GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

S	3 

SENATE BILL 548
Judiciary I Committee Substitute Adopted 4/11/89
House Committee Substitute Favorable 6/19/89

Short Title:  Collection Agency Amendments.	(Public)
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Sponsors:
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Referred to:  
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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; 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 the remaining provisions of this Part shall be guilty of a misdemeanor.  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 (f) reads as rewritten:
"(f)	A completed statement by each stockholder owning ten percent (10%) or more of the applicant's outstanding voting stock and each partner, director, officer, office manager, sales representative or other collector actively engaged in the collection agency business, containing: the name of the collection agency, the name and address of the individual completing the form, the positions held by such individual, each conviction of any criminal offense and any criminal charges pending other than minor traffic violations of such individual, and the name and address of three people not related to the individual who can attest to the individual's reputation for honesty and fair dealings;".
Sec. 3.  G.S. 66-49.25 is amended by adding new subsections to read:
"( m)	A statement certifying that no officer, individual proprietor or partner of the applicant has been convicted of a felony 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 Commissioner by the collection agency, of expenses incurred by the Commissioner in conducting routine examinations, audits, and in investigating written complaints against the collection agency or its employees.  All reimbursements shall be paid to the Commissioner no more than 30 days after the date of billing.
(o)	If the applicant is a foreign corporation, a statement authorizing the Commissioner to be its agent for service of process, which shall be administered pursuant to the provisions of G.S. 58-153.”
Sec. 4.  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. 5.  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. 6.  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. 7. 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, 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 and held within 90 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.  If the Commissioner shall decline an application for renewal, that applicant may continue to do business pending any appeal taken pursuant hereto."
Sec. 8.  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 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 within 30 days of the change of ownership the new owner or owners have satisfied the Commissioner that he or they qualify for a permit under this Article, and he or they maintain a bond in accordance with and in the amount required for a renewal bond under G.S. 66-49.28."
Sec. 9.  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 any county in which the violation has occurred, is occurring, or may occur 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 permittee for a violation of this Article shall automatically have the effect of suspending the permit of that permittee 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)	An individual proprietor, officer, or partner of the collection agency has been convicted of a felony  involving moral turpitude, or any State or federal debt collection law.
(2)	There is an unsatisfied judgment which is not currently the subject of litigation against any partner, individual proprietor, 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 partner, individual proprietor, or officer of the collection agency has violated any State or federal unfair trade practice law.
(6)	A partner, individual proprietor, or officer of the collection agency has violated or refused to comply with any provision of this Article or any order of the Commissioner.
(7)	Another jurisdiction has suspended or revoked a collection agency or similar license or permit of the collection agency."
Sec. 10.  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 any bank located in North Carolina 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. 11.  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 except as required by court order or subpoena, and except to submit and explain claims in bankruptcy court."
Sec. 12.  G.S. 66-49.27 is amended by adding a new subdivision (3) to read:
"(3)	An in-house collection agency, whereby a person, firm, corporation, or association sets up a collection service for his or its own business and the agency has a name other than that of the business.”
Sec. 13. This act shall become effective July 1, 1989.