Source: http://creditsecurely.com/credit-repair-state-laws/idaho-credit-repair-law/
Timestamp: 2017-11-19 04:45:32
Document Index: 382223843

Matched Legal Cases: ['§ 26', '§ 26', '§ 26', '§ 26', '§ 26', '§ 26', '§ 26', '§ 26', '§ 26', '§ 1692', '§ 26', '§ 26', '§ 26', '§ 26', '§ 26', '§ 26']

Idaho Credit Repair Law | CreditSecurely.com
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Title 26. Banks and Banking
This act shall be known as the “Idaho Collection Agency Act.”
(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 Idaho .
(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].
(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 Idaho telephone number and must be open to the public during normal business hours on each business day, provided, however, that the director may in his discretion approve a request for opening at hours other than normal business hours or a portion of a business day. A business day within the meaning of this section does not include Saturdays, Sundays, or legal holidays. Each permittee under this chapter must designate a natural person, who need not be a resident of the state of Idaho , to be responsible for the business carried on at the office and who has passed the examination for a permit required by section 26-2229, Idaho Code. If the person designated by the permittee to be responsible for business carried on at the office is not normally available in the Idaho office, then the permittee’s collection activities with debtors must begin with a written notice to each debtor setting forth a mailing address and a toll-free telephone number whereby a debtor may contact the designated responsible person during normal business hours.
(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
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
(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.
(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.
Upon renewal of any permit, the permittee shall supply the director with a statement 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).
(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.
(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.
(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.
(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.
(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.
(8) The director, may impound the creditors’ accounts, or trust accounts of any permittee if it shall be deemed in the general public interest.
§ 26-2237. Fees–Disposition of funds
§ 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.
§ 26-2240. 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.
§ 26-2243. Property right in accounts–Practice of law prohibited
(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.
(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;
§ 26-2246. Discontinuance of operations–Requirements
(d) All judgments obtained by the collection agency against debtors, in the agency’s name, have been returned and assigned to the creditors.
(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.
OVERVIEW: Plaintiff debt collector was incorporated in Delaware . It operated an office, as required by Idaho law, within the State of Idaho . It sought a declaratory judgment that certain Idaho statutes that governed debt collection within the state were unconstitutional because they violated the U.S. Constitution’s Commerce Clause. The court examined the statutes and their affect on interstate commerce and concluded that one statute, which prohibited communications to persons within the state of Idaho to be instigated from within that state to be unconstitutional. Other statutes, which required debt collectors to maintain in-state offices and which connected the issuance of licenses to residency requirements, were deemed constitutional. Thus the debt collector’s motion for summary judgment was granted in part and denied in part.
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.
(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.
(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 [*260] 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 [**5] States or telephone from outside the State of Idaho, imposes an unreasonable restriction on interstate commerce in violation of the commerce clause, Article I, Section 8, of the Constitution of the United States.
26-2223A. Office to be maintained in state. — Every permittee under this act must maintain an office in the state of Idaho at each location for which a permit is issued. Each office must be open to the public during normal business hours on each business day, provided, however, that the director may in his discretion approve a request for opening at hours other than normal business hours or a portion of a business day. A business day within the meaning of this section does not include Saturdays, Sundays, or legal holidays. Each permittee under this act must designate a person to be personally and actively in charge of the business carried on at any office for which a permit is held. No office may be operated by a permittee under this act unless the person who is personally and actively in charge of the operation of an office doing business under this act passes [**6] the examination for a permit required by section 26-2229, Idaho Code, provided that persons operating under a valid collection agency permit on July 1, 1974 shall not be required to comply with this requirement until July 1, 1976.
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:
A “licensee” is:
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 [**8] States . . .”
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):
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.
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.
Later, in the same Senate Report under “Explanation of the Legislation,” the report [**12] 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.” Id. at 3, and 1697. The legislative history clearly indicates that the statute was intended to apply only to consumer debts. While this construction of the statute may lead to some ambiguity in that consumer and commercial debts are difficult to separate from a legislative standpoint, the only interpretation available to this court is that presented by Plaintiff Dun & Bradstreet. Therefore, this court finds that the FDCPA applies only to consumer debt collection agencies and is therefore inapplicable to this action. The analysis of the challenged legislation will thus proceed on the basis that Congress has not addressed the question of commercial collection agencies.
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 [**13] 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.
From a study of the statute, it appears that the requirement applies evenhandedly [**14] both to Dun & Bradstreet and each and every other collection agency that may be operating in the State of Idaho . It is evident that the statute requires Dun & Bradstreet (or any other collection agency) to maintain an office within the State of Idaho , and that its manager must be personally familiar with correspondence and communications that would involve Idaho debtors. However, in Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 57 L. Ed. 2d 91, 98 S. Ct. 2207 (1978), the United States Supreme Court stated that, HN8 “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.
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, Arizona cantaloupe growers challenged an Arizona law which required that all fruit grown in the state be processed there too. In striking down the legislation, the Supreme Court found that they “viewed with particular suspicion state statutes requiring business operations to be performed in the home State that could more efficiently be performed elsewhere. Even where the State is pursuing a clearly legitimate local interest, this particular burden on commerce has been declared to be virtually per se illegal.” 397 U.S. at 145 (citations omitted). Plaintiff contends that Pike is directly on point and that it therefore controls. However, it must be noted that the Court did not find in-state office requirements per se illegal. It is critical to the analysis [**16] of Pike to understand what the putative benefit of the legislation is. The Court in Pike found that, “the impetus for the Act was the fear that some growers were shipping inferior or deceptively packaged produce, with the result that the reputation of Arizona growers generally was being tarnished and their financial return concomitantly reduced.” Id. at 143. The Court in striking down the legislation held that, “such an incidental consequence of a regulatory scheme could perhaps be tolerated if a more compelling state interest were involved.” Id. at 146 (emphasis added). The question thus before the court is whether Idaho ‘s interest in regulating collection agencies is compelling enough to require the incidental consequences of its regulatory scheme.
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 Arizona cantaloupe growers. In the case at bar, the putative rationale is to regulate collection agencies. To this end, the policy adopted by [**17] the Idaho Legislature in enacting Chapter 26, Title 22, Idaho Code, is to protect Idaho debtors, be they consumer or commercial, from abusive, unethical, and unfair practices by collection agencies.
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 [**18] 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 [*264] Pike balancing test, and consequently, justifies the state’s adopted policy. The court finds that the challenged statute is constitutionally permissible.
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 Idaho debtors, whether by mail or telephone, must emanate from within Idaho . The department relies on a portion of Section 26-2223A which requires: “Each permittee under this act must designate a person to be personally and actively in charge of the business carried on at any office for which a permit is held.” The department argues that by reason of the above a significant part of the business of a collection agency permittee is the solicitation [**19] of accounts and collection of debts. Both of these functions involve sending letters or making phone calls, and that if a person is to be personally and actively in charge of the business carried on at the office, that must mean that he is in charge of the very important business of communicating with creditors and debtors.
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.
Dun & Bradstreet also challenges the constitutionality [**20] 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:
The crux of plaintiff’s challenge is that this statute in requiring residency in the State of Idaho as a prerequisite to operating a collection agency in this state imposes an impermissible burden on interstate commerce. Plaintiff argues that a residency requirement such as that in Idaho Code § 26-2242(8) discriminates on its face and thus is presumed to be unconstitutional. In support of that argument, plaintiff cites Philadelphia v. New Jersey, 437 U.S. 617, 57 L. Ed. 2d 475, 98 S. Ct. 2531 (1978); Service Machine & Shipbuilding Corp. v. Edwards, 617 F.2d 70 (5th Cir.), aff’d, 449 U.S. 913, 66 L. Ed. 2d 142, 101 S. Ct. 310 (1980); [**21] Smith v. Dept. of Agriculture of the State of Georgia, 630 F.2d 1081 (5th Cir. 1980); Dutchess Sanitation v. Town of Plattekill, 51 N.Y.2d 670, 417 N.E.2d 74, 435 N.Y.S.2d 962 (N.Y. 1980).
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.