaint in writing of any person, investigate the action of any person
or persons claimed to have violated the provisions of this chapter, and for
that purpose the director shall have free access to the offices and places of
business, books, creditors' accounts, trust accounts, business accounts,
records, papers, files, safes and vaults of all such persons.
(3) Every permittee and
foreign permittee shall execute to the director an agreement of consent to
examination of any and all bank accounts of the permittee providing the
director with authority to make such examination at any time the director, in
his discretion, deems it to be in the public interest.
(4) The cost of examination for the first annual examination each
year and any investigation shall be paid to the director by each permittee so
examined or investigated and the director may maintain an action for the
recovery of such costs against the permittee or against the surety providing
the bond to indemnify the state for such expenditures as required by this
chapter. The cost shall be fixed annually by the director, but shall not exceed
twenty-five dollars ($25.00) per examination hour.
(5) Each permittee shall acknowledge in writing each account
received for collection and shall maintain a record of such account, make a
permanent record of all sums collected by him and of all disbursements made by
him. Every permittee shall keep and preserve all records relating to accounts
received for collection, collections, receipts, and disposal or disbursement of
all creditors' funds for a period of five (5) years after
the final disposition of any account. It shall be unlawful for any person to
intentionally make any false entry, omit to make a necessary entry, mutilate,
secrete away, destroy or otherwise dispose of any record mentioned in this
subsection, provided a record may be disposed of after the five (5) year period
heretofore provided.
(6) Every permittee shall, within thirty (30) days after the close
of each calendar month, pay to his creditors the net proceeds of all
collections made by the permittee during said calendar month. Each permittee
shall report to the creditor all collections made by him and/or any payments
made to the creditor within thirty (30) days after the close of each calendar
month.
(7) Every permittee shall maintain his books and records in
accordance with generally accepted accounting practices subject to such rules
and regulations as adopted by the director.
(8) The director, may impound the creditors' accounts, or trust
accounts of any permittee if it shall be deemed in the
general public interest.
§ 26-2235. Denial,
suspension, revocation of permit
(1) An application for a permit may be denied and, after notice
and hearing, a permit may be suspended or revoked, by the director if he finds
that the holder of or the applicant for, or any member or manager of an
applicant or holder, or any officer or manager of an applicant or holder of
such permit:
(a) has violated any provision of this chapter or any rule or order of the director authorized under this chapter; or
(b) is not legally qualified to do business in this state; or
(c) has violated any contract or agreement of a type mentioned in
this chapter; or
(d) has failed, refused, neglected, on demand, to pay or remit to
any client the agreed portion of any sum collected by the permittee on any
bill, claim, account or other indebtedness entrusted to such permittee for
collection; or
(e) has failed to return to a
debtor an amount that was not to be paid on his debts; or
(f) has made a material
misstatement in the application for such permit or renewal;
or
(g) has obtained or attempted
to obtain a permit or renewal by fraud or misrepresentation; or
(h) has misappropriated or
converted to his own use or illegally withheld moneys collected or held for any
other person; or
(i) has without properly
qualifying as herein provided represented himself as a permittee for the
purpose of soliciting for or representing any business covered in this chapter;
or
(j) has been convicted of,
found guilty of, pled guilty to, or has received a withheld judgment by a court
of competent jurisdiction for forgery, embezzlement, fraud, obtaining money
under false pretenses, larceny, extortion, conspiracy to defraud or other like
offense, any theft offense, a crime involving moral turpitude, or violating any
provision of this chapter or is currently disbarred from the practice of law in
any state; provided, the director may, in his discretion, issue a permit to any
person convicted of any of the above enumerated crimes providing a period of
five (5) years has elapsed from the date of his conviction, finding of guilty,
plea of guilty, or withheld judgment; or
(k) has had a permit revoked,
canceled, or denied; or
(l) owes outstanding, unpaid,
delinquent and undisputed accounts or judgments.
(2) The director, after notice and hearing, may impose a civil
penalty of not more than one thousand dollars ($1,000) for each violation upon
any permittee found to have violated any provision of this chapter.
(3) Permits shall be issued hereunder only to persons who are, and
to partnerships, firms, companies, and associations whose members and managers
are, and to corporations whose managers are over twenty-one (21) years of age.
(4) The director may, after notice and hearing, impose any
sanction authorized by this section on a permit holder if the director finds
that an agent of the permit holder has violated any provision of section 26-2229A, Idaho
Code.
(5) The director may, in his discretion, and by an order issued in
accordance with chapter 52, title 67, Idaho Code, prohibit permit holders from
utilizing an individual as an agent if the individual has participated in a
violation of this act, or any similar statute of another state.
§ 26-2236. Subpoenas
The director shall have the power to issue subpoenas and bring
before him any person, book, or writing in this state, to swear witnesses and
to take the testimony of any person by deposition, with the same fees and
mileage and in the same manner as prescribed by law in judicial procedure in
district courts of this state in civil cases. Any party to a proposed
revocation or suspension of a permit shall have the right of subpoena to compel
the attendance of witnesses and produce all books and writing on his behalf. In
case any witness shall fail or refuse to comply with a subpoena to appear
before the director, the clerk of the district court of the county in which the
administrative proceedings are held shall, upon demand of the director, issue a
subpoena reciting the demand therefor and summoning the witness to appear and
testify at a time and place fixed; and violation of such subpoena or
disobedience thereto shall be deemed and punished as a violation of any other
subpoena issued from the district court. Any revocation or suspension of any
permit or license provided for by this chapter shall be governed by chapter 52,
title 67, Idaho Code.
§ 26-2237.
Fees--Disposition of funds
All fees provided for in this chapter shall be paid to the director
and by him remitted to the state treasurer pursuant to section 59-1014, Idaho
Code, and all such funds shall be deposited to the credit of the
finance administrative account in the state dedicated fund.
§ 26-2238.
Violations--Penalties
Any person who shall do business within the state of Idaho as
defined in this act, without a permit, or any permit holder who fails to
establish and maintain a separate trust account for such creditors' funds for
each permit which he holds, or fails to make and keep the records required by
this act, shall be guilty of a felony and punishable by a fine not exceeding
five thousand dollars ($5,000) or by imprisonment in the state penitentiary for
not more than five (5) years, or both, and any person who shall fail to comply
with any of the other provisions of this act shall be guilty of a misdemeanor.
§ 26-2239. Exemptions
The provisions of this chapter shall not apply to the following:
(1) Any attorney-at-law duly authorized to practice in this state;
(2) Any regulated lender as defined in section 28-41-301(37),
Idaho Code, nor any subsidiary, affiliate or agent of such a
regulated lender to the extent that the subsidiary, affiliate or agent collects
for the regulated lender;
(3) Any trust company authorized to do business in this state;
(4) Any federal, state or local governmental agency or
instrumentality;
(5) Any real estate broker or real estate salesman licensed under
the laws of and residing within this state when engaged in the regular practice
of a real estate business;
(6) Any abstract and title companies doing an escrow business;
(7) Any mortgage company to the extent that such mortgage company
is engaged in the regular business of a mortgage company as defined in section 26-2802, Idaho
Code;
(8) Any court appointed trustee, receiver or conservator;
(9) Any telephone corporation, as defined in subsection (10) of section 62- 603, Idaho
Code, whose initial request for payment on behalf of such telephone
corporation or on behalf of another person is made by the telephone corporation as a part of regular telecommunications billings to its
customers and at a time before the account, bill, claim or other indebtedness
becomes past due or delinquent;
(10) A person while acting as a debt collector for another person,
both of whom are related by common ownership or affiliated by corporate
control, if the person acting as a debt collector does so only for persons to
whom he is so related or affiliated and if the principal business of such
person is not the collection of debts.
§ 26-2240. Agent
identification--Quarterly notice--Fee
Each permit holder shall, with its initial application and each
annual renewal, file with the director a list of all agents including the name
of the agent and any other identifying information the director may require. A
fee of twenty dollars ($20.00) for each listed agent shall accompany the list.
The director shall be notified in writing of any additions to the agent list no
less often than every calendar quarter. A fee of twenty dollars ($20.00) shall
be filed with the director for each additionally identified agent in the
quarterly notification of additions to a permit holder's agent list. An agent
is not required to be listed, nor the fee paid therefor, unless the agent acted
for the permit holder for more than five (5) business days.
§§ 26-2241, 26-2242.
Repealed by S.L. 1997, ch. 370, § 9
§§ 26-2241, 26-2242.
Repealed by S.L. 1997, ch. 370, § 9
§ 26-2243. Property
right in accounts--Practice of law prohibited
A permit holder shall have a property right in any account
assigned to it for collection; provided, however, no right herein granted shall
authorize such permit holder to engage in the practice of law.
§ 26-2244. Cease and
desist orders, penalty
(1) Whenever it appears to the director that it is in the public
interest, he may order any person to cease and desist from acts, practices, or
omissions which constitute a violation of this chapter.
(2) Whenever, after notice and a hearing, the director finds that
any person has violated any provision of this chapter, the director may order
the person to cease and desist from acts, practices or omissions which
constitute a violation of this chapter and:
(a) Impose a civil penalty of not more than two thousand five hundred dollars ($2,500) for each violation upon any person found to have violated any provision of this chapter;
(b) Issue an order restoring to any person in interest any
consideration that may have been acquired or transferred in violation of this
chapter; or
(c) Issue an order that the person violating this chapter pay
costs, which in the discretion of the director may include
an amount representing reasonable attorney's fees and reimbursement for
investigative efforts.
§ 26-2245. Director's
power to enjoin violations
(1) Whenever it appears to the director that any person, or
employee or agent thereof, has engaged in or is about to engage in any act or
practice or omission constituting a violation of any provision of this chapter,
or any rule or order hereunder, he may in his discretion bring an action in any
court of competent jurisdiction to enjoin any such acts or practices and to
enforce compliance with this chapter or any rules hereunder. Upon a showing
that a person, or employee or agent of any person, has engaged in or is about
to engage in an act or practice constituting a violation of this chapter or any
rule or order hereunder, a permanent or temporary injunction, or restraining
order shall be granted and a receiver or conservator may be appointed for the
defendant's assets. The director shall not be required to furnish bond.
(2) In addition to the foregoing, the director, in his discretion
and upon a showing in any court of competent jurisdiction that a person has
violated the provisions of this chapter or rule or order hereunder, may be
granted the following additional remedies:
(a) An order restoring to any person in interest any consideration that may have been acquired or transferred in violation of this chapter;
(b) An order that the person violating this chapter, rule or order
hereunder, pay a civil penalty to the department in an amount not to exceed two
thousand five hundred dollars ($2,500) for each violation;
(c) An order allowing the director to recover costs, which in the
discretion of the court may include an amount representing reasonable
attorney's fees and reimbursement for investigative efforts;
(d) An order granting other appropriate remedies upon a proper
showing.
§ 26-2246.
Discontinuance of operations--Requirements
(1) Before discontinuance of operations as a collection agency
under the terms of this act, every permittee shall furnish the director with
proof in a form to be determined by the director that:
(a) Proper remittance
has been made to all creditors or claimants of money collected.
(b) All accounts have
been returned to the creditors and certification to that effect has been
provided to the director.
(c) All valuable papers
and assignments of judgment given to the permittee by the creditor [creditors]
in connection with claims have been returned to the creditor [creditors].
(d) All judgments
obtained by the collection agency against debtors, in the agency's name, have
been returned and assigned to the creditors.
(2) Any permittee discontinuing doing business as a collection
agency shall maintain the bonds required of such permittee to conduct a
collection agency business until a final accounting has been made to the
director and approved by him.
§ 26-2247. Institution
of criminal proceedings
The director may refer such evidence as may be available
concerning violations of this act or of any rule or order hereunder to the
attorney general or the proper prosecuting attorney, either of whom may in his
discretion, with or without such a reference, institute appropriate criminal
proceedings under this act.
§ 26-2248.
Administration of act
The administration of the provisions of this act shall be under
the general supervision and control of the director, subject to chapter 52,
title 67, Idaho Code. The director may from time to time make, amend, and
rescind such rules, regulations and forms necessary to carry out the provisions
of this act. No rule, regulation or form may be made unless the director finds
that the action is necessary or appropriate for the public interest or for the
protection of creditors and debtors consistent with the purpose of this act.
§ 26-2249. Judicial
review of final orders of director
Any person aggrieved by a final order of the director may obtain
judicial review of that order pursuant to the provisions of chapter 52, title
67, Idaho Code.
§ 26-2250. Foreign
permittees
(1) Notwithstanding any other provision of this chapter, if a
permittee meets the conditions of subsection (2) of this section, it shall be
exempt, as a foreign permittee, from the requirements that it maintain an agent
or office in this state.
(2) To be a foreign permittee, a collection agency must:
(a) Be qualified to do business
in the state of
(b) Be the holder of a valid
permit or license to do business as a collection agency in the state where it
has its principal place of business, or holds a license in another state if the
state where its principal place of business is located does not require
licenses to operate collection agencies;
(c) Certify in its application
for a permit and each annual renewal that it will not solicit any creditor
client which has its principal place of business in this state;
(d)
Maintain a bond substantially similar, as determined by the director, to the
bond required by subsection (b) of section 26-2232, Idaho Code;
(e) Maintain no agent or place
of business in this state;
(f) Conduct its business in
this state exclusively by mail or telecommunications; and
(g) Maintain its books and
records in accordance with generally accepted accounting practices. The
director or his duly authorized representatives may make an annual examination,
or more frequent in the director's discretion, of the principal place of
business of a foreign permittee outside the state of Idaho, and for that
purpose the director shall have free access to the offices and places of
business, books, creditors' accounts, trust accounts, business accounts,
records, papers, files, safes and vaults of all such permittees. The actual
cost of examination for the first annual examination each year and any
investigation shall be paid to the director by each permittee so examined or
investigated. The director may maintain an action for the recovery of such
costs against the foreign permittee.
(3) The director shall examine each application for a foreign
permit hereunder in the manner provided in section 26-2229, Idaho
Code, and if the applicant is found to be qualified under the
provisions of this chapter, shall cause a permit to be
issued authorizing the applicant to conduct a business in this state as a
foreign permittee. An applicant who has been issued a foreign permit pursuant
to this chapter shall be known as a "foreign permittee." If the
director finds that the applicant does not qualify under the provisions of this
chapter, the application shall be denied.
(4) The failure of a permittee to comply with the provisions of
this section shall constitute grounds for denial, revocation or suspension of a
foreign permit pursuant to section 26-2235, Idaho
Code.
§ 26-2251. Cancellation
of permit
Any permittee or foreign
permittee failing to apply in a timely manner for renewal of a permit shall
have said permit canceled effective the day following the last day for renewal
applications to be filed. Engaging in collection agency business with a
canceled permit shall be a violation of the provisions of this chapter. To
restore a canceled permit the fee shall be two hundred dollars ($200). A
canceled permit may be restored only before the expiration of six (6) months
following the date of annual renewal.
§ 26-2252. Repealed
Current through all 2007 laws of the First Regular Session of the
59th Legislature, Chs. 1-358 that are effective on or before Apr. 11, 2007.
END OF DOCUMENT
(C)
2007 Thomson
Case Law
I identified only one significant
case construing the Act. In Dun &
Bradstreet, Inc. v. McEldowney, 564 F. Supp. 257 (D.
Dun & Bradstreet, Inc. v. McEldowney,
564 F. Supp. 257 (D.
DUN &
BRADSTREET, INC., a Delaware corporation, Plaintiff v. TOM D. McELDOWNEY,
Director of the Department of Finance of the State of Idaho, Defendant
Civil No. 82-1080
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO
564 F. Supp. 257; 1983
May 13, 1983
CASE
SUMMARY
PROCEDURAL
POSTURE: Plaintiff debt collector brought action against defendant, Director of the
Department of Finance of the State of Idaho, to enjoin the director from
enforcing Idaho Code §§ 26-2223A, 26-2229, 26-2233, and
26-2242(8), which required debt collection to be conducted from within the
State of Idaho.
|
|
OVERVIEW: Plaintiff debt
collector was incorporated in
|
|
OUTCOME: The court denied
plaintiff debt collector's motion for a declaratory judgment as to certain
statutes and granted the motion concerning the statute that required
intrastate communications and excluded interstate communications, holding
that it was constitutionally impermissible.
|
|
collection agency, collection, permittee,
consumer, interstate commerce, finance, license, licensee, in-state, per se,
residency requirement, personally, incidental, putative, interstate,
soliciting, commerce, actively, impermissible, telephone, resident, unfair,
mail, declaratory judgment, business carried, evenhandedly, declaring,
balancing, collectors, abusive
COUNSEL: Dale G. Higer
of Eberle, Berlin, Kading, Turnbow & Gillespie, Boise, Idaho, for
Patric V. Collins, Deputy Attorney General, Department of Finance,
JUDGES: Ryan, J.
RYAN
MEMORANDUM
OPINION AND ORDER
This action is brought by the plaintiff, Dun & Bradstreet, to restrain and
enjoin Tom D. McEldowney, Director of the Department of Finance of the State of
Idaho, from enforcing the provisions of Chapter 22, Title 26, Idaho Code, and
more particularly, Section 26-2223A, Section 26-2229, Section 26-2233, and
Section 26-2242(8),
Idaho Code, and the rules and regulations adopted thereunder. Dun &
Bradstreet asks this court to enter a declaratory judgment in accordance with
the provisions of 28 U.S.C. §§ 2201 and 2202 declaring that the
provisions of said statutes of the State of Idaho and the rules and regulations
adopted thereunder are null and void and have no effect as being a
contravention of the commerce clause, Article I, Section 8, of the Constitution
of the United States.
The parties have caused to be filed a Stipulation and Order Concerning Issues
Presented and Conduct of the Case, and providing that depositions be taken of one
witness for each party, after which the parties fully briefed the matter to the
court. The court heard oral argument of counsel, and being fully advised in the
premises, sets forth the following opinion.
Admitted facts requiring no proof filed by the parties are as follows:
(a) Dun & Bradstreet, Inc., is a corporation organized and existing under
the laws of the State of
(b) Tom D. McEldowney is the Director of the Department of Finance of the State
of
(c) Dun & Bradstreet, Inc., is a collection agency and as such engages in
the activities enumerated in Section 26-2223, Idaho Code,
and is a permittee authorized to engage in such activities within the State of
Idaho.
(d) As an entity which has a nationwide collection agency practice, Dun &
Bradstreet is engaged in interstate commerce.
(e) As a permittee, Dun & Bradstreet, Inc., is required under the
provisions of Section 26-2223A, Idaho Code,
to maintain an office within the State of Idaho. This office is maintained in
(f) Tom D. McEldowney and employees of the Department of Finance of the State
of Idaho have interpreted the provisions of Chapter 22, Title 26, Idaho Code,
to prohibit Dun & Bradstreet, Inc., and other collection agencies from
soliciting for collection the accounts of creditors within the State of Idaho
through the use of the mails of the United States or telephone from outside the
State of Idaho, or effecting the collection of creditors' accounts assigned to
Dun & Bradstreet, Inc., or other collection agencies for collection (except
by forwarding such accounts to collection agencies licensed and located in the
State of Idaho) through the use of the mails of the United States or telephone
from outside the State of Idaho.
QUESTIONS PRESENTED
The following issues of law, and no others, are presented by this action:
(a) Whether the provisions of Section 26-2223A, Idaho Code,
impose an unreasonable restriction on interstate commerce in violation of the
commerce clause, Article I, Section 8, of the Constitution of the United States.
(b) Whether the provisions of Section 26-2242(8), Idaho Code, impose an
unreasonable restriction on interstate commerce in violation of the commerce
clause, Article I, Section 8, of the Constitution of the
(c) Whether the interpretation of Chapter 22, Title 26, Idaho Code, made by Tom
D. McEldowney and employees of the Department of Finance of the State of Idaho,
that a collection agency permittee and its employees are prohibited from
soliciting for collection the accounts of creditors within the State of Idaho
through the use of the mails of the United States or telephone from outside the
State of Idaho, and that a collection agency permittee and its employees are
prohibited from effecting the collection of creditors' accounts assigned to such
permittee for collection (except by forwarding the account to a collection
agency licensed and located in the State of Idaho) through the use of the mails
of the United
States or telephone from outside the State of Idaho, imposes an unreasonable
restriction on interstate commerce in violation of the commerce clause, Article
IDAHO CODE SECTIONS AND INTERPRETATIONS CHALLENGED
HN1
Idaho Code, Section 26-2223A,
reads as follows:
26-2223A.
Office to be maintained in state. -- Every permittee under this act must
maintain an office in the state of
HN2
Section 26-2223A requires every permittee to maintain an office in the State of Idaho at each
location for which a permit is issued, and requires each permittee to designate
a person to be personally and actively in charge of the business carried on at
such office. The Department of Finance has interpreted this section to require
that a collection agency permittee conduct its business from its designated
The plaintiff
also challenges the constitutionality of HN3
Section 26-2242(8), Idaho Code,
which reads as follows:
26-2242.
Grounds for refusal to issue license. -- A license may be refused and, after
notice and hearing, be denied, revoked or the renewal thereof refused by the
director if he finds that the holder of or the applicant for such license:
. . .
(8) Is not a bona fide resident of this state; . . .
A
"licensee" is:
any
person licensed by the director who is employed by a collection agency and
whose primary function is as a solicitor engaged in collection or receiving
payment or soliciting the receiving or collection of payment for others of any
account, bill or other indebtedness for the collection agency.
Idaho Code, § 26-2222(7).
The license requirement is contained in Section 26-2240, Idaho Code,
which provides in part:
(1)
No person shall act as a licensee of any firm, company or person holding a
permit under this act without first obtaining a license to do so.
HN4
Article I, Section 8, of the
United States Constitution reads in pertinent part: "The Congress shall
have Power . . . To regulate commerce . . . among the several States . . ."
ANALYSIS
HN5
The commerce clause of the United
States Constitution can erect a barrier to state action where
Congress has exercised its constitutional power to regulate commerce among
several states, and has indicated its policy to which contrary or inconsistent
state action must give way by reason of the commerce clause and
also by reason of the supremacy clause. The commerce clause can
also erect a barrier when Congress by inaction has remained silent or has taken
no action setting forth its policy on a given subject matter. In these latter
situations a challenge or objection to state authority would rest entirely on
the "dormant" commerce clause of
Article I, Section 8, or on the unexercised commerce power itself. The
plaintiff points out that the accepted "modern test" is stated in Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 25 L. Ed. 2d 174, 90 S. Ct. 844
(1970):
HN6
Where the statute regulates
evenhandedly to effectuate a legitimate local public interest, and its effects
on interstate commerce are only incidental, it will be upheld unless the burden
imposed on such commerce is clearly excessive in relation to the putative local
benefits.
(citations omitted) If a legitimate local purpose is found, then the question
becomes one of degree. And the extent of the burden that will be tolerated will
of course depend on the nature of the local interest involved, and on whether
it could be promoted as well with a lesser impact on interstate activities.
The defendant submits that the challenged statutes and the interpretation
thereof by the Department of Finance, will pass constitutional muster under the
"Pike balancing test."
The defendant argues that the instant case falls within a third category
wherein Congress enacted the Fair Debt Collection Practices Act (hereinafter
"FDCPA"), 15 U.S.C. §§ 1692-1692o,
which legislates in the same area regulated by the Idaho Collection Agency Law.
HN7
The FDCPA, in Section 1692n of 15 U.S.C.,
contains the following provision:
This
title does not annul, alter, or affect, or exempt any person subject to the
provisions of this title from complying with the laws of any State with respect
to debt collection practices, except to the extent that those laws are
inconsistent with any provision of this title, and then only to the extent of
the inconsistency. For purposes of
this section, a State law is not inconsistent with this title if the protection
such law affords any consumer is greater than the protection provided by this
title.
The
defendant states that an express congressional recognition of rights of states
to legislate in a particular area would be dispositive in that Congress has
expressly approved of stricter state laws in the field of collection agency
regulation; therefore, ordinary "dormant" commerce clause analysis does not apply to such regulation and the statutes and interpretation
which are the subject of the instant case do not contravene the commerce clause of the United
States Constitution.
However, plaintiff argues that it is a commercial collection agency and that
the FDCPA has application only to consumer collection agencies. An analysis of
the challenged statutes and the interpretation thereof, varies depending upon
whether the FDCPA is applicable to commercial collection agencies.
At oral argument, neither party could point to a judicial determination of the
applicable difference as between consumer collection agency and commercial collection
agency. Thus, this issue appears to be one of first impression. Defendant maintains that since
FDCPA refers to debt collection agencies and debt collectors, the Act applies
to the Idaho legislation in question and thus provides the state a greater
flexibility in dealing with the regulation of debt collections than if Congress
had been wholly silent on the matter. Dun & Bradstreet counters that the
legislative history of the Act explicitly limits the application of the Act to
consumer collection agencies as opposed to commercial collection agencies.
In
reviewing the legislative history of the FDCPA, it is apparent that the bill
was intended to apply only to consumer collection agencies:
NATURE AND PURPOSE OF THE BILL
This
legislation would add a new title to the Consumer Credit Protection Act
entitled the Fair Debt Collection Practices Act. Its purpose is to protect consumers from a host of unfair, harassing, and deceptive debt collection practices
without imposing unnecessary restrictions on ethical debt collectors. . . .
(emphasis added)
S.
Rep. No. 382, 95th Cong., 1st Sess. 1-2, reprinted in 1977 U.S. Code
Cong. & Ad. News 1696.
Later, in the same Senate Report under "Explanation of the
Legislation," the report
reads: "This bill applies only to debts contracted by consumers for
personal, family, or household purposes; it has no application to the
collection of commercial accounts."
THE IN-STATE OFFICE REQUIREMENTS
The defendant argues that the office requirement as provided for in Section 26-2223A and
the communications requirement set forth in the finance director's
interpretation and requirements cannot be discussed separately for if the
statute falls, the interpretation must therefore fall, and conversely, if
the in-state
office requirement is constitutionally valid, the interpretation is likewise
valid. Because two distinct questions are presented by the in-state office
requirement and the interpretation thereof, the court will consider each
question separately.
The plaintiff contends that the requirement of an in-state office is an
impermissible burden on interstate commerce and should be declared
unconstitutional. Plaintiff asserts that the statute would be a restraint on
interstate commerce as applied and is thus per se unconstitutional. In support
of the per se unconstitutional argument, plaintiff cites Philadelphia v. New Jersey, 437 U.S. 617, 57 L. Ed. 2d 475, 98 S. Ct. 2531 (1978),
and Lewis v. BT Invest. Managers,
Inc., 447 U.S. 27, 64 L. Ed. 2d 702, 100
S. Ct. 2009 (1980). In the alternative, plaintiff argues that if the
statute passes the constitutional per se challenge, the in-state office
requirement should be analyzed under the balancing test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137, 25 L. Ed. 2d 174, 90 S. Ct. 844 (1970),
and thus declared constitutionally impermissible.
From a study of the statute, it appears that the requirement applies
evenhandedly
both to Dun & Bradstreet and each and every other collection agency that
may be operating in the State of
"the commerce clause protects the interstate market, not particular interstate firms, from
prohibitive or burdensome regulation." Id. at 127-28. Thus, the Court does not view the
statutory requirements to be per se unconstitutional.
Since the statute is not per se unconstitutional, the applicable test is that
laid out in Pike v. Bruce Church, Inc., 397 U.S. 137, [*263] 25 L. Ed. 2d 174, 90 S. Ct. 844 (1970). In Pike, the Court held that:
HN9
Where the [state] statute
regulates evenhandedly to effectuate a legitimate local public interest, and
its effects on interstate commerce are only incidental, it will be upheld
unless the burden imposed
on such commerce is clearly excessive in relation to the putative local
benefits. If a legitimate local purpose is found, then the question becomes one
of degree.
Id. at 142 (citations omitted). Pike thus
requires a balancing between the state's interest in the regulation and the
burden it imposes on interstate commerce.
Plaintiff asserts that Pike is indistinguishable from the case at bar.
In Pike,
In this situation the court finds that the putative benefit of Idaho's
regulatory scheme outweighs the incidental consequences incurred by collection
agencies and upholds Idaho Code § 26-2223A (1977). In Pike, the putative rationale was to protect the reputation of
Regulation of consumer collection agencies was deemed important enough for the
United States Congress to intervene and pass legislation regulating consumer
collection agencies. Even though this court is unpersuaded that the Fair Debt
Collection Practices Act, 15 U.S.C. §§ 1692-1692o (Supp. IV 1980), is applicable in this instance, the court finds that much of
the rationale for the FDCPA is germane to the discussion of the putative need
for such legislation. As Congress has declared:
There
is abundant evidence of the use of abusive, deceptive, and unfair debt
collection practices by many debt collectors. Abusive debt collection practices
contribute to the number of personal bankruptcies, to marital instability, to
the loss of jobs, and to invasions of individual privacy.
15 U.S.C. § 1692(a) (Supp.IV 1980).
The court is of the opinion that the rationale contained in FDCPA enacted by
Congress applies in a commercial debt collection setting as well. Although
Congress did
limit the FDCPA to consumer debt collection, certainly abusive, unfair, or unethical
practices are not limited just to consumer collection agencies. Regulation of
commercial debt collection practices is a sufficiently compelling state
interest to meet the Pike balancing test, and consequently, justifies the state's adopted
policy. The court finds that the challenged statute is constitutionally
LIMITATION ON INTERSTATE COMMUNICATION: THE INTERPRETATION BY THE DIRECTOR OF
THE DEPARTMENT OF FINANCE
The defendant argues that the director's interpretation of Idaho Code § 26-2223A is a correct statutory construction. The director's interpretation requires
that all communications from Dun & Bradstreet to
With this, the court does
not agree, as this interpretation certainly stretches a new meaning and a new
concept into what the statute actually says. By restricting the plaintiff to
initiating all communication either by letter or by phone intrastate and thus
forbidding the permittee company any interstate communications in soliciting
creditors' accounts at least, certainly interferes with interstate commerce.
Such a statutory construction is constitutionally impermissible as a regulation
or restriction. It is not a proper rationale, from a common sense standpoint or
from a regulatory standpoint, to so restrict the plaintiff's communication
network and coordination of its business affairs in soliciting creditors'
accounts or, for that matter, in communicating with debtors.
RESIDENCY REQUIREMENT OF LICENSEE
Dun & Bradstreet also challenges the constitutionality of Idaho Code §
26-2242(8) (1977). In order to understand plaintiff's challenge of this
statute, it is necessary to read various portions of Title 26, Idaho Code. The
pertinent portions of these statutes read as follows:
HN10
26-2242. Grounds for refusal to
issue license. -- A license may be refused and, after notice and hearing, be
denied, revoked or the renewal thereof refused by the director if he finds that
the holder of or the applicant for such license:
. . .
(8) Is not a bona fide resident of this state; . . .
The
crux of plaintiff's challenge is that this statute in requiring residency in
the State of
However, in a close reading of Idaho Code § 26-2242(8), it is noted that HN11
the requirement of residency of a
licensee is discretionary with the Director of the Department of Finance. The
plaintiff does not actually make any showing that the residency requirement has
in fact had an impact or burden on either interstate commerce or upon the
plaintiff. Just as an in-state office requirement applies evenhandedly to a permittee, so
too does a requirement of residency as a condition for the license of a
licensee, even though such residency requirement is discretionary with the
Director of the State Department of Finance. The court is of the opinion,
therefore, that the impact of a residency requirement on the licensee is
incidental. The court makes no finding that the statute is constitutional or
unconstitutional as it applies to an individual licensee applicant who may
challenge the residency requirement. The residency requirement is merely incidental
as it applies to Dun & Bradstreet. In viewing the legislative scheme as a
whole, the court is of the opinion that an in-state office requirement required
of the permittee, along with a requirement that a representative licensee be a
resident of Idaho, serves a legitimate state purpose wherein it serves to
protect Idaho debtors from unfair debt collectors and also presents a means by
which the director of finance may properly regulate collection agencies as
IT IS THEREFORE ORDERED that plaintiff's motion for a declaratory judgment
declaring Idaho Code § 26-2223A as unconstitutional, should be, and the same is hereby, DENIED.
IT IS FURTHER ORDERED that plaintiff's motion for a declaratory judgment
declaring that the interpretation of the statute requiring intrastate
communications and excluding interstate communications is constitutionally
impermissible, should be, and the same is hereby, GRANTED.
IT IS FURTHER ORDERED that plaintiff's motion for declaratory judgment
declaring Idaho Code § 26-2242(8) unconstitutional should be, and the same is
hereby, DENIED.
