GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

S	1 

SENATE BILL 548

Short Title:  Collection Agency Amendments.	(Public)
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Sponsors: Senator Daniel.
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Referred to:  Judiciary I.
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March 20, 1989

A BILL TO BE ENTITLED
AN ACT TO AMEND THE COLLECTION AGENCY LAWS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 66-49.24 reads as rewritten:
"§ 66-49.24. Permit from Commissioner of Insurance; misdemeanor to do business without permit; penalty for violation; exception.
No person, firm, corporation, or association shall conduct or operate a collection agency or do a collection agency business, as the same is hereinafter defined in this Article, until he or it shall have secured a permit therefor as provided in this Article. Any person, firm, corporation or association conducting or operating a collection agency or doing a collection agency business without the permit shall be guilty of a Class J felony. Any officer or agent of any person, firm, corporation or association, who shall personally and knowingly participate in any violation of this Part shall likewise be guilty of a Class J felony. Provided, however, that nothing in this section shall be construed to require a regular employee of a duly licensed collection agency in this State to procure a collection agency permit.”
Sec. 2.  G.S. 66-49.25 is amended by adding new subsections to read:
"( m)	A statement certifying that no principal, officer, or partner of the applicant has been convicted of a felony, a misdemeanor involving moral turpitude, or any violation of any State or federal debt collection law.
	"(n)  If the collection agency's office or records, as described in G.S. 66-49.29, are located outside of North Carolina, a statement sworn to by an appropriate corporate officer, partner, or individual proprietor consenting to and authorizing the reimbursement, to the Department by the collection agency, of expenses incurred by the Department in conducting routine examinations, audits, and in investigating written complaints against the collection agency or its employees.  All reimbursements shall be paid to the Department no more than 30 days after the date of billing."
Sec. 3.  G.S. 66-49.27(2) reads as rewritten:
"(2)	Any person, firm, corporation or association which attempts to or does transfer or sell to any person, firm, corporation or association not holding the permit prescribed by this Article any system or series of letters or forms for use in the collection of delinquent accounts or claims which by direct assertion or by implication indicate that the claim or account is being asserted or collected by any person, firm, corporation, or association other than the creditor or owner  of the claim or demand."
Sec. 4.  G.S. 66-49.27(11) reads as rewritten:
"(11)	‘Collection agency' shall not include any person, firm, corporation, or association attempting to collect or collecting claims, in his or its own name, of a business or businesses owned wholly or substantially by the same person, firm, corporation, or association."
Sec. 5.  G.S. 66-49.29(a) reads as rewritten:
"(a)	Each person, firm, or corporation licensed as a collection agency in North Carolina shall keep a full and correct record of all business done in this State as set forth below. All such records pertaining to collection activity, concerning debtor records and client accounting records, but not general operating records, shall be open to inspection by the Commissioner of Insurance or his duly authorized deputy upon demand. "
Sec. 6. G.S. 66-49.30 reads as rewritten:
"§ 66-49.30. Hearing granted applicant if application denied; appeal.
If, upon application, the Commissioner finds that the permit should not be issued or renewed and denies an application for a permit or refuses to renew a permit, he shall notify the applicant or permittee and advise, in writing, the applicant or permittee of the reasons for the denial or nonrenewal of the permit. Within 30 days of receipt of notification the applicant or permittee may make written demand upon the Commissioner for a hearing to determine the reasonableness of the Commissioner's action. Such hearing shall be scheduled within 30 days from the date of receipt of the written demand. An applicant or permittee has the right to appeal any order or any unreasonable delay pursuant to Article 4 of Chapter 150B of the General Statutes."
Sec. 7.  G.S. 66-49.31 reads as rewritten:
"§ 66-49.31. Application fee; issuance of permit; contents and duration.
Upon the filing of the application and information hereinbefore required, the Commissioner may require the applicant to pay a fee of five hundred dollars ($500.00), and no permit may be issued until this fee is paid. If the application is denied, the Commissioner shall retain fifty dollars ($50.00) of the application fee and return the remainder to the applicant. The fifty dollars ($50.00) so retained upon applications not granted, and the full fee of five hundred dollars ($500.00) upon the applications granted, shall be used in paying the expenses incurred in connection with the consideration of such applications and the issuance of such permits.
Each permit shall state the name of the applicant, his place of business, and the nature and kind of business in which he is engaged. The Commissioner shall assign to the permit a serial number for each year, and each permit shall be for a period of one year, beginning with July 1 and ending with June 30 of the following year.
A permit is assignable or transferable only if the assignee or transferee first qualifies under the provisions of this Article.  Upon any change in ownership of a permittee, if a sole proprietorship or partnership, or upon a change in ownership of more than fifty percent (50%) of the shares or voting rights of a corporate permittee, a permit issued to a permittee is void unless prior to the change of ownership the prospective new owner or owners have satisfied the Commissioner that he or they qualify for a permit under this Article."
Sec. 8.  G.S. 66-49.32 reads as rewritten:
"§ 66-49.32.  Restraining orders; criminal convictions; permit revocations; other permit requirements.
(a)	When it appears to the Commissioner that any personhas violated, is violating, or threatens to violate any provision  of this Article, he may apply to the Superior Court of Wake County for a restraining order and injunction to restrain such violation, or threatened violation. Ifupon application the Court finds that any provision of this Article has been violated, is being violated, or a violation thereof is threatened, the Court shall issue an order restraining and enjoining such violations; and such relief may be granted regardless of whether criminal prosecution is instituted under any provision of this Article. 
(b)	The conviction by a court of competent jurisdiction of any permitee for a violation of this Article shall automatically have the effect of suspending the permit of that person until such time that the permitis reinstated by the Commissioner.  As used in this subsection, ‘conviction' includes an adjudication of guilt, a plea of guilty, and a plea of nolo contendere. 
(c)	In addition to the other qualifications for a permit under this Article, no collection agency shall be issued or be entitled to hold a permit if the Commissioner finds as to the applicant or permittee any one or more of the following conditions: 
(1)	A principal, officer, or partner of the collection agency has been convicted of a felony, a misdemeanor involving moral turpitude, or any State or federal debt collection law.
(2)	There is an unsatisfied judgment against any principal, partner, or officer of the collection agency or against the collection agency.
(3)	There is any materially false or misleading information in the permit application.
(4)	The applicant has obtained or attempted to obtain the permit through misrepresentation or fraud.
(5)	There has been an adjudication that a principal, partner, or officer of the collection agency has violated any State or federal unfair trade practice law.
(6)	A principal, partner, or officer of the collection agency has violated or refused to comply with any provision of this Article or any rule or order of the Commissioner.
(7)	Another jurisdiction has suspended or revoked a collection agency or similar license or permit of the collection agency."
Sec. 9.  G.S. 66-49.37 reads as rewritten:
"§ 66-49.37. Remittance trust account.
(a)	Each permit holder shall deposit, no later than two banking days from receipt, in a separate trust account in a North Carolina bank or other bank approved by the Commissioner, sufficient funds to pay all moneys due or owing all collection creditors or forwarders. Said funds shall remain in the trust account until remitted to the creditor or forwarder, and shall not be commingled with any other operating funds. The trust account shall be used only for the purpose of:
(1)	Remitting to collection creditors or forwarders the proceeds to which they are entitled. 
(2)	Remitting to the collection agency the commission that is due the collection agency.
(3)	Reimbursing consumers for overpayments.
(4)	Making adjustments to the trust account balance for bank service charges.
(b)	No refund for overpayment by a debtor in an amount of less than one dollar ($1.00) is required."
Sec. 10.  G.S. 66-49.48 reads as rewritten:
"§ 66-49.48. Unauthorized practice of law; court appearances.
Neither a collection agency nor any representative thereof who is not a duly licensed attorney shall engage in the practice of law.  As used in this section, ‘practice of law' includes the preparation of warrants or subpoenas.  A collection agency's representative is prohibited from appearing in court on behalf of a creditor unless he is required to appear by court order or subpoena."
Sec. 11. This act shall become effective July 1, 1989.