HB2614 - 511R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 32-1001, Arizona Revised Statutes, is amended to read:

START_STATUTE32-1001. Definitions

In this chapter, unless the context otherwise requires:

1. "Claim" means an obligation for the payment of money or its equivalent and a sum or sums owed, due or asserted to be owed or due to another, for which a person is employed to demand payment and collect or enforce such payment, that may have been sold or assigned to a purchaser or an assignee after the obligation is written off or delinquent and that includes:

(a) Obligations for the payment of money to another, in the form of conditional sales agreements, notwithstanding the personal property sold thereunder, for which payment is claimed or may be or is repossessed in lieu of payment.

(b) An obligation for the payment of money or its equivalent and a sum or sums owed, due or asserted to be owed or due which is sold or assigned to a purchaser or assignee for which either:

(i) The final payment has not been tendered to the seller or assignor.

(ii) Title has not yet passed.

(iii) The purchaser or assignee has a right of recourse against the seller or assignor.

(iv) The purchaser or assignee acquires the obligation after the consumer allegedly defaults on the obligation.

2. "Collection agency" means:

(a) All persons engaged directly or indirectly in soliciting claims for collection or in collection of claims owed, due or asserted to be owed or due.

(b) Any person who, in the process of collecting debts occurring in the operation of his own business, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.

3. "Department" means the department of financial institutions.

4. "Financial institution" means a person who does business under any other law of this state or law of another state or the United States relating to banks, trust companies, savings and loan associations, credit unions and savings banks.

5. "Person" means an individual, firm, partnership, association or corporation.

6. "Superintendent" means the superintendent of financial institutions. END_STATUTE

Sec. 2. Section 32-1004, Arizona Revised Statutes, is amended to read:

START_STATUTE32-1004. Exemptions

A. The following persons are exempt from the provisions of this chapter when engaged in the regular course of their respective businesses but shall comply with the requirements of section 32‑1051, paragraphs 2 through 7 and section 32‑1055, subsection C and subsection D, paragraphs 1, 2, 3, and 5 and 6:

1. Attorneys‑at‑law.

2. A person regularly employed on a regular wage or salary in the capacity of credit person or a similar capacity, except as an independent contractor.

3. Banks, including trust departments of a bank, fiduciaries and financing and lending institutions.

4. Common carriers.

5. Title insurers, title insurance agents and abstract companies while doing an escrow business.

6. Licensed real estate brokers.

7. Employees of licensees under this chapter.

8. Substation payment offices employed by or serving as independent contractors or public utilities.

9. A person licensed pursuant to title 6, chapter 7.

10. A person licensed pursuant to title 6, chapter 9.

11. A person licensed pursuant to title 6, chapter 14, article 1.

12. A participant in a finance transaction in which a lender receives the right to collect commercial claims due the borrower by assignment, by purchase or by the taking of a security interest in those commercial claims.

13. An accounting, bookkeeping or billing service provider that complies with all of the following:

(a) Does not accept accounts that are contractually past due at the time of receipt.

(b) Does not initiate any contact with individual debtors except for the initial written notice of the amount owing and one written follow‑up notice.

(d) Does not receive or have access to monies paid by debtors or their insurers.

(e) All communications with the debtors are done in the name of the creditor.

14. A person collecting claims owed, due or asserted to be owed or due to a financial institution the deposits of which are insured by an agency of the federal government, or any affiliate of the financial institution, if the person is related by common ownership or affiliated by corporate control with the financial institution and collects the claims only for the financial institution or any affiliate of the financial institution.

15. A person who is licensed pursuant to title 20, chapter 2, article 3, 3.1, 3.2, 3.3 or 3.4 and who is authorized to collect premiums under an insurance policy financed by a premium finance agreement as defined in section 6‑1401.

B. For the purposes of subsection A, paragraph 12 of this section:

1. A transaction shall not be deemed a finance transaction if the primary purpose is to facilitate the collection of claims.

2. "Commercial claim" does not include an account arising from the purchase of a service or product intended for personal, family or household use.

C. For the purposes of subsection A, paragraph 13, subdivision (b) of this section, the initial written notice and follow‑up notice may contain only the following information:

1. The name, address, and telephone and telefacsimile numbers of the creditor.

2. The amount due and an itemization of that amount.

3. The date payment is due.

4. The address or place where payment is to be made.

5. If the payment is past due, that payment is past due.

D. For a person who is exempt under subsection A, paragraph 14 of this section, the superintendent shall investigate complaints of residents of this state relating to any violations of section 32‑1051, paragraphs 2 through 7 or section 32‑1055, subsection C or subsection D, paragraph 1, 2, 3, or 5 or 6 and may examine the books, accounts, claims and files of a person that relate to the complaint. A person who is exempt and who violates the provisions of section 32‑1051, paragraphs 2 through 7 or section 32‑1055, subsection C or subsection D, paragraph 1, 2, 3, or 5 or 6 is subject to the provisions of sections 6‑132, 6‑136 and 6‑137.END_STATUTE

Sec. 3. Section 32-1055, Arizona Revised Statutes, is amended to read:

START_STATUTE32-1055. Unlawful acts

A. It is unlawful for a person to conduct a collection agency in this state without having first applied for and obtained a license under this chapter.

B. A collection agency licensed under this chapter shall not directly or indirectly aid, abet or receive compensation from an unlicensed person. Nothing in this chapter shall prevent a licensed agency from accepting, as forwardee, claims for collection from a collection agency or attorney whose place of business is outside this state.

C. A licensee shall not advertise a claim for sale or threaten to so advertise a claim as a means of endeavoring to enforce payment, nor shall a licensee agree to do so for the purpose of soliciting claims. This subsection shall not be deemed to affect a licensee acting as assignee for the benefit of a creditor or acting under a court order.

D. It is unlawful for a person conducting a collection agency in this state to:

1. Fail to render an account of and pay to the client for whom collection has been made the proceeds collected, less collection charges as agreed to by the person and the client, within thirty days from the last day of the month in which the proceeds were collected. If the amount due the client is less than five dollars, payment may be deferred for an additional thirty days.

2. Fail to deposit with a local depository all monies collected by the person and due to the person's clients, and to fail to keep these monies deposited until these monies or equivalent amounts are remitted to the person's clients. Notwithstanding this paragraph, if a person conducting a collection agency does not maintain an office in this state, the person may deposit and keep these monies in a depository in a state where the person maintains the person's principal office.

3. Fail to keep a record of monies collected and the remittance of these monies.

4. Fail to notify the department within ten days of any change of name under which the person does business as a collection agency or address at which the person conducts business.

5. Aid or abet, directly or indirectly, any person, persons or organizations in evading or violating any of the provisions of this chapter.

6. Bring suit or initiate arbitration proceedings against the debtor or otherwise attempt to collect on a debt if the person knows, or reasonably should know, that the applicable statute of limitations has expired, the debt has been discharged in bankruptcy, the debt has been paid or otherwise settled or the debt is otherwise illegal under federal or state laws.

E. A violation of 50 Appendix United States Code sections 521 through 527 of the servicemembers civil relief act of 1940 is an unlawful act under this chapter. END_STATUTE

Sec. 4. Section 32-1056, Arizona Revised Statutes, is amended to read:

START_STATUTE32-1056. Violation; classification

A. A person operating a collection agency without a license shall be guilty of a class 1 misdemeanor.

B. A licensee violating the provisions of section 32‑1055 or the rules and regulations adopted pursuant to this chapter shall be subject to revocation of license and shall be guilty of a class 1 misdemeanor.

C. A violation of section 32-1055 or the rules adopted pursuant to this chapter is an unlawful practice under section 44-1522 and is subject to enforcement by the attorney general. The attorney general may investigate and take appropriate action as prescribed by title 44, chapter 10, article 7. END_STATUTE