SB1440 - 542R

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

Section 1. Section 6-1258, Arizona Revised Statutes, is amended to read:

START_STATUTE6-1258. Denial, revocation or suspension of license

A. The superintendent may deny a license to a person or suspend or revoke a license if the superintendent finds that an applicant or licensee:

1. Has failed to pay the annual renewal fees.

2. Has failed to file the annual financial statement as prescribed in this chapter.

3. Is insolvent as defined in section 47‑1201.

4. Is not a person of honesty, truthfulness or good character.

5. Has violated this chapter or any other applicable law, rule or order.

6. Has been convicted in any jurisdiction of any felony or other crime that involved breach of trust or dishonesty.

7. Has had an order entered against the applicant or licensee by an administrative agency of any jurisdiction and the order is based on conduct that involves fraud, deceit or misrepresentation by the applicant or licensee and is entered after notice and an opportunity to be heard.

8. Has made a material misstatement or omission on the application for a license or on any document required to be filed with the superintendent.

9. Has had a financial judgment ordered against the applicant or licensee in a civil action based on fraud, deceit or misrepresentation.

10. Has failed to take reasonable measures to ensure that an agreement to defer presentment is not breached.

11. Has engaged in any act or practice that would violate section 32‑1051, paragraph 4, 6, 7 or 8 3, 5, 6 or 7 if engaged in by a third party acting on behalf of the applicant or licensee.

B. It is sufficient cause for the denial, suspension or revocation of a license if an officer, director, partner, employee or controlling person of the licensee has acted or failed to act in a manner that if the licensee acted or failed to act in that manner would be cause for denial, suspension or revocation of the license. For the purposes of this subsection, "controlling person" means a person who owns more than twenty‑five per cent percent equity interest in the deferred presentment company or who has the ability to affect one or more significant business decisions of the licensee or applicant.

C. The superintendent may deny renewal of a license or suspend or revoke a license if the superintendent finds that any fact or condition exists that, if it had existed at the time of the original application for the license, would have warranted the superintendent to refuse to issue the license. 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 8 and section 32‑1055, subsection C and subsection D, paragraphs 1, 2, 3 and 5:

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 3.5 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 8 or section 32‑1055, subsection C or subsection D, paragraph 1, 2, 3 or 5 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 8 or section 32‑1055, subsection C or subsection D, paragraph 1, 2, 3 or 5 is subject to the provisions of sections 6‑132, 6‑136 and 6‑137. END_STATUTE

Sec. 3. Section 32-1051, Arizona Revised Statutes, is amended to read:

START_STATUTE32-1051. Duties of licensees

An individual, firm, partnership, association or corporation to whom a license is to be issued under this chapter shall:

1. Meet the financial responsibility and bonding requirements of this chapter.

2. Not have been a former licensee under the provisions of this chapter whose license was suspended or revoked and not subsequently reinstated.

3. Deal openly, fairly and honestly in the conduct of the collection agency business.

4. Except for attorneys licensed to practice law, not attempt to collect any collection fee, attorney's fee, court cost or expenses unless the fees, charges or expenses are justly due from and legally chargeable against the debtor, or have been judicially determined, nor shall any licensee engage in any unfair or misleading practices or resort to any oppressive, vindictive or illegal means or methods of collection.

5. Except for attorneys licensed to practice law, not give or send to any debtor, or cause to be given or sent to any debtor, any notice, letter, message or form which that:

(a) Simulates any legal process.

(b) Is ambiguous as to or misrepresents the character, extent or amount of the obligation of the debtor.

(c) Represents or infers implies that the existing obligation of the debtor may be increased by the addition of attorneys' attorney fees, investigation fees, service fees, or any other fees or charges when in fact these fees or charges may not legally be added to the existing obligation of the debtor.

(d) Threatens to sell the obligation of the debtor to any person, firm or group.

(e) Uses or sets forth the name of or purports to be from any attorney at law or legal firm.

6. Except for attorneys licensed to practice law, not use any letterhead, or literature bearing any heading, slogan or statement representing or inferring implying that the licensee practices law, renders legal services or advice, or maintains a legal department.

7. Not by the use of any letterhead, advertisement, agreement, form, circular or other printed matter, or otherwise, convey the impression that the individual, firm, partnership, association or corporation is vouched for or is an instrumentality of the this state, a political subdivision of the this state, or the department.

8. Treat a COMMUNICATION received from a credit services ORGANIZATION that complies with the requirements of section 44-1713 in the same manner as any communication received directly from a buyer and respond to all original credit disputes to both the debtor and the credit services organization.END_STATUTE

Sec. 4. Section 44-1703, Arizona Revised Statutes, is amended to read:

START_STATUTE44-1703. Credit services organizations; prohibited activities

A credit services organization and its salespersons, agents and representatives who sell or attempt to sell the services of a credit services organization shall not do any of the following:

1. Charge or receive monies or other valuable consideration before full and complete performance of the services the credit services organization has agreed to perform for or on behalf of the buyer, unless the credit services organization, in conformity with section 44‑1708, has obtained a surety bond issued by a surety company authorized to do business in this state. If a credit services organization is in compliance with this paragraph, the salesperson, agents and representatives who sell the services of the organization are not required to obtain the surety bond provided for in section 44‑1708.

2. Charge or receive monies or other valuable consideration solely for referral of the buyer to a retail seller who will or may extend credit to the buyer, if the credit which that is or will be extended to the buyer is on substantially the same terms as those available to the general public.

3. Make or counsel or advise a buyer to make any statement which that is untrue or misleading and which that is known, or which that by the exercise of reasonable care should be known, to be untrue or misleading to a consumer credit reporting agency or to any person who has extended credit to a buyer or to whom a buyer is applying for an extension of credit, with respect to a buyer's credit worthiness, credit standing or credit capacity.

4. Make or use any untrue or misleading representations in the offer or sale of the services of a credit services organization, or including:

(a) Guaranteeing to remove information from a person's credit history unless the representation clearly discloses that this can be done only if the information does not meet state or federal credit reporting requirements.

(b) Guaranteeing an extension of credit regardless of the buyer's previous credit history unless the representation includes all advertising disclosures for an offer to extend credit as required under state and federal law.

5. Engage, directly or indirectly, in an act, practice or course of business which that operates or would operate as a fraud or deception on a person in connection with the offer or sale of the services of a credit services organization, including failing to include all of the information that is required by section 44‑1713 on all communications from the credit services organization to buyers, data furnishers, creditors and credit reporting agencies. END_STATUTE

Sec. 5. Title 44, chapter 11, article 7, Arizona Revised Statutes, is amended by adding section 44-1713, to read:

START_STATUTE44-1713. Communication requirements

All written communications from a credit services organization to buyers, data furnishers, creditors and credit reporting agencies shall include all of the following:

1. The complete name and address of the credit services organization.

2. A statement that the communication is from a credit services organization. END_STATUTE

Sec. 6. Applicability

This act applies only to communications that are sent from and after the effective date of this act.